Internet charges in Fiji are set to drop dramatically. Fiji's competition watch-dog, the Commerce Commission, is pursuing a 2-pronged strategy to make sure prices go down.
The first part of the strategy involves regulation to force Fiji's International telecommunications provider, Fintel, to reduce the wholesale prices it offers to internet retailers. The second, will see Fintel forced to give other providers access to the landing station for the southern cross fibre optic cable which links Fiji with the rest of the world.
Fiji Commerce Commission Chairman, Mahendra Reddy says once there is another connection to the southern cross cable, savings to consumers and business will be huge.
Presenter: Jemima Gerrett
Speaker: Mahendra Reddy, Fiji Commerce Commission Chairman
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REDDY: The connection to the Southern Cross cable will ensure that the wholesale charges go down and I expect that that wholesale charges is symmetrical with the retail rates and therefore the current retail rate should go down by at least 30-35 per cent.
GARRETT: Earlier in the year, the Commerce Commission acted to make sure that those wholesale internet prices did come down. What did you to exactly?
REDDY: As you know, currently Fintel is sourcing band width from Southern Cross cable and then selling it to the operators in Fiji, the network operators in Fiji. Effectively Fintel then is a monopoly provider of bandwidth to operators in Fiji who then retail it out via various ISP providers. What we did on first of July to regulate the bandwidth charges of Fintel and in doing that we had brought down the prices substantially. Over a two year period, we expect to see that regulated price to come down by 36 per cent, the wholesale price. But on first of July we brought the prices down by about 20 per cent or so. We have seen immediate reaction in the retail rate by 10 per cent. That is not what we had expected, that is not what we want. We want the full effect of the reduction in the wholesale rate to translate into a deduction of retail rates. That is not forthcoming. I have met with the ISP people rather than say I want to see the reduction in wholesale rates translated into a reduction in retail rate. If that's not happening, they are pocketing the reduction in the wholesale rate and not allowing it to pass onto consumers and if it continues then I will have to regulate the retail rate. At the moment, we are not regulating the retail rate. We are only regulating the wholesale rate. If I find that the market is not responding, then we will have to get in and regulate the retail rate.
GARRETT: So how long have the retail companies got to act before you step in?
REDDY: I have said that I am looking at six-month study on this. I have said to them I am getting my paperwork done, getting the paperwork in line. If I don't find they are responding to the intentions of the commission, when it has reduced the wholesale rate, then that will give me a case, a strong case to make it to the minister that he allow us sign off a price control order to regulate the retail sector. I am looking at January next year.
GARRETT: If those retail rates come down, what would it mean in terms of the number of families that are able to get access to the internet in Fiji?
REDDY: Access to internet services is a function of a number of factors. It could be retail rate to excess of band width is one of the factors and a very important factor. However, there are other factors, for example, access to electricity, access to affordable PCs, so lap tops, so notebooks. So what the Commission is doing is to bring down the retail price offered by the ISP Internet Service providers and we expect to see ISP penetration in Fiji increase significantly.
Furthermore, in this era of market economies, internet plays a very important role in not only a source of education for the tertiary and secondary educational institutions, but also for the business sector. I see the direction in the retail rates bringing in a significant if not major savings towards cost of doing business in Fiji, major advantages in terms of cost of doing business, in terms of efficiency of doing business, apart from the key objective of government is to use ISP as a tool for provision of education to the rank and file in Fiji.
GARRETT: The Asian Development Bank recently did a rating of internet and phone card costs across the Pacific. Fiji was quite good, but not the best. Would this reduction in retail prices that you're pushing for make Fiji the leading country in terms of internet prices?
REDDY: Fiji has the potential to be the leader in terms of doing business at the back of ICT development. As a regulator, I need to put in measures to ensure that Fiji has the platform to become a leader in that area. I don't see regulation as a sustainable source of delivering the objective that we want to, but in a small economy, with the bottlenecks in terms of market structures, we come in but the stable solution is to get the market to deliver what we want to and as you know as I have mentioned earlier on, in first of November, I see want to see another operator having direct connections to the southern cross cable, therefore providing competition at the wholesale level and which I see as sustainable solution.
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