Pacific Connectivity Study - UN-OHRLLS documents/Pacific Connectivity... · •On-going submarine cable projects ... Tonga Samoa Timor Leste Hawaii New ... Landing station cost including

Pacific Connectivity StudyFinal report conclusions

October 15th 2008

Polyconseil

PITA conference - Sydney

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World Bank overview

15/10/2008 Polyconseil - Confidentiel 2


The World Bank Group

Global development institution, founded 1944. 185 member

countries (all shareholders)

Mission statement: “our dream is a world

free of poverty”

“World Bank Group”

• International Bank for Reconstruction & Development/International Development Association: Governments

• International Finance Corporation: Private Sector

• Multilateral Investment & Guarantee Agency



The World Bank & ICT

Global ICT Department—Policy

Division

Active in 80+ countries worldwide in the following areas:

• ICT infrastructure (telecoms),

• ICT applications and e-Government

• IT-enabled services

In response to Government

demand, through formal requests for

assistance, via Ministry of Finance

in case of loans



Project methodology



Objectives of the assignment

Increaseconnectivity

Lowerconnectivity

costs

Promote ICT &

Information Society


“Regional telecoms backbone network or sub-regional networksDetailed technical and institutional assessment, and implementation

options study”

Technical assessment and review of design options

Economic/financial analysis and cost modeling

Legal/institutional and enabling regulatory

environment assessment


Timing of the assignment


April

• Mission launch

• PITA meeting in Palau

May-August

• In-country visits (7 countries)

• PITA meeting in Brisbane

• Draft final report

September - October

• Final report

• PITA meeting in Sydney


Country meeting survey

• International links

•Local backbone infrastructure

•Local access networks

Telecoms infrastructure

•Subscribers per telecoms service type

•Traffic per telecoms service type

•Capacity used on international links

Demand and traffic flows

•Ownership, governance, financing and operations

•Telecoms regulations

•Competitive telecoms landscape

Regulatory frameworks


Operators

Regulators


Data collection

• Current country demand

• Economic situation and prospective

• Existing backboneinfrastructures and ongoing projects

• Regulatory issues

Technical and economic model

• Demand forecast per country

• Possible network scenarios for eachcountry and at a regional level

• Business plan of eachrealistic network scenario

Opportunity analysisfor each country

• SWOT analysis of several network scenarios for eachcountry :

• Technicalassessment

• Economic impact

• Legal / institutionalissues

Steps of the study


1 2 3


Content of the report

•Country context (section 2)

•Market/traffic analysis (section 3)

Country situation and market analysis

•Terrestrial versus satellite (section 4)

•Existing infrastructure (section 5)

•On-going submarine cable projects (section 6)

•Alternative backbone configurations (section 7)

Alternative solutions for Pacific Island countries

•Analytical basis for a business case (section 8)

•Country scenario analysis (section 9)

•Case for a regional project (section 10)

•Legal/regulatory recommendations (section 11)

Business case



Country situation and marketanalysis



A geography challenge

Population heterogeneity (2k in Niue, 6.3M in

PNG)

Long distances (>500km)

All countries are not equal


FS Micronesia

French Polynesia

Niue

Cook isd

PNG

Palau

Marshall Isd

Solomon Isd

Kiribati

Vanuatu

Fiji

Tonga

Samoa

Timor Leste

Hawaii

New Zealand

Wallis & Futuna

1100 km

600 km 1150 km

650 km 550 km

1500km

2800km

750km

2250km

2850km

850 km

2700 km

2100 km

1900 km

1850 km

2100 km

1400 km

1650 km

1650 km

1750 km

1450 km

700 km

2250 km

1300 km

1600 km

600 km

3200 km

1300 km

2100 km

2000 km

2400 km 1150 km

750 km

4200 km

1300 km

2100 km

4100 km

900 km


A regulatory challenge


Increasingcompetition in

Internet Service and Wireless

But Int. Gateway de facto monopoly in

all countries

High monopolyprices might slow down the market

International

gatewayInternet Service Wireless telephony

Fixed lines and

telephonyLeased lines

Samoa

M C

Samoatel and Digicel

both have a satellite

June 2009: exclusivity

removed and market will

be fully opened.

