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Pacific Connectivity StudyFinal report conclusions
October 15th 2008
Polyconseil
PITA conference - Sydney
World Bank overview
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The World Bank Group
Global development institution, founded 1944. 185 member
countries (all shareholders)
Mission statement: “our dream is a world
free of poverty”
“World Bank Group”
• International Bank for Reconstruction & Development/International Development Association: Governments
• International Finance Corporation: Private Sector
• Multilateral Investment & Guarantee Agency
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The World Bank & ICT
Global ICT Department—Policy
Division
Active in 80+ countries worldwide in the following areas:
• ICT infrastructure (telecoms),
• ICT applications and e-Government
• IT-enabled services
In response to Government
demand, through formal requests for
assistance, via Ministry of Finance
in case of loans
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Project methodology
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Objectives of the assignment
Increaseconnectivity
Lowerconnectivity
costs
Promote ICT &
Information Society
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“Regional telecoms backbone network or sub-regional networksDetailed technical and institutional assessment, and implementation
options study”
Technical assessment and review of design options
Economic/financial analysis and cost modeling
Legal/institutional and enabling regulatory
environment assessment
Timing of the assignment
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April
• Mission launch
• PITA meeting in Palau
May-August
• In-country visits (7 countries)
• PITA meeting in Brisbane
• Draft final report
September - October
• Final report
• PITA meeting in Sydney
Country meeting survey
• International links
•Local backbone infrastructure
•Local access networks
Telecoms infrastructure
•Subscribers per telecoms service type
•Traffic per telecoms service type
•Capacity used on international links
Demand and traffic flows
•Ownership, governance, financing and operations
•Telecoms regulations
•Competitive telecoms landscape
Regulatory frameworks
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Operators
Regulators
Data collection
• Current country demand
• Economic situation and prospective
• Existing backboneinfrastructures and ongoing projects
• Regulatory issues
Technical and economic model
• Demand forecast per country
• Possible network scenarios for eachcountry and at a regional level
• Business plan of eachrealistic network scenario
Opportunity analysisfor each country
• SWOT analysis of several network scenarios for eachcountry :
• Technicalassessment
• Economic impact
• Legal / institutionalissues
Steps of the study
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1 2 3
Content of the report
•Country context (section 2)
•Market/traffic analysis (section 3)
Country situation and market analysis
•Terrestrial versus satellite (section 4)
•Existing infrastructure (section 5)
•On-going submarine cable projects (section 6)
•Alternative backbone configurations (section 7)
Alternative solutions for Pacific Island countries
•Analytical basis for a business case (section 8)
•Country scenario analysis (section 9)
•Case for a regional project (section 10)
•Legal/regulatory recommendations (section 11)
Business case
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Country situation and marketanalysis
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A geography challenge
Population heterogeneity (2k in Niue, 6.3M in
PNG)
Long distances (>500km)
All countries are not equal
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FS Micronesia
French Polynesia
Niue
Cook isd
PNG
Palau
Marshall Isd
Solomon Isd
Kiribati
Vanuatu
Fiji
Tonga
Samoa
Timor Leste
Hawaii
New Zealand
Wallis & Futuna
1100 km
600 km 1150 km
650 km 550 km
1500km
2800km
750km
2250km
2850km
850 km
2700 km
2100 km
1900 km
1850 km
2100 km
1400 km
1650 km
1650 km
1750 km
1450 km
700 km
2250 km
1300 km
1600 km
600 km
3200 km
1300 km
2100 km
2000 km
2400 km 1150 km
750 km
4200 km
1300 km
2100 km
4100 km
900 km
A regulatory challenge
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Increasingcompetition in
Internet Service and Wireless
But Int. Gateway de facto monopoly in
all countries
High monopolyprices might slow down the market
International
gatewayInternet Service Wireless telephony
Fixed lines and
telephonyLeased lines
Samoa
M C
Samoatel and Digicel
both have a satellite
June 2009: exclusivity
removed and market will
be fully opened.
