Marshall McLuhan’s rise to prominence as a cultural icon parallels that of television. Today, just like television, he is as widely lionised as he is misunderstood. Like credulous children, we toss around the terms he minted without a moment’s reflection. ‘The media’ has become a shibboleth for corporate commentary on the events of the day, filtered arbitrarily through a lens that sees no further than the next ratings cycle.

McLuhan saw this trend and feared it. Contrary to popular belief, his famous image of a global village was a pessimistic, almost despairing vision. A flickering television screen replaced the campfire at the centre of the human experience, but those huddled around it, seeking meaning in its seductive gaze, were as brutish and unreflective as he imagined early man to be.

It’s a shame he wasn’t around to see the how the rise of personal communications has subverted this dark vision. A new PiPP report, “Social and economic impact of introducing telecommunications throughout Vanuatu”, demonstrates unambiguously that access to personal communications has the power to change lives.

McLuhan’s dark metaphor was wrong in one critical regard: The people sitting around the village campfire are not nearly the simpletons he imagined them to be. Dozens of case studies in the PiPP report demonstrate that even in a world with only the most rudimentary technology, people show ingenuity, perspicacity and intelligence. Given access to mobile telecommunications, they grasp the initiative, improving their lives in almost every way.

The personal stories appearing in ‘Social Impacts…‘ provide striking contrasts between a world bereft of the amenities taken for granted in the developed world and the immediacy of electronic communications. Before the advent of mobile telephony, a process as simple as ordering goods for a village shop involved days of effort and weeks of waiting. Just making a phone call often required long treks over difficult terrain and prohibitively high costs.

The report offers numerous examples of the inordinate lengths that rural merchants go to just to keep stock on their shelves, putting paid (one hopes) to the stereotype of the indolent islander waiting patiently for the cargo to come. If it serves no other purpose, it is invaluable for this insight alone.

But there is a great deal more to it than that. The image it conjures up is not so much of new entrants to the Global Village as of residents of Digital Islands: While communication has improved –and social and economic well-being along with it– the distance from one island to the next has diminished only slightly.

Mobile telephony in and of itself is a boon in most regards, but without complementary infrastructure and services, it is of limited value.

It’s not even clear how our new telecoms infrastructure can be further leveraged to bootstrap access to the Internet. Digicel’s Mobile Internet fees put the service out of reach of the overwhelming majority of its customers, and TVL is simply absent from the field.

Furthermore, lack of access to electricity forces rural residents to spend as much charging their mobile phones’ battery as they do on credit. If they can’t keep even a mobile phone running cheaply, what hope have they of running a computer?

The PiPP report recounts the story of Simon, a lobster salesman based in Ipota on Erromango island. Before Digicel’s appearance on the island, he was forced to rely on the teleradio at the local airport, making delivery of his highly perishable stock extremely difficult. He now relies almost exclusively on his mobile phone to conduct his business. But limited coverage in his area means that he has to ride 9 km on horseback to get reliable service.

The image of a man riding his horse across Erromango’s rugged jungle trails to place a call on his mobile phone says it all. The telecoms market liberalisation strategy represents an historic policy win for the Government of Vanuatu, but unless it’s treated as a first step of a much more comprehensive development strategy, its value will be significantly diluted.

Dozens of stories like Simon’s are peppered throughout ‘Social Impacts…‘, each as illuminating as his. Their lesson is consistently the same: Improvements in transport, access to credit and secondary infrastructure are all necessary if we want to see further improvement in household outcomes in next year’s report.

Another concern raised by the report is the impact on kastom and culture as the immediacy of personal communication provides new channels for information, insight and guidance. While some of them are undeniably positive –women, for example, are making extensive use of mobile telephony to sustain and strengthen their social networks, improving their safety and access to information– these changes present new and largely unacknowledged sources of conflict with kastom’s inherent conservatism.

This year’s survey was nearly an order of magnitude larger than the inaugural report, which was conducted only weeks after Digicel’s initial roll-out. A total of over 900 participants were interviewed this year. The resulting dataset is a goldmine of demographic and economic intelligence whose import extends well beyond the primary focus of the report.

‘Social Impacts…’ should be read by more than just researchers and policy wonks. Anyone with even a passing interest in development, Vanuatu culture and its leap from a largely unchanged 3000-year-old agrarian culture into the Information Age will find it a fascinating document. Its 140-odd pages are replete with fascinating insights into social phenomena affecting the entire Pacific, indeed much of the developing world.