C

3 ISP

C

Samoatel (Go Mobile) &

Digicel

M

SamoaTel

M

SamoaTel

Tonga

M

TCC, but Digicel can buy

satellite bandwidth for

its own needs

C

TCC, Digicel

C

TCC, Digicel

M

TCCC

FijiM

Fintel, but TFL & Digicel

have their own satellite

C

Connect, Unwired and

Kidanet

MC

Vodafone, and soon

Digicel

MC

TFL, but Fintel has some

customers

MC

TFL, but Fintel has some

customers

Vanuatu

M

TVL

but Digicel can answer

its own needs

M

TVL

C

TVL & DIGICEL

M

TVL

Until 2012

M

TVL

Until 2012

Solomon Islands

PNG

M

PNG Telikom

Digicel is to stop using its

own satellite

C

Tiare (Telikom), Daltron,

Datec, Global

Technology, Datanets

C

PNG Telikom, Digicel

M


M


Timor-Leste M C

Kiribati

Marshall Islands

FS Micronesia

Palau M (PNCC)

M (FSMTC)

M

Our Telecom until 2018

M (TSKL)

M (MITA)

M (Timor Telecom)


Current country demand for international bandwidth

• In-country data for visited countries, ITU data for others

• Reconciled with data on Population, Penetration, Usage per user, contention / compression

• Simplex to Duplex conversion


Strong demandheterogeneity


Country bandwidth forecast(17 Pacific Islands)

Three scenarios for bandwidth forecast

• Low, Medium, High

• Based on Population, Penetration, Usage per user forecast scenarios


1.5 Gbps today

4.5 to 21.5 Gbps in 10 years


Trans-pacific traffic

High capacity and strong growth

• 17 Tbps installed capacity

• Australia-US above 3 Tbps

• Growth above 50%

Declining prices (ie. Southern Cross)

• 160US$ 20US$ per Mbps per month for Australia-US

• On-going process

Fiji: a potential backhauling point

• 5MUS$ for an STM-4 IRU over 12 years

• 75US$ / Mbps / month


Southern Cross public price list


Alternative solutions for Pacific Island countries



Submarine cable vs. Satellite


High bandwidth Medium bandwidth Low bandwidth

Fiji, PNG, French Polynesia and New Caledonia

•Submarine cable is more cost effective in all demand scenarios

Timor-Leste, Samoa, Solomon Islands, Vanuatu, Tonga, and

American Samoa

•Satellite is still cheaper in the short term

•A cable infrastructure becomes more effective within 2-5 years with the growing demand

Cook Islands, Wallis & Futuna, Niue and Northern territories

•A satellite solution is more cost effective in all demand scenarios

STM-1: 1.5MUS$ per year (50% for

other STM-1)

2000 US$ per Mbps per month

Submarinecable

(SPIN offer)Satellite

Min: 20MUS$

disc. over 25y


In service and planned backbone links

15/10/2008Polyconseil - Confidentiel

19

Name Status Opportunity

Southern Cross In service Backhauling in Fiji

Gondwana and Picot In service Backhauling in New-Caledonia

APNG-2 In service Exclusively for PNG, short term

PACRIM West (North part) Decommissioned Expensive reuse

AJC In service None (no available BU)

Sydney-Hawaii In service None (no available BU)

TPC-5CN In service None (small capacity)

SEAMEWE-3 In service None (West Australia)

JASURAUS In service None (West Australia)

PPC-1 PlannedBackhauling for PNG and Solomon Islands

PPC-2 Planned Backhauling in New Zealand

Honotua Planned Backhauling in French Polynesia

Palapa Ring Planned Backhauling in Indonesia

Serendipity Planned Backhauling in Indonesia

ASH Planned Mainly for Samoas, short term

PACRIM East (South part) Decommissioned Expensive reuse

Pacific Unity (Google) Planned None (competition on trans-pacific)

AAG Planned None (competition on trans-pacific)

Some existing or planned cablescan serve as backhauling systems

Some short term solutions are put in place through cable reuse

Trans-pacific systems generallyoffer no opportunity

There is no obvious solution for Pacific Island countries


Scenarios for networks in the Pacific

Regional/Subregional

• 17 scenarios

• Regional example: NCFP (SPIN-like)