C
3 ISP
C
Samoatel (Go Mobile) &
Digicel
M
SamoaTel
M
SamoaTel
Tonga
M
TCC, but Digicel can buy
satellite bandwidth for
its own needs
C
TCC, Digicel
C
TCC, Digicel
M
TCCC
FijiM
Fintel, but TFL & Digicel
have their own satellite
C
Connect, Unwired and
Kidanet
MC
Vodafone, and soon
Digicel
MC
TFL, but Fintel has some
customers
MC
TFL, but Fintel has some
customers
Vanuatu
M
TVL
but Digicel can answer
its own needs
M
TVL
C
TVL & DIGICEL
M
TVL
Until 2012
M
TVL
Until 2012
Solomon Islands
PNG
M
PNG Telikom
Digicel is to stop using its
own satellite
C
Tiare (Telikom), Daltron,
Datec, Global
Technology, Datanets
C
PNG Telikom, Digicel
M
PNG Telikom, Digicel
M
PNG Telikom, Digicel
Timor-Leste M C
Kiribati
Marshall Islands
FS Micronesia
Palau M (PNCC)
M (FSMTC)
M
Our Telecom until 2018
M (TSKL)
M (MITA)
M (Timor Telecom)
Current country demand for international bandwidth
• In-country data for visited countries, ITU data for others
• Reconciled with data on Population, Penetration, Usage per user, contention / compression
• Simplex to Duplex conversion
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Strong demandheterogeneity
Country bandwidth forecast(17 Pacific Islands)
Three scenarios for bandwidth forecast
• Low, Medium, High
• Based on Population, Penetration, Usage per user forecast scenarios
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1.5 Gbps today
4.5 to 21.5 Gbps in 10 years
Trans-pacific traffic
High capacity and strong growth
• 17 Tbps installed capacity
• Australia-US above 3 Tbps
• Growth above 50%
Declining prices (ie. Southern Cross)
• 160US$ 20US$ per Mbps per month for Australia-US
• On-going process
Fiji: a potential backhauling point
• 5MUS$ for an STM-4 IRU over 12 years
• 75US$ / Mbps / month
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Southern Cross public price list
Alternative solutions for Pacific Island countries
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Submarine cable vs. Satellite
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High bandwidth Medium bandwidth Low bandwidth
Fiji, PNG, French Polynesia and New Caledonia
•Submarine cable is more cost effective in all demand scenarios
Timor-Leste, Samoa, Solomon Islands, Vanuatu, Tonga, and
American Samoa
•Satellite is still cheaper in the short term
•A cable infrastructure becomes more effective within 2-5 years with the growing demand
Cook Islands, Wallis & Futuna, Niue and Northern territories
•A satellite solution is more cost effective in all demand scenarios
STM-1: 1.5MUS$ per year (50% for
other STM-1)
2000 US$ per Mbps per month
Submarinecable
(SPIN offer)Satellite
Min: 20MUS$
disc. over 25y
In service and planned backbone links
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19
Name Status Opportunity
Southern Cross In service Backhauling in Fiji
Gondwana and Picot In service Backhauling in New-Caledonia
APNG-2 In service Exclusively for PNG, short term
PACRIM West (North part) Decommissioned Expensive reuse
AJC In service None (no available BU)
Sydney-Hawaii In service None (no available BU)
TPC-5CN In service None (small capacity)
SEAMEWE-3 In service None (West Australia)
JASURAUS In service None (West Australia)
PPC-1 PlannedBackhauling for PNG and Solomon Islands
PPC-2 Planned Backhauling in New Zealand
Honotua Planned Backhauling in French Polynesia
Palapa Ring Planned Backhauling in Indonesia
Serendipity Planned Backhauling in Indonesia
ASH Planned Mainly for Samoas, short term
PACRIM East (South part) Decommissioned Expensive reuse
Pacific Unity (Google) Planned None (competition on trans-pacific)
AAG Planned None (competition on trans-pacific)
Some existing or planned cablescan serve as backhauling systems
Some short term solutions are put in place through cable reuse
