Denis O’Brien, owner of the Digicel Group, graces the cover of the August 11th issue of Forbes Magazine. Their profile, titled ‘Babble Rouser’, begins with a tone of detached and vaguely supercilious astonishment at the risks that Digicel has incurred in the course of its lightning-quick expansion across the island nations of the world. It quickly sobers, though, when it reports that the Digicel Group earned $505 million in operating profit on $1.6 billion in revenue in the financial year ending March, 2008.

Forbes leaves it to O’Brien himself to explain his damn-the-torpedoes philosophy:

“Get big fast. [Damn] the cost. Be brave. Go over the cliff. [The competition] doesn’t have the balls.”

I suspect he used some word other than ‘damn’.

Most anyone would enjoy downing a beer with the honey-tongued chancer from Cork, but Denis O’Brien didn’t make the cover of Forbes merely because of a flamboyant devil-may-care attitude. He’s noteworthy because he saw an opportunity where others didn’t, and he got rich capitalising on it.

The idea is simple enough: If you give everyone – literally everyone – access to mobile services, you can make money everywhere. In O’Brien’s world, there is no such thing as low-hanging fruit. Every single market gets aggressively cultivated. The fruits of such labours are truly remarkable.

O’Brien is not the only one to have realised that there are fortunes to be made in places once considered unserviceable. Indeed, much of the government’s telecoms policy is predicated on the certainty that market forces will provide enough incentive to encourage well-funded entities like Digicel to invest in Vanuatu without requiring some sort of financial crutch.

The economic manifestations of Network Effects are becoming increasingly well understood in the business community. Indeed, it appears that TVL has been pleasantly surprised to find that mobile phone services were far from the money-losing service they first thought it would be.

The urge to communicate is fundamental to human nature, and people are willing to go to great lengths to talk to others. More willing, in fact, than they consciously realise. An early usage survey of an email network in the Solomon Islands showed that, contrary to expectations, well over 60% of messages were between family members exchanging news. Those messages cost about 50 vatu each back then.

Digicel is benefiting from this desire to communicate primarily because of its first-mover status and commitment to its chosen course. That implies a fair degree of risk, but risk is one thing the private sector handles better than most others.

Now, let’s not overstate things. Denis O’Brien is not the Oracle at Delphi. He’s simply better positioned than the majority of corporate leaders. What we have here is a corporation tapping new reserves in a market that most others considered unserviceable. The job of other CEOs, as they saw it, was to consolidate revenues and find new ways to tap existing markets. There’s probably not a telecoms CEO anywhere that wouldn’t have been pilloried for attempting what Digicel did. If the board hadn’t ended such apparent rashness, the shareholders certainly would have.

It’s true that O’Brien was one of the first entrepreneurs to see the business potential of Network Effects in the developing world. But the process of commoditisation of hardware and software that made this investment possible has been visible for years.

My first brush with this phenomenon came when I was living on Baffin Island in Canada’s eastern Arctic. In 1994, a few friends and I created the most remote commercial Internet Service Provider in the world. We found that we were able to take a frighteningly expensive satellite link and make good money from it by slicing and dicing the bandwidth between hundreds – and later thousands – of customers.

After only six months of operation about 25% of the local population – over a thousand people – were subscribed to our service. Our competition, belatedly set up and funded by the local telecoms monopoly, had 7 customers. I’ll admit we surprised even ourselves.

Lest this be construed as an exercise in self-congratulation, the lesson here is that Network Effects work. That’s been obvious to anyone who cared to think about it since Bell Telephone president Theodore Vail first described the phenomenon a century ago in 1908. The 1990s saw a resurgence of the effect due to the advent of the Internet. In this decade and the next, low-power handheld devices will be where most of the growth occurs.

To sum up: O’Brien put two and two together, and has made a couple of billion out of it so far.

We can too, if we want. The next wave of innovation in technology and communications is happening right here in the developing world, and thanks to the vision of a few dedicated individuals here in Vanuatu, we’re further along than the majority of our neighbours. If we take advantage of the investment that O’Brien and others are making in Vanuatu, we can become allies in an island-hopping campaign reminiscent of General Douglas MacArthur’s conquest of the Pacific.

Both Digicel and TVL are investing heavily in localisation of staff and management positions. The advent of competition led directly to the promotion of a few key individuals in the TVL hierarchy. Most notable among them was the appointment of the first ni-Vanuatu comptroller in its corporate history.