Comprehensive research reports into the dynamics of Vanuatu society are few and far between. Rarely are they presented in such a concise and approachable format. The report is available from www.pacificpolicy.org.

For every action, there is an equal and opposite reaction.

When Isaac Newton first formulated his third law of motion, he codified a long-observed phenomenon. Wits have suggested a fourth law: ‘No good deed goes unpunished.’

At the Lowy Institute’s recent conference, The Pacific Islands and the World, attendees witnessed two contrasting views of Vanuatu. The gathering, timed to coincide with the Pacific Forum, was attended by dignitaries from major global institutions as well as government leaders from throughout the region. It was billed as an opportunity to discuss the impact of the global economic crisis on vulnerable Pacific Island nations.

By all accounts, though, Vanuatu has been less affected than the global economic giants. Mid-year numbers do indicate a slight slow-down, but in real terms, our economy’s still growing fairly well. In a recently published briefing paper by the Pacific Institute of Public Policy, Nikunj Soni and the Australian National University’s professor Stephen Howes point to tourism and construction as the leading drivers of this growth.

But they are quick to note that the environment is as critical to this success as the actual business opportunities. One noteworthy chart clearly shows the rise in economic activity starting in 2003, about the same time as major budgetary and macro-economic reforms began to take hold in Vanuatu.

The briefing paper goes on to highlight the fact that none of this growth would have been possible without social stability. That may seem like so much common sense to some. Civil disturbance and political turmoil are seldom on a tourist’s must-see list. Likewise with home buyers.

But what brings this stability about?

What is it about Vanuatu that has allowed it to avoid civil strife like that which recently wracked the Solomon Islands? How, despite the incessant game of political musical chairs, do we still manage to avoid the coup/counter-coup culture that has beset Fiji since its independence? How do we avoid the overtly racist violence and rioting that have left the business communities in numerous PNG cities in a state of siege?

There are a hundred possible answers, all of them partial.

The most coherent interpretation of the source of Vanuatu’s stability was presented at the Lowy Conference by MP Ralph Regenvanu. His talk discussed the Custom Economy. “The traditional economy,” writes Regenvanu, “constitutes the political, economic and social foundation of contemporary Vanuatu society.”

Regenvanu goes on to observe that the one of the reasons urban dwellers have avoided hardship is precisely because their meager earnings are subsidised by traditional family networks that provide access to “food and other resources and… provide manual labour, child care and aged care, [as well as] dealing with their disputes in the traditional way.”

The traditional economy is innately conservative. It rewards egalitarian behaviour and benefits the community more than to the individual. Free market capitalism, on the other hand, rewards personal initiative and the accumulation of wealth and resources.

As a recent World Bank report observed, land sales – one of the drivers of our recent economic boom – are usually conducted on a context that leaves traditional land-owners at a distinct disadvantage.
It’s tempting to say that Vanuatu’s economy is eating its children. The very conditions that make growth possible are being undermined by the growth itself.

Newton’s fourth law in action.

The increasing – but certainly not intractable – tension that exists between the traditional and modern economies needs to be reconciled. Before that can happen, though, a great deal more research will be required.

The process of understanding will be a messy, decidedly un-scientific affair. While Vanuatu’s economic managers have made great strides in systematising their economic analysis, their tools and metrics just don’t translate usefully into the custom economy. While the movement of cash can ultimately be tracked as closely as time and resources allow, the same cannot reasonably be said about the often intangible inputs and outputs of the kastom economy.

It’s one thing to draw up a spreadsheet of VAT revenues per sector and use them to extrapolate domestic business activity. It’s another thing entirely to track the movement of mats and yams between families and to infer from them the potential for employment stability brought about by renewed alliances.

But the situation is far from hopeless. This year’s census data, combined with the results of the agriculture survey, will no doubt provide some valuable insight into land use and agricultural activity. This is turn can help us begin to quantify the phenomenon that MP Regenvanu has been describing for years now.

But we will almost certainly find that scientific analysis will only get us so far. We know that a tension exists between the modern and custom economies. We’re going to need something more than a few spreadsheets and graphs to learn how to diffuse the tension between them and allow each to exert appropriate amounts of inertia and momentum on the other.

