Netco/Servco model scrapped?

Dionisia Tabureguci
It was a victory of sorts for the critics of Papua New Guinea’s ICT Policy formulated in May last year.

Public pressure resulted in the PNG Government scrapping the much controversial Netco/Servco competition model proposed in that policy. The model was to have allowed for the refurbishment of state-owned PNG Telikom’s networks by temporarily reverting all commercial telecommunication networks in PNG to PNG Telikom (to become a Network Company—Netco) while liberalising service provision (licensed providers to become Service Companies—Servcos).

This was to have also delayed competition in the mobile telephony market, in which new player Digicel PNG had been operating since July last year, following a set of liberalisation decisions by government in 2005.

However, after last year’s national elections, the government’s National Executive Council (NEC) abandoned the 2005 liberalisation formula in favour of the May 2007 ICT Policy and its Netco/Servco proposal.

The move had attracted criticisms and opposition from the PNG public. But the triumph in seeing this model dumped was shortlived.

The government is now accused of reviewing the policy under cloak and dagger.

When this edition went to press, a NEC (National Executive Council) meeting was scheduled in which it was expected to approve the reviewed policy.

“We are not happy because we feel the revised policies should be released, the public should have a look at it, give their opinions and then it goes to cabinet and then to parliament.  But we are now told it will go to cabinet on Wednesday (February 13) and that we will see it when they (government) are finished with it,” said David Conn, general manager of the Port Moresby Chamber of Commerce and Industry Inc. (POMCCI).

“It’s the process that we are concerned about and it’s pretty hard to make comments on it when you’re not really sure what they’ve done. 

“We are hearing that they have scrapped the Netco/Servco model but we don’t know. We are hearing that the role of the ICCC (Independent Consumer and Competition Commission) has changed but then again, until we see it, we just don’t know what is going on.”

Conn criticised the government and PNG Telikom for not attending a public workshop it held in January which was attended by a wide spectrum of people and stakeholders in which the May 2007 ICT Policy was well dissected.

“It was a little bit disappointing when you can’t get that sort of open debate on something so important to the future of the country. The business communities and stakeholders are not happy at the moment and so are the rural people who have seen the value of competition in the last seven months. I think they would be very unhappy if this policy does not maintain things the way they have been used to in the last seven months,” said Conn.

“There’s a lot of rhetoric about Telikom being our Telikom and that we must protect it. But we are behind the times. History has shown you don’t often succeed in rehabilitating incumbent monopolies.

“The only thing that makes them change is competition and proper regulation. The rest of the world has seen what competition can do from top to bottom and never mind the digital divide, we are in a policy divide here, we are miles behind.

“We would like to catch up and we would expect any policy promulgated by government on this to catch up. Telecommunications are opening up everywhere in the world and now we’re behind everyone else. So businesses here are very angry, very frustrated about that.”

Although the PNG public’s view of the government’s policy review is murky, the government is still stuck with the unenviable task of striking a balance between maintaining the sweet taste of competition and protecting the interests of Papua New Guineans. 

Acting Secretary for the Department of Communication and Information, Henao Iduhu, confirmed to this magazine that the government had shifted from the Netco/Servco model to “an infrastructure-based competition but at the mobile telephony sector”.

His minister Patrick Tammur and Minister for Public Enterprises Arthur Somare further shed light on the government’s stand in a joint statement issued last month following interconnection efforts between PNG Telikom and Digicel PNG failed due to technical reasons.

“We have tasted the fruits of competition. With continued efforts, we will soon see further benefits of competition.

“Different carriers—both state-owned Telikom PNG together with new entrant Digicel—will be able to develop their networks for the benefit of Papua New Guineans across the country.

“The government will ensure by its continuing refinement of the ICT policy that it will provide an appropriate framework for both general and mobile carriers to operate.”

The catch in this will be the intended transfer of the monopoly from the domestic market to the international gateway.

The ministers indicated this will happen as soon as the interconnection issues between the two mobile operators are sorted out.

“Once interconnection is achieved, Papua New Guineans will enjoy the full benefits of mobile competition as intended by the government policy.

“Gone will be the sad situation where phone users are unable to call family, friends and business contacts who have phones on the other company’s network. The ICCC will also ensure the temporary consent for Digicel to operate its own international gateway will cease,” they said.

This proposed shutting of Digicel’s gateway and forcing it to use Telikom PNG’s gateway has opened up a new line of debate in PNG’s telecommunications industry with critics saying it will only increase costs of communication and, for technical reasons, will not auger well for effective competition.