John Delves, General Manager of Digicel Vanuatu, states that he is “aiming to localise all positions as soon as possible and our current experience is that there is tremendous talent here. Our ultimate goal is for Digicel Vanuatu to be run by people from Vanuatu.”

Judging by its performance in other markets, Digicel seems to favour a high degree of independence in each national operation. This is achieved in no small part because of a willingness to invest in the local population. They are currently actively recruiting both Sales and Technical Operations managers.

But these are not the only opportunities available. Improving communications requires significant policy change and the creation of strong regulatory mechanisms as well. This is another area where Vanuatu can take the lead. Some of the World Bank consultants helping Vanuatu put together its regulatory regime are citizens of Caribbean nations, veterans of the liberalisation process in their region. There is no reason why a few talented ni-Vanuatu couldn’t join their ranks. There will also be demand for logistics experts, marketing and customer service staff – you name it.

The immediate benefits of investing in this area are blindingly obvious. Salaries for skilled technology positions are higher than in most other employment sectors. Work in this field is not bound by geography. I continue to work in Port Vila with clients around the world. This means that we can export our talent throughout the developing world without losing it ourselves.

Digicel is the first company to really grasp the market potential of marginal markets like those in the Pacific. They aren’t the only ones, though. The people of Vanuatu need to take note of this regional phenomenon and commit themselves to strengthening it. If we aren’t complacent about our role in this process, the rewards for us and our neighbours will be considerable.

About a month ago, I gave a talk [Powerpoint File] to telecommunications network operators from all over the Pacific region. It dealt with the social aspects of Vanuatu’s communications revolution. Many of the themes I touched on will be familiar to readers of this column.

In a nutshell, I talked about Digicel’s approach to so-called marginal markets and how they relied on Network Effects to generate traffic where there had been none before. Once you have more than a certain percentage of the population using a particular means of communication, everyone else is compelled to join them, simply because everybody is using it.

Mobile telephone services significantly enhance one – and only one – important aspect of Vanuatu culture. They enable family members and friends to stay in touch with one another much more easily than they could before. This has the effect of strengthening some of the bonds that keep small groups together. As such, it should be viewed as a positive reinforcement of many of the things that we hold dear.

But in Vanuatu society, there’s more to communication than conversations between family members. We’ve so far succeeded in re-creating the kitchen conversation by electronic means. But we have no nakamal, no nasara. We have no meeting place we can truly call our own.

If you plot the rise of mobile telephone use in Vanuatu since the inception of the service, you’ll note that at first it started very slowly. Phones and SIM cards were expensive, which meant that only the richest could afford to use them. But prices reached a level attainable by the average wage-earner, uptake was huge. In the course of a few short years, GSM services became the single largest source of revenue for TVL, who reportedly had over 20,000 subscribers as of mid-2007.

Digicel’s arrival this year has only accelerated and expanded the process. Neither Digicel nor TVL will release sales figures or call volumes, but since they launched their service, Digicel has so far exceeded its own expectations that it’s currently out of stock on many telephone models.

The appeal of mobile telephony in the islands is immediate and compelling. Recent discussion on the VIGNET mailing list highlighted a few interesting anecdotes. People everywhere can’t bear to be separated from their mobile phones. They take them fishing, to the garden, everywhere they go. At this week’s Independence festivities in Freswota, the fastest selling item in every store I canvassed was phone credit.

So what does this mean in terms of Vanuatu society? There’s been a lot of discussion recently about the potential for negative effects. Many people with a stake in building communications capacity in Vanuatu privately confide that they’re nervous about a vast tidal wave of information spilling into Vanuatu from the outside world. What will happen to language, kastom and culture? Will our youngest generation throw over tradition, trading in string band music for the latest hip-hop ringtones?

To a certain, admittedly limited degree, mobile telephone services are immune to that kind of thing. Their initial value lies, as I mentioned, in one-to-one communication. The very same kind of communication that ni-Vanuatu have so enjoyed, in the kitchen while grating coconut for laplap, on the road to and from the garden, under a shade tree on a long afternoon, over a shell or two of kava in the evening.

This reflects an integral part of everybody’s life: The casual, constant contact that keeps families intact.

But mobile phones don’t easily allow another equally important aspect of communication in Vanuatu society: There is no virtual equivalent of the communal space. There is, in effect, no nasara, nowhere for the village to come together and consider matters of import to them all.