Vanuatu’s policy makers have no choice but to weave science and kastom together, respecting the laws of both if they want to be able to ensure both prosperity and stability in Vanuatu.

A prominent US liberal blog recently ran a story, titled “So Go Already” that captured in a nutshell the deep resentment that many, Americans especially, are feeling toward those captains of enterprise who continued to receive massive payouts even as the financial service companies they guided were foundering in bankruptcy.

Reacting to a rather blithe and blinkered editorial on tax havens published by the right wing Washington Times, the article ranted, “If you don’t like paying taxes here on the millions you’ve made or that someone made for you, you’re free to take your shekels and move.”

Both Right and Left utterly miss the point.

These ill-informed rants paint tax havens as a place to hide one’s (possibly ill-gotten) riches. That might have been true in the past, but following the events of September 11, 2001, reporting requirements have changed significantly. New rules proposed at the recent G20 summit in London would make reporting requirements even more stringent than they are today.

Righteous anger felt by many hard working individuals toward financial managers who received multi-million dollar rewards for having failed so spectacularly at their job is venting in all directions. And now, some in Vanuatu feel they’re being made to pay for others’ sins.

Not so, says Nikunj Soni, Executive Director of the Pacific Institute of Public Policy (PiPP). While the Pacific region is home to 6 of the 38 formally declared tax havens in the world, not all of them will be affected by the proposed new reporting requirements mooted at the G20 summit.

The only nations facing significant sanctions are Malaysia, the Philippines and Costa Rica, members of the notorious OECD ‘Black List’ – tax haven countries that are subject to sanctions as a result of their non-compliance with international taxation and reporting standards.

A PiPP press statement notes, “the G20 communiqué does not seek to punish tax havens – only ‘non-cooperative jurisdictions’ – that is, only those countries on the black list.”

Vanuatu is not entirely out of the woods. As a member of the so-called Grey List of countries who have committed to international tax standards, but who have yet to conclude any bilateral tax treaties, Vanuatu would be subject to monitoring. Sanctions might eventually come into play if we don’t show willing when new reporting and information sharing requirements are put forth, but that’s not terribly likely.

When the pressure starts, Soni says, “it is in the industry’s interest to become more open about its activities.”

That should not present a problem. The point of tax havens is not money laundering, nor is it tax evasion. Some have tried to abuse the system for those purposes, and in fairness, lax standards did in the past make such abuse far easier than it should have been. But no longer.

The rationale for acting as a tax-free jurisdiction is simple: Given a lack of sustainable industry, a small economic base and few prospects for international trade, tax haven status is one of the few avenues available to countries like Vanuatu to attract foreign currency. By enticing money and people into the country, the government is able to derive income from import tariffs, license fees and other activities that don’t unduly burden either investors or ni-Vanuatu.

Some degree of visible, verifiable probity is required for such a role, and cooperation will no doubt be expected from neighbouring nations as they pursue individuals playing fast and loose with the rules. But this should not be cause for alarm. We don’t want people investing here who only see the rule of law as an encumbrance.

Nonetheless, we’re facing a strong, even unreasonable backlash, which is directing itself in part at some of the punier members of the international community. Great care, and large helpings of wit and diplomacy, will be required as we sit down with OECD member nations to discuss the issue.
On the one hand, we need to show willing in terms of information exchange, but on the other, we cannot afford to give away entirely one of our only means of attracting foreign investment.

The same week this news was announced, Vanuatu embarked on the opening movements of a multilateral dance between its Pacific neighbours and local economic heavyweights Australia and New Zealand. With our two largest donor partners leaning on us to reduce trade tariffs on the one side and the OECD on the other pressuring us to move into line on tax policy, Vanuatu cannot afford to assume that everything will be hunky-dory.

Says Soni, “If the industry is to get Pacific governments to support its cause on the international stage, it will need to demonstrate the contributions to economic growth, which in turn will require a degree of openness and trust.”

It’s a fine balance, but a manageable one, if all parties play nicely. A fair amount of cooperation will be required, and some of that may feel a little uncomfortable to financial management companies here. Foreign governments are going to be looking at them askance, and the people of Vanuatu cannot afford to sacrifice much for either side’s benefit.