• Subregional example: Fiji-Tonga-Samoa

Point-to-point

• 37 scenarios

• Example: Tonga-Fiji


All scenarios, both regional or point-to-point, have been studiedeconomically and technically and are detailed in the final report

Guam – Fiji, 2 path

Fiji – French Polynesia, 2 path

Philippine –

New Caledonia, 1 path

Philippine – Fiji,

1 path

Solomon –

Fiji, 1 path

Main paths within South Pacific region


Country scenario analysis



Preferred Point-to-point projects

Samoa (and AS)

To Fiji Network 29 30MUS$0.972 to

1.521 MUS$

Tonga To Fiji Network 31 26MUS$1.925 to

2.915 MUS$

VanuatuNew

Caledonia(Poindimie)

Network 42 17MUS$1.178 to

1.972 MUS$

SolomonIslands

To BU 3.5 of PPC-1


2.017 MUS$

Timor Palapa ring thru Kupang

Network 52 6MUS$ N/A


No individual cable projects proposed for

•Wallis & Futuna, Cook Islands, Niue, Northern territories: not economically viable

•French Polynesia, New-Caledonia, PNG and Fiji: not needed

(Annual price

per STM-1)

LowestCAPEX

LowestSTM-1 price

Best backhauling


Point-to-point vs. subregional


Type Net ID Network name Samoa Tonga Fiji VanuatuSolomon

IslandsPNG

28 Fiji-New Caledonia X

29 Fiji-Samoa X

24 BU 3.5 PPC1-Solomon X

31 Fiji-Tonga - unrepeated X

42 New Caledonia (Poindimie)-Vanuatu X

15 PN (PNG - New Caledonia) X

4 FS (Fiji - Solomon) X X

9 FTTS (Fiji - Tonga - Samoa) repeated X X

13 FNC (Fiji - New Caledonia) X X

6 GF south (Guam - Fiji) X

8 NCFP X X X X X

Pt2pt links

Subregional

network

Regional

network

Samoa –Tonga – Fiji


1.581 MUS$

SolomonIslands –

Vanuatu – FijiNetwork 4 60MUS$

1.171 to 2.059MUS$

Two subregional projects offer the sameoutcome as identifiedpoint-to-point projects


Advantages of a regional project

Lower O&M cost (teams, spare parts, vendor contracts…)

More backhauling points

More supported traffic (regional or trans-pacific) and therefore additional revenue

More interest of investors

Management of the project led by one single team for the whole region



Case for a regional project



Opportunity for a regional project


Type Net ID Network name Minimum Maximum28 Fiji-New Caledonia 35.6 0.992 1.611

29 Fiji-Samoa 30.5 0.972 1.521

24 BU 3.5 PPC1-Solomon 17.6 1.156 2.017

31 Fiji-Tonga - unrepeated 26.1 1.925 2.915

42 New Caledonia (Poindimie)-Vanuatu 17.0 1.178 1.972

15 PN (PNG - New Caledonia) 81.5 0.994 2.092

4 FS (Fiji - Solomon) 60.1 1.171 2.059

9 FTTS (Fiji - Tonga - Samoa) repeated 46.1 1.032 1.581

13 FNC (Fiji - New Caledonia) 51.8 1.020 1.661

6 GF south (Guam - Fiji) 196.2 0.751 3.798

8 NCFP 252.4 0.910 2.451

Pt2pt links

Subregional

network

Regional

network

STM1 price

(MUS$/year)CAPEX

(MUS$)

A much larger project (CAPEX = 252MUS$)