This has one extremely important effect. I’ve written before about the Coconut Wireless, the informal network of gossip and rumour that has historically provided a remarkably effective and versatile means of disseminating news of all kinds:

“[Coconut Wireless] refers to the lively rumours that spread via word of mouth concerning anything – or anyone – of interest to people as they idle away their spare time. In small doses, it’s generally unreliable, but when information is amalgamated from numerous sources, an assiduous listener can gather a good deal of interesting (sometimes deliciously scurrilous) and surprisingly accurate information.”

Mobile telephony has given us part of that. It’s given us better, more convenient access to some sources of our daily dose of hearsay. But it doesn’t give us everything. It limits the number of sources we can readily access. This means that there are fewer opportunities to correlate – and mitigate – much of the information reaching us.

Take for example the furore that arose a few years ago concerning the planned visit to Vanuatu of the reverend Sun Myung Moon. Families were divided over whether he should be allowed in, some supporting him, others threatening that it was their sacred duty to assassinate him, should he arrive, because rumour had it that he was a false prophet, possibly even the Antichrist.

Imagine how SMS and mobile telephone conversations could further exacerbate what was already a tense situation.

Conversely, it also provides the opportunity for individuals to become known to a larger proportion of society than ever before. It’s conceivable that the Coconut Wireless’ newfound spread might give us our very first truly national political figure since Father Walter Lini. Depending on the individual, this might be a very good thing indeed. Or not.

The Coconut Wireless becomes dangerous when it’s not leavened with verifiably correct public information. The Internet can provide this. Its very nature gives us back the many-to-one and one-to-many communications that typified the village nasara, where everyone could gather, offers their views directly to the community as a whole, and listen as well to the guidance offered by their chiefs and elders.

Next-generation mobile technology, including GPRS and WiMax wireless Internet services, will provide some mobile phone owners with access to this resource. Projects like One Laptop per Child and the small satellite stations being tested by the government as part of the Pacific RICS project will also fill in critical parts of the puzzle.

But they do so at a price. The Internet is not Vanuatu’s alone. The nasara we are entering is extends across the globe, even to places that many ni-Vanuatu will find foreign and possibly repulsive. Unless steps are taken to positively reinforce Vanuatu culture online, we run the risk of bringing up a generation who consider kastom to be nothing more than a collection of ramblings told by their bubus around the fire.

Vanuatu has invested wisely in its material infrastructure. But even when the last cable is plugged in, the job is not nearly finished. Vanuatu’s cultural infrastructure needs to be enhanced as well. This requires that young and old alike cooperate to translate the best elements of Vanuatu society into this new medium.

Make no mistake: This worldwide cultural nasara already exists. It is up to us to determine how our children enter it, and what they see and hear when they get there.

Digicel launched their mobile phone service in Vanuatu this week with a splash the likes of which have not been seen since Independence. Outside observers will find it hard to believe just how much excitement the arrival of a new phone company has engendered in Vanuatu. This column needs to be read in the context of a nation that, in terms of communications, has been utterly impoverished, but whose poverty seemed to vanish in a single day. In this light, the prospect of nearly ubiquitous mobile coverage at affordable rates is takes on historical proportions.

This week’s column isn’t so much a commentary as a sketch of first impressions about Digicel, its services and people’s reactions to both.

Digicel’s launch was a coordinated campaign designed to make it look to most people as if it sprang fully formed from the ground on the morning of the 25th. Billboards went up overnight, the flagship store was unveiled, the largest bandstand in Vanuatu history was constructed in the aptly-chosen Independence Park. Top-up signs appeared on store fronts everywhere, sometimes four to a block. Even newspaper sellers were transformed into Digicel vendors. One of the biggest concerts in Vanuatu history went off on-time and without a hitch. Hundreds of people – athletes, the disabled, the wealthy and the powerful – were entertained with food and drink that flowed smoothly and in apparently limitless quantities. It culminated with the biggest fireworks display in living memory.

Digicel wasn’t just showing off. There was a deliberate point to be made, and they made it emphatically: Digicel delivers.

Anyone who’s done any amount of work in Vanuatu knows just how remarkably difficult it can be to coordinate everyone’s efforts. This usually leads to things happening in sequence, rather than all at once. That, in turn, leads to delays, because one little failure can hold up the entire chain of events. These failures can compound quickly as a delay in one area can – and usually does – affect the once-ready state of others.

