A drop in the ocean to connect the Pacific

By Pacific Region Team on Mon, 25 February 2013

Written by Hans van Rijn, Senior Public Management Specialist

For the small, isolated Pacific islands, access to more affordable and reliable telecommunications, particularly high-speed (broadband) internet, offers new economic opportunities. It has been estimated that a 10% increase in broadband penetration raises GDP by over 1% in such countries. Growth is generated as the cost of business, government, and household communications are reduced and new Information and Communication Technology (ICT) business opportunities such as investments in e-commerce and business process outsourcing facilities are possible. The use of improved ICT connectivity for remote delivery of services such as agricultural extension, policing, health, employment, disaster management and banking is only limited by imagination.

Since 2010, the Federated States of Micronesia, Fiji, Papua New Guinea, Marshall Islands, and Samoa, have been globally connected by submarine fiber-optic cables. As an immediate result of the introduction of high-speed broadband, regional evidence shows that wholesale bandwidth prices are likely to halve, leading to a conservatively estimated retail price reduction of 20%. 

Outside these countries, the 9 other ADB Pacific developing member countries rely on satellite connection, which is expensive and constrained by limited bandwidth. This situation stands to change shortly for Solomon Islands and Tonga. 

ADB and the World Bank are jointly supporting Tonga Cable Limited in developing a submarine cable system that includes installation of an 827-kilometer cable link between Nuku’alofa (Tonga) and Suva (Fiji). This link to the Southern Cross Cable is expected to be in place by July 2013. ADB is also supporting the Solomon Islands in developing a submarine cable system that will link the country to the existing cable that runs between Guam and Sydney. In addition to the international link (roughly 430-kilometer), the submarine cable system will comprise two domestic spurs to Malaita and the Western Province (roughly 400 and 150 kilometer, respectively). An interesting feature of this project is that the financing plan comprises a mix of sovereign funds (load and grant) and non-sovereign funds (commercial debt and equity). The sovereign component of the project was approved in September 2012, while the commercial part of the financing structure currently awaits finalization. 

But infrastructure is just one part of the story. To reap the development benefits quality regulatory regimes are essential to ensure the telecommunications sector is competitive and so able to create business opportunities, that there is cost-based wholesale and retail pricing, and universal access policies, to guarantee the equitable provision of ICT services. Recognizing the need for advice and capacity building in this area ADB supports a regional resource centre for ICT regulatory reforms (based in Fiji).

The final piece of the ICT for development puzzle is the application of ICT. Broadband based improvements can lower the cost of doing business, and promote good governance and inclusive service delivery in key social sectors like health and education. ADB has also been actively supporting the development of innovative broadband based service delivery improvements. The Rural Health Services Improvement Program in Papua New Guinea, for example, is piloting the use of mobile data devices in selected remote provinces of the country.

When infrastructure, regulation and application come together, improved broadband connectivity has a positive economic and social impact which, ultimately, will support an inclusive growth path. Other countries in the region are watching Solomon Islands and Tonga with interest as they consider improving their own connectivity.