Markets, Monopoly, Mobile & Morals:Small Island Developing States

Case Studies

Michael.Minges@itu.intOpinions expressed may not reflect the views of the

International Telecommunication Union or its members

Pacific Telecommunications Council11-14 January 2004Honolulu, Hawaii USA

Small Island Developing States (SIDS) & Telecoms

“The vulnerability of SIDS are also non-natural, economic and external in nature. These are compounded by economic constraints, such as small domestic markets with small natural and human resource bases, resulting in lack of economies of scale, competitiveness, diversification and hence investment opportunities.” — Minister for Foreign Affairs & International Trade, Saint Lucia Moral: Conventional wisdom that has been rarely tested

Percentage of countriesSIDS < 1.2 million population

2003 ITU Case StudiesOne island state from each region

Oceania:Fiji

Asia:Maldives

Africa:Mauritius

Americas:St. Lucia

Demographics - 2002

38% urban; 1 island3’840620159’133St. Lucia

42% urban; 97% of population on main island

3’8502’0401'210'485 Mauritius

1’190 coral islands; 199 inhabited; 30% of population live in capital

2’090300280'549 Maldives

51% urban. Over 300 islands; around 100 are inhabited. Almost 80 percent of population lives on two main islands.

2’16018’270819'600Fiji

NoteGNI per capita US$

Land area

(km2)

Population

Market environment - 2002

2 new mobile licenses issued

2001• C&W (100%)St. Lucia

Numerous licenses being issued

2003(mobile opened earlier)

• MT (40% France Telecom)

• Emtel

Mauritius

Regulator created in 2004

2009 (fixed). 2nd ISP in 2003 and 2nd mobile in 2004.

• Dhiraagu(45% C&W)

Maldives

Monopoly in each market segment

2014 (mobile subject to interpretation)

• Telecom Fiji• FINTEL (49%

C&W)• Vodafone (49%

Vodafone UK)

Fiji

NoteExclusivity untilOperator(s)

Mobile markets• Coverage: % of population

that can receive signal• Penetration: % of

population that are actually subscribing

• Effective penetration: % of population that subscribe adjusted for coverage

• End 2002: All except Mauritius with one operator

• Bottlenecks: Coverage (Maldives & Fiji), Pricing (St. Lucia), Regulatory (Mauritius (RPP))

• Moral: Coverage important

Mauritius missed opportunityTelephone subscribers per 100 inhabitants

May ’89:Emtel

launches first mobile

network in Southern

Hemisphere.Receiving

Party Pays.

Mar ’96:Cellplus enters market

Nov. ’99:Prepaid

launched

Moral: Competition without regulatory oversight does not always deliverexpected benefits

MaldivesMobile subscribers per 100 inhabitants

1997: Analogue

mobile launched

1999:Conversion

to GSM 2001:Prepaid

launched

Moral: Monopoly can generate high growth when aligned with government objectives

FijiTelephone subscribers per 100 inhabitants

1994:GSM

launched

1999:Prepaid

launched

Moral: Right technology alone not sufficient

St. Lucia’s mobile history

1992: Analogue

AMPS launched as Boatphone.

Primarily aimed at

marine market. Receiving Party Pays

(RPP).

1995: 300 land

clients & 2 cell

sites

1999: Prepaid &

digital TDMA

launched. 17 cell sites.

2002:CPP & SMS introduced. 2 new licenses

awarded. C&W begins to subsidize

handsets and other

promotions. 27 cell sites

2003: Digicel &

AT&T enter with

GSM. C&W

launches GSM.

All launch GPRS.

Telephone subscribers per 100 inhabitants

Moral: 2 is good, but 3 even better!

St. Lucia mobile scene

ECTEL• East Caribbean

Telecommunication Authority (ECTEL)

• Regional “regulator”• Negotiate on behalf of member

countries• Achieved early termination of

C&W monopoly• Facilitated mobile competition

through regional licensing• Moral: A regional telecom

authority can have more impact on negotiations with incumbents and attracting investment than a single small country

Regional synergy, fibre cable• Digicel (St. Lucia) runs

roaming operations from Jamaica

• C&W (St. Lucia) runs Internet gateway from Antigua

• Vodafone (Fiji) runs billing from Australia

• Moral: Small market more attractive if investor has other operations in region and linked by fibre optic

Years after launchMobile subscribers per 100 inhabitants

Moral: Act sooner to create pro-growth environment.

Tourism & telecoms• Tourism major industry• Makes telecom more attractive

because creates larger ‘virtual’ market

• Roaming growing source of revenue. Roamers pay much more.

• Roaming agreements:o Mauritius: 236 operators, 104

countrieso Maldives: 95 operators, 50

countrieso Fiji: 73 operatorso St. Lucia: 68 operatorsMoral: Factor tourism into telecoms.

Mobile technology• 2.5 / 3G important for

data applications• MMS postcards could

turn into major tourist application

• WiFi also relevant• Moral: Keep up with

technology

Summary• St. Lucia dramatically shows impact of mobile

competition, particularly entry of 3rd operator• Mauritius has lost its early lead in mobile due to

competitive constraints, inability to keep up with technology and RPP

• Maldives proves exception to rule with reasonable penetration & coverage despite monopoly and difficult geographical situation

• Fiji has done less well: Low coverage and penetration; high tariffs

• Moral: Align telecom goals with national goals

Message for incumbents

• Justification for monopoly harder and harder to defend; better to get on board now

• Technology evolution important for protecting market share

• Market is bigger than thought; incumbent benefits from advertising and interconnection

• Cooperate regionally with concrete objectives (e.g., fibre optic cable)

Further research

• Tourism and telecoms• Competition impact• Data applications• Impact of regional approach

Digital Access Index (DAI)

Complete case studies for Fiji, Maldives, Mauritius & St. Lucia to be available at: http://www.itu.int/ITU-D/ict/cs