Digicel has proven that they have an organisation capable of delivering a large-scale event in a coordinated and coherent manner, and that they are willing to commit the resources required to do it.

This has two interesting implications. The first and most obvious is that there is every reason to believe that Digicel can operate successfully throughout the country at the level promised. They can do so by relying on nobody but themselves. It is clear now that when they offered a very large performance bond to the government, they did so with complete confidence.

The second implication will take time to play out. The Digicel Group has given a great deal of autonomy to each of its 27 national operations. They make a policy of investing significantly in local knowledge and capacity in order to tailor each company to the local environment. There is obvious wisdom in this strategy, as their business plan is predicated on effective operation in heretofore marginal markets.

How will this strategy play out in a country with largely undeveloped technical capabilities? It will require extensive engagement and a higher degree of commitment than any other outside entity has proven willing to invest in the past. Only time will tell whether Digicel’s leadership will continue to invest the resources necessary to the task.

But I’m writing this neither to praise Digicel, nor to bury them. What follows are anecdotal observations of the first few days after the birth of nation-wide communications in Vanuatu:

On opening day, I went down to the opening of the new store where Ma Barker’s used to be. Absolute madness. There were about 40 people allowed into the store at a time, with a line-up that was never less than about 100 people all the time I was there. There was an air of tangible excitement in the crowd. One would think they were selling Rolling Stones tickets, not mobile phones.

I was told that Au Bon Marché Nambatu was lined up out to the parking lot, as was Top Video.

At the launch party, I spoke briefly with John Delves, the General Manager of Digicel. I asked him about sales figures for the day, but he would only say that they were very pleased with results so far. Interestingly, he said that their primary form of measurement is call volume. The phones, obviously, are just a means to an end, and their reporting reflects that.

The next morning, I went down to the Digicel store, and found out that 3 different models were out of stock. Apparently the phones are in-country, but not enough were prepped for sale. Staff said they expected to have more before lunch time, but by end of day the phones had still not arrived. One staff member estimated that they sold over 500 mobiles at the main location on the first day alone. That’s not at all a reliable number, but it gives some of perspective on the rough level of interest. Five hundred phones in a single day, in a town of roughly forty-thousand people.

Interestingly, the cheapest phones, which start at 2000 vatu, were still in good supply. The sold-out models were in the lower middle range, between 8-15,000 vatu. It seems that Digicel misjudged the market slightly. It’s equally possible that people are simply conditioned to spend more on mobile service, and that Digicel has so exceeded their expectations that people simply up-sold themselves. It will be interesting to see if Digicel adjusts its marketing tactics, or the market adjusts to Digicel’s aggressive price point, or both.

A significant number of people were buying two or more mobiles at a time. When asked, more than one of them said they were purchasing them for family back on the island.

Crowds remained excited on the second day, even a tiny bit rowdy. They would have benefited from having staff outside to manage the line, but nobody seemed to have considered just how excited people would be. One intrepid security guard eventually brought order to the situation through a combination of wily talk and a little bit of chest-puffing.

Some technical notes: I bought a SIM card for an existing phone, and later when I checked my credit levels, it told me that I have 0 vatu credit. The good news is that my expiry date was ‘9999/12/31’. I hoped at first that my SIM card could be handed down through the generations, but the problem was rectified later the same day without any intervention from me. Nonetheless, I hope they’ve incorporated the year 10,000 bug into their IT planning.

Call quality seems to be excellent so far, but there are problems texting from TVL to Digicel. I’ve been told by reliable sources that the problem originates on the TVL side (Digicel’s error message says tactfully that the problem originates on ‘another’ network), and that it will be fixed within days. I’ve also heard reports that the service is down in Aore and Malo islands, and that coverage in North Efate leaves a little to be desired. Villagers in Epule have to walk to the shore or up the hill in order to place a call.

None of these initial wrinkles are surprising. What does surprise me is that Digicel turned up the entire network, rolled out its marketing and sales effort and then threw a party of historic proportions all on the same day. That is a logistical feat that is without precedent in Vanuatu history.

I like good engineering, good design and efficient performance. In short, I like things that do their job well, whatever that job may be. I like it so much that I hate to settle for less than the best. Not the biggest, necessarily, nor the most expensive. Just the best.