Trans-pacific systems generallyoffer no opportunity
There is no obvious solution for Pacific Island countries
Scenarios for networks in the Pacific
Regional/Subregional
• 17 scenarios
• Regional example: NCFP (SPIN-like)
• Subregional example: Fiji-Tonga-Samoa
Point-to-point
• 37 scenarios
• Example: Tonga-Fiji
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All scenarios, both regional or point-to-point, have been studiedeconomically and technically and are detailed in the final report
Guam – Fiji, 2 path
Fiji – French Polynesia, 2 path
Philippine –
New Caledonia, 1 path
Philippine – Fiji,
1 path
Solomon –
Fiji, 1 path
Main paths within South Pacific region
Country scenario analysis
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Preferred Point-to-point projects
Samoa (and AS)
To Fiji Network 29 30MUS$0.972 to
1.521 MUS$
Tonga To Fiji Network 31 26MUS$1.925 to
2.915 MUS$
VanuatuNew
Caledonia(Poindimie)
Network 42 17MUS$1.178 to
1.972 MUS$
SolomonIslands
To BU 3.5 of PPC-1
Network 24 18MUS$1.156 to
2.017 MUS$
Timor Palapa ring thru Kupang
Network 52 6MUS$ N/A
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No individual cable projects proposed for
•Wallis & Futuna, Cook Islands, Niue, Northern territories: not economically viable
•French Polynesia, New-Caledonia, PNG and Fiji: not needed
(Annual price
per STM-1)
LowestCAPEX
LowestSTM-1 price
Best backhauling
Point-to-point vs. subregional
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Type Net ID Network name Samoa Tonga Fiji VanuatuSolomon
IslandsPNG
28 Fiji-New Caledonia X
29 Fiji-Samoa X
24 BU 3.5 PPC1-Solomon X
31 Fiji-Tonga - unrepeated X
42 New Caledonia (Poindimie)-Vanuatu X
15 PN (PNG - New Caledonia) X
4 FS (Fiji - Solomon) X X
9 FTTS (Fiji - Tonga - Samoa) repeated X X
13 FNC (Fiji - New Caledonia) X X
6 GF south (Guam - Fiji) X
8 NCFP X X X X X
Pt2pt links
Subregional
network
Regional
network
Samoa –Tonga – Fiji
Network 9 46MUS$1.032 to
1.581 MUS$
SolomonIslands –
Vanuatu – FijiNetwork 4 60MUS$
1.171 to 2.059MUS$
Two subregional projects offer the sameoutcome as identifiedpoint-to-point projects
Advantages of a regional project
Lower O&M cost (teams, spare parts, vendor contracts…)
More backhauling points
More supported traffic (regional or trans-pacific) and therefore additional revenue
More interest of investors
Management of the project led by one single team for the whole region
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Case for a regional project
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Opportunity for a regional project
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Type Net ID Network name Minimum Maximum28 Fiji-New Caledonia 35.6 0.992 1.611
29 Fiji-Samoa 30.5 0.972 1.521
24 BU 3.5 PPC1-Solomon 17.6 1.156 2.017
31 Fiji-Tonga - unrepeated 26.1 1.925 2.915
42 New Caledonia (Poindimie)-Vanuatu 17.0 1.178 1.972
15 PN (PNG - New Caledonia) 81.5 0.994 2.092
4 FS (Fiji - Solomon) 60.1 1.171 2.059
9 FTTS (Fiji - Tonga - Samoa) repeated 46.1 1.032 1.581
13 FNC (Fiji - New Caledonia) 51.8 1.020 1.661
6 GF south (Guam - Fiji) 196.2 0.751 3.798
8 NCFP 252.4 0.910 2.451
Pt2pt links
Subregional
network
Regional
network
STM1 price
(MUS$/year)CAPEX
(MUS$)
A much larger project (CAPEX = 252MUS$)
For the opportunity of a competitive bandwidth price
Regional project: NCFP
% international traffic
American Samoa 50%
Cook Islands 100%
Fiji 20%
French Polynesia 20%
New Caledonia 20%
Niue 100%
Samoa 50%
Solomon Islands 100%
Tonga 100%
Vanuatu 100%
Wallis & Futuna 100%
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$71 610 517
$101 965 920
$34 694 065
$44 170 500
$0
$50 000 000
$100 000 000
$150 000 000
$200 000 000
$250 000 000
$300 000 000
Landing station cost including SLTE