At a public meeting recently held in Port Vila, Digicel Pacific General Counsel David Dillon estimated that Digicel and TVL combined have about 100,000 active mobile subscriptions in Vanuatu. If that number is correct – and I believe it is – it means that the number of subscriptions has increased by a stunning 400% in less than a year.

100,000. Let’s think about that for a second.

In the big cities of the world, selling 80,000 new subscriptions is a modest achievement. But here in Vanuatu, simply finding that many is a herculean feat. Extrapolating from the 2001 census numbers, we can estimate that there are roughly 55,000 people living in Port Vila and Santo today. Pick any reasonable percentage of people actually using mobile phone services, and it quickly becomes evident that reaching the reported subscription level requires pretty significant penetration into places that had never had mobile services before.

Digicel, TVL and the government of Vanuatu have achieved a truly remarkable thing. This is nothing short of a communications revolution.

Nobody doubts that the effect of opening the telecoms market is a fundamental transformation in the way Vanuatu society interacts. But it’s difficult to characterise the exact nature and scope of the impact.

It would be nice to quote statistical chapter and verse, but we don’t have enough publicly available information to do so.

Both Digicel and TVL have a policy of keeping their cards close to their chest. Says TVL Managing Director Ian Kyle, “I will have no comments to make on speculative metrics such as these. Of course, TVL has a solid understanding of the local GSM mobile market, including detailed analysis of traffic and yields.”

In an interview during a recent visit to Vanuatu, Digicel’s Dillon made a similar statement. He demonstrated to me how closely Digicel monitored its performance metrics, but declined to go into detail concerning actual numbers. Both he and Digicel Vanuatu CEO Tanya Menzies have asserted that such information is proprietary and needs to be guarded carefully for competitive reasons.

That’s a reasonable stance, on the face of it. It’s standard practice in any business to deny any competitive advantage to other players. But on consideration, the need to keep subscription numbers secret seems less compelling than it might appear at first blush. You see, when someone with a Digicel account calls someone on TVL (or vice versa), both companies have a record of the call. Given a sufficient call volume, it quickly becomes possible to get a very clear picture of how many subscribers the other guy has.

So the only ones they’re keeping these numbers from is the public.

More to the point, though, raw subscription numbers aren’t particularly useful when it comes to analysing business performance. TVL’s Kyle discounted their importance, stating that TVL “must focus on market revenue and maintaining healthy financial [indicators] rather than the more simple act of chasing customer numbers. Money is the metric which drives the machine and in that commercial reality, TVL continues to achieve significant success.”

Both TVL and Digicel have gone on the record with subscription numbers when it suited them. Some months before Digicel’s initial rollout in Vanuatu, TVL stated publicly that they had about 20,000 subscriptions. At last month’s meeting in Vanuatu, Dillon offered the estimated total of 100,000 active accounts for both services. These numbers appear to be roughly accurate.

More interestingly, Digicel Pacific’s CEO Vanessa Slowey told Islands Business magazine in October last year that Digicel controlled 70% of Vanuatu’s mobile market.

So what do these numbers really mean?

First off, 100,000 subscriptions does not mean that 100,000 people are using mobile services. It only means that 100,000 subscriptions are in use right now. Some people have multiple active subscriptions (I have 3 myself).

A survey of social effects of mobile market liberalisation by the Pacific Institute of Public Policy (PiPP) includes a finding that many people keep two SIM cards on hand, using their TVL card to call other TVL subscribers, and a Digicel card for friends and family on the Digicel service. Preferential pricing for callers on the same network, coupled with an aggressively low cost of subscription, leads people to double up.

So how many people are using mobile phone services in Vanuatu? And more importantly, what are the effects of such a massive increase in less than a year? Analysts agree that it’s hard to speak in anything other than generalities right at the moment.

The PiPP survey was a baseline study. While it provides important insights into usage habits, it’s a snapshot taken within weeks of Digicel’s Vanuatu rollout. Things have almost certainly changed since then.

The number of households surveyed is what analysts call statistically significant, meaning that we can draw some conclusions about the general population based on the numbers contained in the report. But the survey is too limited in geographical terms to allow us to make broad assertions concerning demographics, such as the relative number of men, women, youth and adults using mobile phone services, how much each of them are spending, and how they’re using them.