This focus on tools made me lose sight of a couple of important things: First, while doing things perfectly is a commendable ideal, it happens exactly 0% of the time in the real world. Second, Vanuatu is more, er, ‘real world’ than many other places on Earth.

In case you haven’t noticed, I’m a bit of a leftie when it comes to computing. I like to see as much power in the hands of the people as possible. While it’s nice – and often necessary – to rely on services provided by others, I’ve always believed that DIY is the most empowering way to go. So, when the news began to percolate out that Vanuatu would have truly national mobile phone services, I was interested mostly in how that might help the spread of computers into the islands.

What I didn’t consider is that the mobile might actually become the computer.

The road to Damascus has been a long-ish one for me. Looking back, I have to chuckle that it didn’t become obvious to me sooner that using mobile telephones as a data entry and display terminal was a viable approach to extending many useful services to the islands.

Email, news, commodity prices and market reports, shipping schedules, financial transactions, even census data and business license applications and health data… all of these can be managed by using a mobile phone to access a central data service. As long as only small amounts of data are sent at a time, everything works just fine.

For the time being, at least, mobile phones are among the very few devices that can run in places with little or no power generation. The amount of power generation required to run most computers adds enough to their cost that they will remain out of reach of the majority of the population. So far, the One Laptop Per Child Project’s XO laptop is the only device that might be capable of running in the islands without significant infrastructure upgrades. But even then, it requires at least nominal access to the Internet to work to its full potential.

The lowest-cost alternative for Internet access today is VSAT, a small satellite dish technology. But local operators charge around a million vatu a pop for these, and that’s not including ongoing Internet charges. For VSAT to be feasible, a good deal of cooperation would be required, because the cost would have to be shared by a number of parties. Based on current pricing models, the amount of bandwidth available to any given individual would be meagre indeed.

Mobile telephony has often been described as a leap-frogging technology, in that it allows developing areas to jump past the prior technological stages that developed nations have transitioned through. There’s no need to install expensive copper wiring and a power grid. Just throw up a few towers, run your equipment using solar and/or wind power, and as they say, Bob’s your uncle.

India, Uganda and many other developing countries have made large investments in leveraging this approach to ensure that even the most underprivileged in their societies have access to basic information services. I’ve not been alone in noting that mobile phone credit actually serves as currency for small transactions in many parts of the world. It’s safer, it’s harder to steal or to lose, and it doesn’t lose its value.

Building mobile-based software applications is not terribly difficult. In principle, it’s like constructing a text-only website. Someone sends you a text message; you process the data and send a message back with the results. This kind of transactional computation is probably easier to design and implement than just about any other. The phone number and a pass-code are enough to verify the identity of parties on both ends of the transaction, so security is actually easier to enforce than on the web.

In order to make this all work, we need to be sure that there will be a degree of consistency and cooperation between all parties involved. Market forces should be sufficient to encourage much of the early development. As long as businesses are given room to work in, they will likely come up with more mobile-based services than we might have thought possible.

Possible pitfalls include services being available only through a particular carrier, or only for a particular kind of device. Much less likely – but still a possibility – is the issue of access to the information systems themselves. The right to repackage and re-sell services will need to be carefully protected, in order that smaller operators can develop their own niche markets, thus enlarging the common pot.

Mobile telephony-based information services help us to lift ourselves up by our own bootstraps. But we need more than this to get off the ground. Mobile phones can do a lot, but they can’t do everything. Online learning, for example, pretty much requires computers and the Internet. Leveraging this basic level of communications into something better will still require that we figure out how to run robust, energy-efficient computers in rural settings.

Right now, we have a few people of vision leading the charge towards a national communications roll-out. But it must be admitted that a formal, truly national ICT strategy exists only in a fragmentary way. The Ministry of Infrastructure and Public Utilities has published a telecommunications policy. The e-government initiative is still moving forward, and the Ministry of Education has established an ICT committee as part of their new Sector-Wide Approach.

Business, however, has neither been consulted to any great degree, nor has it shown much desire to work collectively. The Vanuatu IT Users Society works hard at fostering discussion in these areas, but it does so with little if any material assistance from outside.

This must change. We don’t need a worker’s paradise-style central committee to manage everyone’s lives, but we do at least need a little more formal cooperation, and in a few key locations, a mandate to require that Vanuatu’s ICT priorities are being addressed.