2010 Pacific Island mobile market update
mobile services remain unaffordable in some of the Pacific Island countries, in particular Solomon Islands, Papua New Guinea and Kiribati, which could be constraining consumer take-up.
Want to know more about this topic? Contact the author Nina Matthews
See our updated analysis of the rates as at March 2012.
A year on from our last comparison of mobile tariffs in Pacific Island countries we are updating the analysis once again to see what has changed. Since our previous update in June 2009 the only change in the status of competition in our sample countries the Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Palau, Papua New Guinea, the Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga and Vanuatu has occurred in the Solomon Islands, with the launch of B-Mobile at the beginning of September 2010. We have not included prices from this new operator in our analysis, however, due to lack of data.
We have compared mobile tariffs in the countries by calculating the average monthly spend for low, medium and heavy usage customers, based on the OECD 2006 basket usages. We have also measured the affordability of mobile services in the Pacific Island countries, calculated as the average monthly spend on mobile services for each usage level as a percentage of the average monthly income (calculated as the GDP per capita divided by 12).
In line with the lack of change in competition status in the sample countries, there have been very few changes in mobile tariffs over the past year, with only Telecom Cook Islands, Digicel Vanuatu, Digicel Fiji, and Digicel Papua New Guinea showing reduced prices.
The cheapest plans for each operator, and the resulting monthly spend for a low volume user (one who makes 30 calls and sends 33 text messages per month), are illustrated in Exhibit 1. The monopoly operators in the Marshall Islands and the Cook Islands still have the highest monthly spend for a low volume user, even with the reduction in prices in the Cook Islands. The only other changes for monthly spend of a low volume user occurred in Vanuatu and Fiji, where in both cases the previously more expensive operator has reduced their prices such that the monthly spend for a low volume user is now slightly lower than that of the other operator.
Similarly the monthly spend for a high volume user (someone who makes 140 calls and sends 55 text messages per month) is illustrated in Exhibit 2. The only changes in the monthly tariffs for a high volume user are Telecom Cook Islands offering reduced prices, and for the cheaper operator in Papua New Guinea and the more expensive operator in Vanuatu to have reduced their prices.
We have also updated the calculation of mobile affordability in the sample countries. To measure this we determined what percentage of average monthly income is taken up by the different levels of monthly spend (Exhibit 3). In general the affordability figures have shown some improvement over the past year, but this is primarily due to increases in the monthly income proxy with more recent GDP data now available.
For a low volume user, in most countries the monthly spend represents less than 10% of monthly income, with the highest spend being 19.2% in Papua New Guinea and the lowest being 2.4% in Palau. For medium volume users, the monthly spend represents less than 15% of income for most countries, although this rises to 46% in Papua New Guinea. The percentage of average monthly income spent on mobile usage for a high level user ranges from 7.6% in Palau, to 92.1% in Papua New Guinea, with the majority of countries requiring less than 20%.
|Federated States of Micronesia||3.7%||7.2%||14.6%|
|Papua New Guinea||19.2%||46.0%||92.1%|
|Republic of the Marshall Islands||11.6%||14.0%||19.9%|
The monthly spend as a percentage of income suggests that mobile services remain unaffordable in some of the Pacific Island countries, in particular Solomon Islands, Papua New Guinea and Kiribati, which could be constraining consumer take-up. Exhibit 4 illustrates mobile penetration compared to the monthly spend as a percentage of income for a low volume user. Mobile penetration varies widely in the countries studied, ranging from less than 2% for the Marshall Islands, up to 84% for Samoa. In general, the countries with a relatively high monthly spend on mobile services as a percentage of income have the lowest penetration rates. In comparison, the countries where the monthly spend as a percentage of income is 5% or less for a low volume user all have penetration rates of over 30%. This same pattern is shown for medium and high volume users.
Over the past year there has been some expansion of mobile coverage in Papua New Guinea and the Solomon Islands. Nonetheless coverage remains limited in several Pacific Island countries:
- Cook Islands: coverage is provided to Rarotonga, Aitutaki and Mangaia islands.
- Federated States of Micronesia: coverage is provided to town areas of Kosrae, Pohnpei, Yap and Chuuk islands. Note: higher charges apply for calls between states.
- Fiji: both Vodafone and Digicel provide coverage to the coastal areas of the two main islands (Viti Levu and Vanua Levu), as well as most of the inner islands. There is also some coverage on Kadavu Island.
- Kiribati: coverage is provided to South Tarawa, Kiritimati Island and some parts of North Tarawa.
- Palau: Palau Mobile provides coverage to the main populated areas of Babeldoab Island and the state of Koror. PNCC provides coverage throughout Palau.
- Papua New Guinea: Pacific Mobile provides coverage to Wewak, Madang, Mt Hagen, Goroka, Lae and Port Moresby. Digicel currently provides coverage to Port Moresby and the provinces of Central, Morobe, Madang, Chimbu, Eastern Highlands, Western Highlands, Milne Bay, East New Britain, New Ireland, Western and the autonomous region of Bougainville. Coverage is also provided by Digicel in parts of East Sepik, Sandaun, Manus, Enga, West New Britain and Southern Highlands. Digicel plans to extend coverage to include Ora and Gulf provinces.
- Republic of the Marshall Islands: coverage is provided to Majuro, Jaluit, Kili, Rongelap and Wotje.
- Samoa: Digicel provides service to the coastal regions of the two main islands (Savaii and Upolu), covering at least 80% of the population. Samoatel does not give details of its coverage on its website.
- Solomon Islands: coverage is provided to several regions in the Western, Choiseul, Malaita, Isabel and Guadalcanal Provinces.
- Tonga: both Digicel and TCC provide coverage to Tongatapu, and areas of the island groups of Eua, Vavau and Haapai. Note: higher charges apply for calls to outer islands.
- Vanuatu: Telecom Vanuatu provides coverage to areas in Santo, Ambae, Maewo, Malekula and Efate islands. Digicel provides coverage to areas in Santo, Malekula, Ambae, Maewo, Pentecost, Ambrym, Epi, Efate, Erromango and Tanna.
Notes for analysis of monthly spend:
- Prices include GST (at the rate relevant to that country) and are in US dollars.
- All prices were converted to US dollars using 2008 Purchasing Power Parity (PPP) rates sourced from the World Bank, where available, with the remaining PPP rates sourced from the World Health Organisation. Note that the July 2009 prices given in the graphs have been updated using these newer PPP rates.
- All plans were current as at 23 August 2010.
- The prices for each operator represent the plan resulting in the lowest monthly spend.
- OECD mobile baskets of usage were sourced from the report: Revised OECD Telecommunications Price Comparison Methodology, July 2006.
- GDP per capita data were sourced from the World Bank for 2008.
- Mobile subscriber numbers were sourced from the ITU for 2009.
Copyright © 2010 Network Strategies Limited