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Dionisia Tabureguci
The World Bank’s involvement in the deregulation processes of some telecommunication markets in the Pacific is not directly connected to the affairs of aspiring pan-Pacific cellco Digicel Pacific, a senior bank official has confirmed.
This comes amid concerns by some telecom companies in the region that there may be a conflict of interest in the involvement of the World Bank and its affiliate organisation IFC (International Finance Corporation) in the liberalisation of the telecommunication industry in some islands countries.
In an interview with ISLANDS BUSINESS, World Bank Country Director for Papua New Guinea, Timor-Leste and the Pacific, Nigel Roberts said while it was publicly disclosed that Digicel’s investments are being partly funded by the IFC—its private sector financing arm—the relationship functions are in isolation from the World Bank’s policy advice engagements with some islands governments on their telecom deregulation.
“The process we’re involved in on the World Bank’s side has nothing to do with the private investment that the IFC staff are involved in,” said Roberts.
“Our role in all this comes in at the request of the governments and I think it’s important to stress that. We don’t go to Vanuatu or Fiji or the Solomon and simply suggest their telecom systems need reforming. It means that we’re responding to the request by the governments for assistance. Which means that the governments have perceived that they need to do more to provide either cheaper services or more extensive services and that’s obviously the objective of our involvement.”
The bank believes that because it is here by the invitation of governments in the Pacific, they should be the ones to clear the air on the matter.
“Well, let’s look at it this way, I can understand that there is a perception of a conflict of interest and what I think needs to give rise to in the Pacific is a clear statement by governments that they recognise that there is a potential conflict of interest and that they have taken measures that are satisfactory within their own government structures to make sure any perception of conflict of interest is properly managed and that Digicel or anyone else that might have a relationship with IFC does not have a material advantage when it comes to re-tendering or rebidding contracts,” said Roberts.
At the end of the day, he added, it would be up to the governments to decide whether or not to accept the World Bank’s advice.
“Countries in the region that have approached the World Bank for technical assistance in their telecom deregulation are Vanuatu, Timor Leste, Fiji, Solomon Islands, Samoa, and more recently, Papua New Guinea," said Roberts,.
There's no secret about Digicel’s foray into the Pacific—it already has presence, official and unofficial, in a few of those countries and has been a catalyst in the speeding up of deregulation of telecom sectors in many Pacific markets.
The local telcos are also warily watching Digicel’s arrival and activities and some of them have gone to great lengths to protect their cash cows—mainly the mobile business—by quickly instituting internal corporate reforms, upgrading networks, revising advertising strategies, bringing down call charges and improving overall customer care services.
But a number of them know that having to match Digicel’s financial muscle may be a different ball game altogether because of Digicel’s strong and impressive financing history.
When rolling out in the Caribbean, Digicel was linked to big development financing names like Proparco, the private sector financing arm of the French Development Agency; Netherlands Development Financing Company; Export Development Canada; Bank of Nova Scotia (Canada) and Citibank. It also has a close working relationship with Irish entrepreneur Paul Conolly, a long-time business associate of Digicel founder and Irish businessman Denis O’Brien.
Conolly is head of Connolly Corporate Finance (CCF), a company with the specific aim of sourcing capital from international capital markets, particularly in the US, to grow Irish companies—this growth being linked to Ireland’s innovative approach to assist fellow developing nations lesser by aid and more by participating in community developments through commercial undertakings.
CCF was adviser to the Digicel Group in the latter’s successful (and one of its biggest) fundraising exercise in 2005 to raise US$408 million for expansion in the Caribbean.
With a host of such connections in the big money markets, Digicel has deliberately come to the Pacific to grow its business as opposed to Pacific islands telecoms which have historically been comfortable in the protection of their exclusive licenses with the strength of their balance sheets ruling out intentions to grow the business outside their islands homes.
The result therefore is a Digicel camp armed with experts and funding geared towards a much bigger plan against a Pacific camp dotted with small locally owned and nationally focused Pacific operators.
In all this, the World Bank’s indirect involvement (through IFC’s Digicel financing) and direct involvement in providing islands governments with technical assistance (mainly in policy advice) to move their telecom markets towards a competitive environment are being viewed by the Pacific camp as an almost orchestrated move by the developed world to pry open the Pacific telecom markets.
One operator that is not amused by it all is Solomon Islands’ incumbent carrier—Our Telekom.
Its CEO Martyn Robinson told ISLANDS BUSINESS that while the company appreciates the World Bank’s involvement in drafting new telecommunications law for the Solomon Islands and recognises that the way of the future is a competitive environment, it did not like what it believes is an act of “double standards” on the World Bank’s part.
“Our Telekom considers it inappropriate for the World Bank to be going around the Pacific Islands promoting competition in the telecommunication sector and at the same time providing finance to Digicel through IFC to perhaps influence them to enter markets that it would otherwise not consider,” said Robinson.