Even with the limited data this initial independent study provides, it is possible to make some observations. PiPP Communications Director Derek Brien states, “in order to capitalise on the benefits of improved access to telecommunications, policy makers and the private sector need to consider options for addressing affordability, improving complimentary infrastructure, reducing gender inequalities and facilitating the transfer of resources to the rural areas.”

There is, in other words, a clear need to supplement the commendable work that the government and private sector have accomplished so far. But in order to do that, we need good data to work with. Says Brien, “Policy decisions need to be evidence based and this is why it will be an important part of PiPP’s 2009 activities to update this research in order to build on the initial findings and examine the developments in access and use.”

The draft telecoms legislation covering the role of the Regulator gives him some latitude to request information from the two telcos. While some of the data contained in these reports must necessarily – and rightly – remain confidential, it is hoped that enough will be made public that we can better understand the effects of this communications revolution on Vanuatu society.

Next year, we should have the first results of this year’s upcoming census. These too will be crucial in helping us better understand the shape and nature of Vanuatu society. More importantly, they will give us better information to extrapolate from, making our projections for future development more reliable.

A single tidbit of information is nice to have, and useful, too. But when we can plot numerous points on a graph, we can begin discussing trends. And trend analysis is critical when we’re trying to understand long-running processes like the spread of communications throughout the islands.

It’s clear that Vanuatu is undergoing a historic change where communications are concerned. Our next steps will depend largely on how we understand the effects of our actions. Everyone in Vanuatu is best served by an environment of equal and open access to information. Let’s all continue to work together to make this happen.

It won’t come as news to anybody if I say that family is strong in Vanuatu. We’ve known it all along. But with the upcoming release of a new report on telecommunications liberalisation, we will see its influence illustrated in vivid terms.

The Pacific Institute of Public Policy (PiPP) will soon be releasing a report measuring the social impacts of telecoms liberalisation in Vanuatu. One of the main findings is that, in the months following the extension of mobile telephone service to the majority of Vanuatu’s population, families benefited more than businesses in terms of changed perceptions and real outputs.

We’ve suspected this for a while. In June of this year, I presented a talk to regional telecommunications providers. Titled ‘Network Effects: Social Significance of Mobile Communications in Vanuatu‘, it explains Network Effects and how they manifest themselves in village life, then looks at some obvious and not-so-obvious implications for network providers in the Pacific.

Briefly, my point is that village life features very tight communication loops from which no one is exempt. The one-to-one aspects of village communications are enhanced by mobile communications, and smart network operators should do what they can to enhance this effect. The result is that our island geography (and gestalt) creates more value per user than traditional business analysis might lead us to believe.

I based this point on three things: anecdotal data gathered from the VIGNET technical mailing list, my own personal and professional experience and a survey conducted in 2004 by the People First Network (PFNET) in the Solomon Islands. The PFNET survey showed that about two thirds of the email traffic generated by their 20+ rural email stations was family-related.

It seemed reasonable to believe that this same phenomenon would make itself visible in Vanuatu with regards to mobile telephone use. PFNET’s email stations are located in some of the most remote areas of the Solomons, and in most cases represent the only affordable communication media in their respective areas.

The PiPP report validates this. It goes further, though, and shows that mobile telephony has even exceeded public telephone usage in places where it’s available. One interesting datum is that people spend more on mobile telephones now than they used to on public telephones.

One of the questions that came up regularly when I asked for feedback on my talk was how people would be able to afford mobile services. Given that 5000 vatu (about USD 50) per month is not an unusual family income in the village, even topping up with 200 vatu credit (currently the smallest increment available) would be a burden, would it not? The answer is yes and no.

There’s an interesting relationship between commodity prices and agricultural production here in Vanuatu. When the price of commodities like coffee, copra and cacao rises, production actually decreases rather than increasing. The reason for this is that the need for cash in rural areas is quite limited. Once a villager earns enough to pay school fees, clothing and a few staples, there’s no more need to sell their crop. So when they can earn the same amount of money for less effort, they do so.

This is one of the factors leading to a kind of economic insulation for the average ni-Vanuatu. The bottom line is that the cash economy remains small in rural Vanuatu because the cash economy is only a small part of the whole picture.

When mobile communications are introduced, the perceived need for cash increases. In the short term, this puts stress on the pocket book, but things can probably work themselves out through a nominal increase in the amount of cash being generated (e.g. through cash crops). Add to this the increased efficiencies that come hand in hand with better communications, and we’ll likely see more prosperity and economic activity – in cash terms – than less.

