Telecom Fiji's Rural Thrust: Telecom's price slash to boost rural business
By Dionisia Tabureguci
Telecom Fiji Ltd's (TFL) Internet services delivered via VT SAT has been slashed by as much as 81 percent following a joint announcement last month by the government and TFL. The announcement outlined an overall reduction in the cost of services delivered via VT SAT-TFL's $20 million satellite-based telecommunication network with its earth station situated at Yaqara-which includes basic telephony as well as dedicated Internet and data access.
VT SAT... not very popular amongst rural dwellers.
Since the commissioning of the Yaqara Earth Station in August 2004, some 900 villages around the country now have access to telephony service through the VT SAT network. But the cost compared to those delivered through TFL's major cable network has remained relatively high.
Prepay calls (telecards) made to normal telephones or EasyTel cost the consumer 80 cents a minute while post-pay charges ranged from 49 cents a minute to $1.49 cents a minute.
These rates have been reduced by up to 51 percent, a move aimed at improving the quality of life in our rural areas, according to Prime Minister Laisenia Qarase.
The biggest reduction is for Internet connection, where the cost of a 64 kbps access dropped from $2261.65 a month to $478.13 a month (VIP), while a 128 kbps access was reduced to $495 (VIP) from the previous monthly rate of $2576.25.
TFL's reasoning behind this massive reduction is that it is aimed at attracting more customers. The take-up of the VT SAT delivered Internet service has so far been disappointing.
"Fundamentally, if we look at the huge investment that we have there-$20 million-if you do the math that says we must recover the cost based on the amortisation of VAT, then of course, we will charge VAT.
"The problem is if we charge VAT, nobody will use it and what happens next is that we have a piece of Taj Mahal sitting there and no one is using it.
"So we might as well use it and the law of the market says that if you reduce the price, you get people to use it and you get some money from it," says TFL managing director, Josaia Mar.
The service has not been very popular both because of its cost and because it has not worked very well, according to those who use it.
Mar says only four resorts have subscribed to the service mostly because they don't have a choice under the current legal system.
It is hoped that this reduction would see more hotels come on board.
This optimism, however, is likely to be challenged by the reality of the market. According to those who use the service, accessing the Internet via VT SAT is a 'frustrating' task because it is very slow.
"Our connection does not work half the time. VT SAT has been a disaster from the start and should be scrapped," says Robert Foster, managing director of Dive Kadavu.
Like another customer, Papageno Eco Resort in Dogowale, Kadavu, Foster encountered some confusion with the billing.
"TFL promised us a $30 a month deal for connection which includes 20 megabytes free plus 99 cents per megabytes downloaded thereafter.
"The next thing we know, we received a bill from Connect saying we should pay $5800. I told them wait a minute, I didn't sign a contract with you. I have been getting a bill from Connect since January last year where it is charging us $492 a month.
"Now a reduction has been announced. What reduction are they talking about? The whole billing thing is a mess and we don't know who we are dealing with, whether it's Connect or Telecom."
Papageno Eco Resort gets a bill of over $2000 a month but does not know if this also includes telephone and fax.
"We have a fax line that doesn't work and recently we received a bill for $5 so there is some confusion there.
"Our Internet is working fine and it has been three months since we last met with some problems," says its manager.
TFL has refrained from commenting on its customers' complaints. But Foster says it was good to see that TFL was finally doing something about its VT SAT service.
By bringing the rates down, TFL will directly assist the ruling Soqosoqo Duavata ni Lewenivanua party (SDL) fulfill one its promises, which is to reduce the rate of telecommunication services in the country.
Says Prime Minister Qarase: "This is not something that we promised and then failed to deliver. We are delivering it in partnership with TFL and with the current deregulation in the entire telecom industry, the possibility of further reduction is staring us in the face."
The government had contributed $2.5 million for the VT SAT project, which was supposed to enable the delivery of telephone and Internet services to the rural areas.
Mar says TFL has taken an initiative to fully fund five pilot telecenter projects in Nayavu, Vunidawa, Dreketi, Muaniweni and Ratu Latianara Secondary School to offer telephone, Internet, fax, photocopying, printing and scanning facilities for these rural communities.