For the opportunity of a competitive bandwidth price


Regional project: NCFP

% international traffic

American Samoa 50%

Cook Islands 100%

Fiji 20%

French Polynesia 20%

New Caledonia 20%

Niue 100%

Samoa 50%

Solomon Islands 100%

Tonga 100%

Vanuatu 100%

Wallis & Futuna 100%


$71 610 517

$101 965 920

$34 694 065

$44 170 500

$0

$50 000 000

$100 000 000

$150 000 000

$200 000 000

$250 000 000

$300 000 000

Landing station cost including SLTE

Marine Survey and operations

Wet Plant

Submarine Cable cost

Total distance (km) : 9597

Average cable cost per km (US $): 7461

Number of repeaters : 116

Marine operation (days) : 207

Main cost drivers

$252 M

Number of landing stations : 9

NCFP: New Caledonia to French Polynesia

Best regional project linking 11 countries


Cost allocation to countries


Country Spur length (km) Spur & landing station cost (US$)

Main Backbone (US$)

Total cost (US$)

American Samoa 196 9 902 024 10 462 336 20 364 359

Cook Islands 326 12 430 923 10 462 336 22 893 259

Niue 269 11 150 014 10 462 336 21 612 349

Samoa 226 11 479 191 10 462 336 21 941 527

Tonga 675 20 485 875 10 462 336 30 948 211

Solomon Islands 1 369 33 843 318 10 462 336 44 305 653

Vanuatu 840 23 587 411 10 462 336 34 049 747

Wallis & Futuna 195 9 568 722 10 462 336 20 031 057

Fiji - 4 907 833 10 462 336 15 370 169

French Polynesia - - 10 462 336 10 462 336

New Caledonia - - 10 462 336 10 462 336

Total 4 095 137 355 311 115 085 691 252 441 002

Costs allocated based on spur length

Section 10


Risks of the NCFP project

• Niue, Wallis & Futuna, Cook Islands3 low demand countries ability to pay

• Samoa, American Samoa, Tonga, Solomon Islands, Vanuatu have individual solutions

• Fiji has no particular need

Alternative individualprojects

• What price to secure traffic ?Nature of OPT involvement

• Competitiveness of a non specialized cable

• Uncertainty on backhaul costTrans-pacific traffic

• Non stabilized regulatory regimes (de facto monopolies)Large size projectinvolving many countries



Simplified NCFP (4 countries)

Country Spur length (km) Spur & landing

station cost (US$)

American Samoa 196 9 902 024

Cook Islands 326 12 430 923

Niue 269 11 150 014

Samoa 226 11 479 191

Tonga 675 20 485 875

Solomon Islands 1 369 33 843 318

Vanuatu 840 23 587 411


Regional project linking 4 countries: Fiji and 3 French territories

Mainly for securingGondwana and Honotua cables and catching trans-pacific traffic

Additional countries canconnect in option

Main backbone cost: 115MUS$

STM-1: as low as 0.5MUS$ depending on trans-pacific traffic


Decision table

Point-to-point projects

Subregional projects

NCFP projectSimplified

NCFP projects

SPIN commercial

offer

Total CAPEX (MUS$)

127 106 252 115+Landing stations

(4MUS$ each)

Price range (MUS$ per year)

0.972 to 2.915

0.994 to 2.092

0.910 to 2.451

0.488 to 2.357

1.5 “guaranteed”

Project complexity

ConditionsFiji: Southern Cross price

NC and PPC1: right to connectOPTs: backhaul conditions

Trans-pacific trafficSPIN ability to

execute


Choose the right project for the region once the conditions are met


Possible WB Group Involvement



Pacific Connectivity: possible WB Group Involvement

World Bank Technical

assistance, e.g.

Analysis

Structuring of regional/sub-

regional projects

Regulatory reforms

World Bank Investment:

Technical/advisory assistance

(grants, loans)

Contribution to universal service

funds (for competitively-

tendered projects)

Support for international connectivity (e.g. regional backbone projects--spurs,

landing stations, pre-purchase of capacity)

provided on “open access” basis

IFC

Equity investments

Loans

WB/IFC/MIGA

Guarantee instruments



Thank you.



Contacts


Dominique TaiebPolyconseil [email protected]

Sylvain GéronPolyconseil [email protected]

Alexis PastréLocal Project Manager+687.87.75.17 (New-Caledonia)[email protected]


mailto:[email protected]



Documents

Pacific Connectivity Study - UN-OHRLLS documents/Pacific Connectivity... · •On-going submarine cable projects ... Tonga Samoa Timor Leste Hawaii New ... Landing station cost including