In other words, this is not a zero sum game.

That detail is still lost in many traditional planning processes. In fact, ignorance of this dynamic is a bigger inhibitor to growth than many other external factors. If people can’t forecast capacity properly, their estimates come out consistently low, and because products and services don’t meet the need, they don’t have the effect they’re intended to, so people don’t invest in them.

The PiPP Telecoms report validates this important point, and illustrates in some detail the ways that family livelihoods benefit from improved communications:

“The research findings demonstrate that households in Vanuatu are ‘stretched’ between rural areas and urban areas and increasingly between rural areas and overseas. Migration is becoming an essential component of household livelihoods in rural areas. Telecommunication liberalisation and greater access to telecommunication services is playing a critical role in ‘managing distance’ between rural and urban households, and facilitating the redistribution of resources to rural households.”

It’s critical that this point be taken on board by planners and policy makers as we continue the process of liberalising the telecommunications market. Very often, private sector-driven initiatives like this tend to be driven by business-oriented approaches, and their success measured using finite metrics like increased GDP.

There’s no doubt that improved access to mobile telephone services has had a beneficial effect on the bottom line. We need look no further than PiPP’s finding that people are spending more on communications now than they did before. And it’s important as well to note that, while telephone services are beneficial to business in and of themselves, one of the reasons we didn’t see a bigger impact on business activity is because of the lack of complementary infrastructure, like roads, shipping and electricity.

So there’s an argument to be made that basic infrastructure needs to improve in order for the full benefits of mobile telephony to be realised by business. Some of that is already underway, with the MCA project building airstrips, roads and wharves across the nation.

Work has already begun on rural electrification, but the problem is a difficult one, and will take time to address in a comprehensive manner. The lack of electricity has curtailed mobile uptake in some rural areas. Respondents reported that they spent more money on charging their phones that they did actually making calls.

There’s a great deal more we can do to enhance the social value of communications in Vanuatu. Rather than wait for rural electrification to catch up, we could help people use their phones more efficiently. For example, PiPP notes that relatively few rural users know how to send a text message. This means that they’re spending more per communication, and using more battery life as well. An advertising and awareness campaign that took advantage of informal family and village networks could prove effective and beneficial.

PiPP’s report on the social effects of telecommunications liberalisation is an invaluable resource. It provides a useful snapshot of the effects of telecommunications in the first months following the service roll-out.

We can’t allow this report to be a one-off effort. By supplementing it with ongoing and/or periodic updates, we can develop a deep, nuanced understanding of this integral part of the nation’s development.

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.

On Monday, the Pacific Institute of Public Policy officially launched ‘The political parties and groupings of Vanuatu’. The 60-page booklet is a treasure trove of information about Vanuatu’s political past and present. It lists the major political parties along with a brief history, key membership and policies. Already, there are over 500 Bislama copies in circulation. This number is expected to double before the election.

Chiefs, government representatives and members of civil society all voiced their support for the report. Without simple, reliable information like this, voters rely on intuition and (often hollow) promises to choose a candidate. Prior to this, the task of sifting the wheat from the rhetorical chaff was near impossible.

Rebecca Olul, manager of Save the Children’s Youth Outreach project, shared some lively and nuanced insights with the audience at Monday’s presentation. Her short speech cast a jaundiced eye on the vague blandishments that sometimes pass for policy. Without resorting to rank cynicism, she encouraged readers of the report to carefully weigh their candidates’ words and actions.

The 25 year old knows the challenges facing young people today, the competing tensions between Vila and village, kastom and 21st Century culture. She combines 6 years of living and learning overseas with the intimate understanding of life in the islands that only those born into it can possess.

Vanuatu society is among the rapidly diminishing number that still guarantee their members a place and a purpose in life. Traditional life is clearly delineated – not to say boring – in almost every way. Family ties, rank and gender define every aspect of one’s existence. If you are an adult male in a family in good standing, life is very good indeed. But the situation degrades from there.

Young people in Vanuatu are mostly expected to listen, not talk. Young women especially. They learn early on to avoid drawing attention to themselves. For most of them, they only ever receive the wrong kind. Village affairs, they’re taught, are best left to those in charge. If they do have some useful skill, they’ll be told how and when to use it. Advice and opinion find their only outlet in kitchen gossip.

