Marshall Islands May Open Telecom Sector To Competition

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Local telecom authority fears ‘unfair nature’ of proposed law

By Giff Johnson

HAGÅTÑA, GUAM (Marianas Business Journal, Oct. 20, 2013) – The government-owned National Telecommunications Authority (NTA) will be forced to shut down, says the general manager of the company, if World Bank-proposed legislation to open the communications sector to competition is adopted by the Marshall Islands Nitijela (parliament). If you are Digicel, the Fiji-based company providing cell phone service throughout the South Pacific, and the World Bank, which is financing Digicel, that is not a bad thing.

But Tommy Kijiner Jr., general manager of the National Telecommunications Authority, says it is shortsighted thinking by the government if it adopts World Bank inspired legislation in exchange for $13 million since it will "force NTA to cease its business, thereby depriving our Marshallese shareholders of their investment in our company." During a late September hearing on the legislation, Kijiner repeatedly emphasized that the legislation will give new entrants a significant edge over NTA. "It is not fear of competition," Kijiner said of his opposition to the legislation. "Rather it is fear of the unfair nature of the proposed legislation."

Earlier this year, when the legislation was first up for review by the government, NTA asked to be consulted before it was introduced and passed. But World Bank officials have told Marshall Islands leaders that any changes in the legislation will result in the bank cancelling the grant funding offer.

Secretary of Finance Alfred Alfred Jr., also an NTA board member, said the Marshall Islands has already received $3 million from the World Bank and once the bill is passed the remaining $10 million will be released. The funding can be used for anything government decides, which is one reason it has gained support.

Alfred said he believes competition will promote economic development and expand access to internet and phone service. He cited low per capita mobile phone and internet hookups in the Marshalls compared to its neighbors as proof of the problem. "Under a monopolistic environment, NTA's performance won't improve," Alfred said.

But Kijiner said the market in the Marshall Islands is too small for two telecom companies. "Market penetration is not limited because these services are not available, but by the economic conditions in the Marshall Islands," he said. "The typical large household headed by a single wage earner often has higher priorities for their limited disposable income than DSL. The addition of more telecom companies will not change this economic fact." People who can afford it are subscribing to telecommunications services, he says.

NTA by law is mandated to provide universal coverage, even if at a loss, to extend telecommunication service to the outer islands. Over the past several years, the telecom authority has established call centers on nearly 20 remote outer islands, none of which can function profitably because of small customer bases.

Kijiner has a list of areas in the proposed legislation that he'd like to see modified to provide an even playing field for everyone, not only new entrants. A key point is the legislation allows new entrants to use NTA telecommunications equipment, which means, "A new entrant can come to the Marshall Islands and compete with minimal investment and thus little commitment to the Marshall Islands marketplace. If there is to be an equal playing field, a new entrant must shoulder its own capital investment costs and not simply use the infrastructure that NTA has spent 26 years building," he said.

The pending legislation includes none of the suggestions from NTA. "Pass this bill and this will be the most expensive $13 million grant you'll ever get," Kijiner told parliamentarians at the recent public hearing.

But with the World Bank dangling $13 million in front of a cash-poor government, the legislation is likely to gain traction in the final six meeting days of the Nitijela that will extend into early November.

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