Considerable improvements in PNG’s technological architecture have been made in recent years. Deregulation has driven considerable improvements in competition, and the rollout in 2008 of Digicel’s network has brought internet services to millions of previously unconnected Papua New Guinean citizens.   Notwithstanding these improvements, PNG’s internet infrastructure appears to be reaching its limits, and service outages are commonplace throughout the country. And although penetration has improved considerably in recent years, it remains amongst the lowest in the world.   In 2013, the International Telecommunications Union (ITU) ranked PNG’s internet affordability at 163rd out of 169 countries, with an entry level fixed broadband package estimated to cost 266% of gross national income (GNI) per capita. Since that time, internet prices have fallen markedly — in 2014 NICTA estimated that the price of a 1GB package ranged from around 20-80% of GNI per capita, while current estimates suggest a 1GB package can be obtained for around 10% of GNI per capita. These dramatic price reductions are likely to be driven by a number of factors, including reductions in the wholesale price (which has fallen by around 70% over that time), and increased competition in the retail market.   Nevertheless, we note that entry level internet packages still appear to be substantially above the ITU’s benchmark required to accelerate internet penetration (less than 3-5% of the average monthly income). Further, the costs of reliable internet services to businesses remain substantial — moderate-to-high data usage packages cost many thousands of Kina and the requirement for businesses to adopt redundancy solutions to manage intermittency adds substantially to costs. Lack of reliability also results in numerous indirect costs to retail and business customers.   The reasons behind high internet prices are multiple. This study has identified a range of reasons spanning five broad categories: infrastructure; wholesale; regulation; retail and competition; and PNG specific issues.

Deloitte Touche Tohmatsu