Options for young men are not much broader. Though some, especially those with rank, are sometimes used as pawns or knights in village affairs, most of the time they’re little more than muscle, performing public chores and supporting the family.

This state of affairs exists for a reason. Kastom is a fluid formula for peaceful coexistence that’s been innovated, tried, tested continuously over the course of 3000 years. But it exists for the benefit of the community, not the individual. Tension arise, therefore, when it butts up against Enlightenment concepts of individual rights, equality and natural justice.

So what happens when a young, educated woman stands up in the nakamal and starts asking questions? Right now, the idea is inconceivable to most, both young and old. Many youth today create a space for themselves by leaving the village and kastom behind. They are disengaged, disinterested, adrift in the gulf between Western culture and their own. In some cases, they’re more inspired by the liberation philosophy of Rastafarianism or the materialistic yearnings of rap and hip-hop than they are by their own leaders.

Olul’s work tries to reconcile these competing cultural influences, to replace some of the adversarial thinking so common in Western culture with the spirit of accommodation and compromise integral to kastom. She cites Chief Selwyn Aru of the Malvatumauri Council of Chiefs. He accepts that the disparities between kastom and basic human rights need to be reconciled, But he is quick to note that work must proceed carefully:

The best way to get breadfruit, he observes, is neither to cut down the tree nor to throw stones in the hope that some of the fallen fruit will be ripe. A bamboo pole should be used to cull only those fruit which are ripe and ready. That way, more of the fruit can be shared by more people.

Asked how change can be usefully achieved, Olul demurs somewhat. There is no party, no movement that can empower youth without directly challenging authority and provoking conflict. Comprehensive change must be achieved in increments. Individuals need to educate and inform themselves, and look for levers to change perspectives bit by bit in their individual milieu.

She looks to a new generation of independent political actors to advocate intelligently, without cynicism or self-interest.

PiPP’s Political Parties book gives people the information they need to assess their candidate. It won’t immediately stop family- and village-based block voting in exchange for gifts. But it will at least make it clear just how ripe this fruit is that the community is dining on.

Young ni-Vanuatu are told to wait their turn, to know their place. The incremental change espoused by Olul and others just might be enough to build a sense of enfranchisement within the community. Our youth need to see a place for themselves in achieving change, and to know that the time to start is now.

The report is the first of a series of annual surveys that will provide an overview and update of economic developments in the Pacific island region and Timor-Leste. It collates and summarises public data on various aspects of the region’s national economies, performs some comparative and collective analysis with the results, then provides a few basic recommendations.

The theme for this year’s report was Connectivity. The survey focuses on aviation, shipping and telecommunications. It argues that liberalisation, more input from the private sector, and a cooperative regional approach to the problems inherent in improving connectivity are keys to improving Pacific economies.

The findings in the area of telecommunications do much to validate the Government of Vanuatu’s market liberalisation strategy and provide every encouragement to expand upon them. It addresses some potential pitfalls that might be encountered, primarily where access to technical expertise is concerned. And that is where it risks missing the boat.

First, let’s take a look at some of the findings.

“Competition has led to explosive mobile phone growth and lower prices,” states the report. The extent of this truth should prove very encouraging for people in Vanuatu, poised as we are to start tasting the fruits of market liberalisation.

In Samoa, only 1.5 per cent of the population had mobile phones in 2002; by mid-2007, this had increased to 46 per cent. During the same period in Tonga, competition increased mobile phone ownership from 3.4 per cent to 30 per cent. In PNG, the introduction of competition in mid-2007 led to a sharp increase in coverage and a doubling of mobile phone subscribers in a short period.

None of this is terribly surprising, of course, but it’s nice to see our sense of the situation validated. It’s especially encouraging to note the explosive growth rate in access to communications. In just a few short years, for example, nearly half of all Samoans have subscribed to mobile services.

The effects of this fundamental improvement in communications are transformative, to say the least. Papua New Guinea estimates that telecommunications liberalisation and the resulting benefits have already added nearly one percent to GDP growth. Arguably, the impact of such radical change on Vanuatu’s smaller economy might be even bigger. There is no doubt, however, that it will increase commercial activity in the islands. In some cases, it will make it possible for the first time in modern history.