“We have contacted the World Bank on this matter and have not received any formal reply. This matter should now be raised at the World Bank's ethics committee. It seems the minimum requirement from World Bank should be to declare a conflict of interest to all governments that they are providing advice and assistance on the matter of introduction of competition.
This matter will be brought to the attention of the PITA membership at the forthcoming meeting in January,” said Robinson.
Senior officials in one or two local telecom companies have even begun to use the Digicel/IFC/World Bank/powerful names/other development banks package as “a classic example” of bigger forces protecting and furthering the interests of “rich individuals while smaller nations like the Pacific islands and their people will always remain marginalised” in a reforming Pacific that is increasingly opening up to globalisation.
They believe that just a few of the multitude of businesses that will thrive and make money out of Pacific resources when the markets open up will actually be owned by Pacific islanders and that reforms sweeping across the Pacific islands would eventually benefit the Digicel-type of interests who have the skills and money to achieve in a day what would take Pacific islanders years to achieve.
“This is about a philosophical divide,” said one Fiji official. “It’s private versus public interest. Of course World Bank says it has not done anything in the Pacific because the market is too small but here is a big one. They are backing rich individuals, not the Pacific defenceless people. Their policy is to promote private participation. It’s a good theory but in practice, government operatives are influenced by other agendas and miscarry the reform objectives and the result is that poor people of the world, especially the Pacific, remain at the bottom of the heap because they start off with no capital.
"The result: after so many years of reform efforts and consultants after consultants, you see where the poor of the world are...they get poorer while those with capital get richer. Let us hope this is not assisted by the World Bank. We even see it in the International Rugby Board policies towards Pacific rugby nations. It is good to see Fiji put on a good show despite being underprivileged.”
While Pacific-owned businesses might identify with that, the World Bank does not quite see eye-to-eye with the Fiji telecom official. To it, it is not so much a question of ownership as it is about the delivery of quality service, essential or non-essential, to the ordinary citizen, whether living in the Pacific or elsewhere.
“There is always this debate about whether public or private ownership is in the best interest of the ordinary citizen,” said Roberts.
“In principle, if you have competition, then the private sector solution should be the most efficient but it has to be properly regulated. In the end, it comes back to governments. If a government actually owns and delivers a service through a public utility, then it has to operate it efficiently and cleanly.
"And in some cases in the Pacific, it really isn’t feasible to have a private entity carry the risk of a large public utility. In some cases and some situations, that utility is simply not going to be profitable just because of the dynamics of the population and the social requirement to serve them,” Roberts added.
The debate on philosophy is obviously hot in the telecom sector, and Digicel being a very big shadow now in the Pacific skyline, the players in the Pacific camp are beginning to tap into the Pacific consumers’ patriotic sentiments by churning out catch slogans like: “Our Telekom”, “owned by the people of Fiji”, “we are a local company, giving a lot of revenues to the state”, “Telikom is owned by the people of Papua New Guinea”, “your company” and “our profits stay here which is not the case for other foreign-owned companies.”
The fight for consumer attention in telecommunication has never been as fierce in the Pacific.
PITA BRIEFCASE
Pacific roaming partner
A decision is expected soon on the successful candidate to provide 20 Pacific Islands GSM mobile telephone network operators with a near real time roaming data exchange (NRTDE) service, said the Pacific Islands Telecommunications Association (PITA). PITA manager Fred Christopher told ISLANDS BUSINESS three companies have shortlisted following PITA’s request for proposals in October. “PITA is in a position now to pick a provider but we are looking at some factors like pricing,” said Christopher. “A key factor in this is the ability to provide solutions that are more geared towards the needs of small island countries.” Also important is the ability of the successful candidate to provide a comprehensive fraud monitoring option that would assist island companies detect fraud early and prevent it.
Potential for e-content in Pacific
The Pacific’s effort to participate in the recent World Summit Awards (WSA) resulted in a win for one of its entries. The Participatory 3D Modelling (P3DM) for Resource Use, Development Planning and Safeguarding Intangible Cultural Heritage in Fiji was named winner in the e-culture category of the WSA. The Fiji project was a culmination of communal effort by the people and communities of Ovalau island and technical input and partnership by various organisations including the Native Land Trust Board (NLTB), a few government ministries, the Secretariat of the Pacific Community (SPC) and the World Wide Fund for Nature (WWF).
More capacity on SCCN
From this month, additional capacity will be available on the Southern Cross Cable Network as a result of network upgrade, said cable owner Southern Cross Cable Network Ltd. The company announced it was upgrading the submarine cable network with the latest generation of transmission equipment. “Each cable is currently equipped at 240 Gbps and the upgrade will increase each cable’s capacity in two stages; to 330Gbps in the first quarter of 2008 and to 430Gbps by the fourth quarter of 2008,” said Southern Cross director of operations Dean Veverka.
Fiji is the only country in the South Pacific that has direct access to the undersea cable through its international service provider FINTEL (Fiji International Telecommunications Ltd).
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