Marine Survey and operations
Wet Plant
Submarine Cable cost
Total distance (km) : 9597
Average cable cost per km (US $): 7461
Number of repeaters : 116
Marine operation (days) : 207
Main cost drivers
$252 M
Number of landing stations : 9
NCFP: New Caledonia to French Polynesia
Best regional project linking 11 countries
Cost allocation to countries
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Country Spur length (km) Spur & landing station cost (US$)
Main Backbone (US$)
Total cost (US$)
American Samoa 196 9 902 024 10 462 336 20 364 359
Cook Islands 326 12 430 923 10 462 336 22 893 259
Niue 269 11 150 014 10 462 336 21 612 349
Samoa 226 11 479 191 10 462 336 21 941 527
Tonga 675 20 485 875 10 462 336 30 948 211
Solomon Islands 1 369 33 843 318 10 462 336 44 305 653
Vanuatu 840 23 587 411 10 462 336 34 049 747
Wallis & Futuna 195 9 568 722 10 462 336 20 031 057
Fiji - 4 907 833 10 462 336 15 370 169
French Polynesia - - 10 462 336 10 462 336
New Caledonia - - 10 462 336 10 462 336
Total 4 095 137 355 311 115 085 691 252 441 002
Costs allocated based on spur length
Section 10
Risks of the NCFP project
• Niue, Wallis & Futuna, Cook Islands3 low demand countries ability to pay
• Samoa, American Samoa, Tonga, Solomon Islands, Vanuatu have individual solutions
• Fiji has no particular need
Alternative individualprojects
• What price to secure traffic ?Nature of OPT involvement
• Competitiveness of a non specialized cable
• Uncertainty on backhaul costTrans-pacific traffic
• Non stabilized regulatory regimes (de facto monopolies)Large size projectinvolving many countries
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Simplified NCFP (4 countries)
Country Spur length (km) Spur & landing
station cost (US$)
American Samoa 196 9 902 024
Cook Islands 326 12 430 923
Niue 269 11 150 014
Samoa 226 11 479 191
Tonga 675 20 485 875
Solomon Islands 1 369 33 843 318
Vanuatu 840 23 587 411
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Regional project linking 4 countries: Fiji and 3 French territories
Mainly for securingGondwana and Honotua cables and catching trans-pacific traffic
Additional countries canconnect in option
Main backbone cost: 115MUS$
STM-1: as low as 0.5MUS$ depending on trans-pacific traffic
Decision table
Point-to-point projects
Subregional projects
NCFP projectSimplified
NCFP projects
SPIN commercial
offer
Total CAPEX (MUS$)
127 106 252 115+Landing stations
(4MUS$ each)
Price range (MUS$ per year)
0.972 to 2.915
0.994 to 2.092
0.910 to 2.451
0.488 to 2.357
1.5 “guaranteed”
Project complexity
ConditionsFiji: Southern Cross price
NC and PPC1: right to connectOPTs: backhaul conditions
Trans-pacific trafficSPIN ability to
execute
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Choose the right project for the region once the conditions are met
Possible WB Group Involvement
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Pacific Connectivity: possible WB Group Involvement
World Bank Technical
assistance, e.g.
Analysis
Structuring of regional/sub-
regional projects
Regulatory reforms
World Bank Investment:
Technical/advisory assistance
(grants, loans)
Contribution to universal service
funds (for competitively-
tendered projects)
Support for international connectivity (e.g. regional backbone projects--spurs,
landing stations, pre-purchase of capacity)
provided on “open access” basis
IFC
Equity investments
Loans
WB/IFC/MIGA
Guarantee instruments
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Thank you.
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Contacts
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Dominique TaiebPolyconseil [email protected]
Sylvain GéronPolyconseil [email protected]
Alexis PastréLocal Project Manager+687.87.75.17 (New-Caledonia)[email protected]