Prices also tend to drop the most in liberalised telecoms markets. Currently, Vanuatu stands in third-to-last place where prices are concerned. Only the Solomon Islands and Telikom in PNG are more dear. In fairness, customers in PNG are free to use Digicel, which in 2007 charged about 35 vatu to Telikom’s 55.

Prices have fallen elsewhere when competition was introduced. But they haven’t fallen hugely in every case. In PNG, Digicel rates aren’t significantly less than we’re paying now to Telecom Vanuatu. While there’s every reason to believe that Digicel will charge less than we’re currently paying, we shouldn’t necessarily expect rates to plummet.

The report states, “Access to the Internet in the Pacific is increasing, albeit from a very low base. It remains limited outside capital cities [and] the majority of subscribers are institutional….” Vanuatu fares moderately well, relative to the rest of the countries in the study. It’s firmly in the middle of the pack where coverage and prices are concerned.

But that’s no compliment. Of all the Pacific nations, only tiny Palau has extended Internet access to more than 25% of its people. In Vanuatu, coverage is said to have reached about 10% of the population. Personal and anecdotal experience suggest that this might be a generous interpretation of data, and that the number of people who use the Internet on a consistent and active basis could be much lower.

The effect of market liberalisation on Internet prices is startling. In Fiji, personal broadband Internet is available for as low as 2000 vatu per month. Business class connections cost about 25% of what we pay here in Vanuatu. Even allowing for differences in population and economic activity, the contrast is stark.

The road to a liberalised telecoms market in Vanuatu has been a long one, and there’s a lot of ground to cover yet. Of the six major service areas available for liberalisation, only one has been opened so far. There’s been no visible motion so far on broadband and dial-up Internet, fixed-line telephone service, leased lines or international gateway services.

Vanuatu should absolutely not open the market pell-mell and all at once, of course. The pace at which the process has moved is a sober and reasonable – albeit frustrating – reflection of Vanuatu’s capacity to manage change.

To its credit, the Economic Survey recognises the reality of limited technical capacity, and provides some prescriptive relief. It rightly observes that market reform needs a watchdog to oversee the process and to arbitrate, if necessary, when disagreements arise. The benefits of such a process, even for tiny markets like Palau, are significant.

The survey authors further suggest that competition is the key to coverage:

New entrepreneurs tend to bring in additional capital and management resources and are often smaller and nimbler than incumbents—faster to adopt new, lower-cost technologies, more focused on customer needs and marketing, better attuned to local conditions and business opportunities, and better able to assess and deal with local risks.

This assertion, however is quickly hedged by the claim that government subsidies may be required in order for market entrants to justify services. Governments should be prepared to provide funds and incentives to telecoms companies to ensure the widest possible coverage area. Vanuatu’s Universal Service Fund, which makes millions of dollars available to improve coverage, is listed as an example.

Another important element of universal access is affordablility:

The more sustainable public-access approaches have proven to be subsidised village-phone-type initiatives where business risk is taken by the self-employed agent, rather than publicly-funded telecentre programs, where business risks are left with government.

‘Village phone’ projects have been rolled out in numerous countries. They typically involve providing a local person of proven acumen with one or more mobile phones, a signal repeater to reach areas that were previously un-serviced, and allowing them to pocket part of the charges for each call.

This micro-business approach ensures coverage in places of marginal profitability. Interestingly, network effects guarantee that the benefit to the phone company is well beyond whatever paltry income derives to the agent. Family in the capital will certainly originate most of the calls, meaning that they end up spending more than they would have on mobile services.

The Daily Post has observed that the survey lists Vanuatu as one of the healthiest economies in the region. But some commentators have cautioned that this relatively robust state of affairs could lead to complacency, which in turn could lead to poor management practices from which we all could suffer. We’ve seen this pattern in the past, where lax management processes have led to near disaster.

Technical experience and expertise is a particular liability in this regard. Australia’s response to this is to suggest the creation of a regional ‘pot’ of technical expertise, and to encourage all Pacific nations to work cooperatively, sharing learning and ideas.

The idea has some merit. It will almost certainly be necessary to create something like this for the short term at least. But it misses an important point: All the technical expertise in the world won’t save you if it’s not communicated effectively and fit properly to the individual circumstances of each individual nation.

The recommendation, in other words, does nothing to mitigate the need for the kind of human resource development outlined in this column recently. More about this next week.