[This week’s Communications column for the Vanuatu Independent.]
It’s axiomatic that in our so-called Information Society, improving communications is synonymous with improving people’s quality of life. Easier access to information is generally accepted as a good thing.
Far be it from me to gainsay the truisms that keep me in pocket money. But I do enjoy being wrong.
One of the most important lessons I’ve learned in my time here in Vanuatu is that trends and patterns are not so universal as they sometimes seem. Things that are self-evident elsewhere in the world should not be taken for granted here. Society, geography, economy and a few dozen other differentiating factors make Vanuatu unique in important ways.
Received wisdom, even from the leading lights of development theory, often does more damage than good if it’s not leavened with a solid grounding in local conditions. And that’s why I’ve been waiting with bated breath for an upcoming report by the Pacific Institute of Public Policy (PiPP) on the social effects of mobile telephony in Vanuatu.
The report, scheduled for release next month, runs over 120 pages. It’s a thorough investigation of the impact of the telecoms market liberalisation policy on households throughout Vanuatu. In the weeks ahead, we’ll look at it in more detail. This week’s column, though, investigates a single incidental datum that, I confess, I completely misjudged.
In the months leading up to Digicel’s roll-out, I confided to my friends that I was worried they would eat TVL alive. Their aggressive approach in other markets looked like it would be devastating when unleashed on what appeared at the time to be a rather complacent incumbent.
It appears that I got that prediction wrong. A survey of households shortly after the roll-out shows an overwhelming majority of rural users with Digicel accounts, while the exact opposite is true in our urban centres. The sampling, while geographically limited, is large enough to be statistically significant, as we wonks like to say.
These numbers date from shortly after Digicel first turned on its service. It’s entirely possible that the ratio has changed since then. But given that both companies have been tight-lipped so far with regards to their sales or usage levels, this is the best objective data we have to judge them by. (Neither Digicel nor TVL responded to requests for comment on this story.)
That Digicel would dominate the rural population comes as no surprise. Their more extensive network gives them an effective monopoly in many parts of the country. But even in rural areas where TVL had established a foothold prior to Digicel’s arrival on the scene, the survey showed a preponderance of Digicel customers. Anecdotal evidence from north Efate seems to support the perception that Digicel’s comprehensive coverage made them a more compelling choice for rural customers.
So what, if anything, went wrong in Vila and Santo? Why don’t customers appear to have flocked en masse to Digicel? Well, some part of it may be due to a psychological phenomenon known as ‘loss aversion’. Briefly stated, loss aversion theory states that losses are twice as powerful as gains, in psychological terms. So either Digicel would have had to find a way to make people see them as vastly better than the existing alternative, or Telecom would have had to do something make themselves look far worse.
In other words, TVL benefited from their status as ‘the devil you know.’
But more than that, TVL’s marketing campaign was clear and focused. They matched Digicel’s mobile service offering nearly feature for feature and closely aligned their prices. Having secured their urban base from mass defections, TVL have since increased their rural coverage, apparently in an attempt to bring the game to Digicel’s half of the field, as it were.
Cable and Wireless, one of TVL’s parent companies, seems to have learned valuable lessons from its Vanuatu turf war. It’s already taking steps in other vulnerable markets to ensure that Digicel doesn’t find a way to differentiate itself from the incumbent. In the Solomon Islands, Our Telekom (the monopoly carrier) has changed its corporate colour to a primary red, virtually indistinguishable from the same crimson tide that Digicel splashed all over Vanuatu when they debuted here.
Of course, mobile subscription is not an either/or proposition. A significant minority of the urban survey sample stated that they had SIM cards for both providers. They used their Digicel card to reach their family in the islands, and their TVL card to reach people in town.
(Full disclosure: I use both services, too. In fact, I went shopping for a dual-SIM mobile last weekend.)
So do we chock this up as a win, loss or tie for the upstart Digicel? Without more recent – and more detailed – data, it’s hard to tell. We can safely say, though, it seems clear now that fears of TVL’s imminent demise were somewhat exaggerated.
Indeed, there’s every possibility that TVL is doing just as well as before, and perhaps a little better. In their rush to get things started, Digicel was quite accommodating on the terms of their interconnect fees with TVL – perhaps more than they needed to be. Now that the pool of callers has increased so much, their urban customers’ fidelity, combined with their continued monopoly in land lines, could mean that they’re seeing greater call volumes and revenue than ever before.
It’s entirely possible that things have changed since this survey was conducted. But even if the landscape has altered somewhat, I suspect that the larger features remain intact.
And that would be good news indeed. I’ve stated before that the best outcome for consumers in this liberalised market is a knock-down, drag-out fight in which both companies battle for every inch of turf, but neither gains a decisive advantage. We can’t afford to allow complacency to re-enter the picture. We want both companies to keep prices low; we want each to anticipate the other’s moves and to keep the game as close and competitive as possible.
TVL, Digicel and a few others are gearing up right now for the next round in the liberalisation game. Before too very long, we’ll see Internet services thrown into the mix. If the patterns that we’ve seen from the early days of mobile competition hold true there, we’ll see real benefits for the country.
Each of the new entrants into the market is going to have to work harder than ever to set themselves apart from the others. TVL has shown that it’s capable of getting the lead out and duking it out toe-to-toe with one of the fiercest and best-resourced challengers in the telecom world. It will be interesting to see how they fare in a more fluid scenario, with multiple players all manoeuvring for the dominant position.
Where Internet is concerned, most of the competition will happen on TVL’s turf. If experience in the mobile arena is any indication, it won’t be sufficient to bring the cost of switching close to zero; the challengers will have to provide a compelling reason for people to change providers. Assuming that Telecom is capable of pulling its socks up to the same extent that they have in the mobile arena, the newcomers are going to have to find some very creative solutions indeed to set themselves apart from the crowd.