More players in the Game
Opening up telecomunications to others

There is an old joke that goes something like this: What does a 500-pound gorilla eat? The answer: Anything it wants.
When it comes to telecommunications in this country, Telecom Cook Islands is that gorilla.
The only show in town when it comes to staying in touch, whether it be via land lines, mobile phone or the internet, Telecom CI is owned by Telecom New Zealand (60 per cent) and the Cook Islands Government (40 per cent).
But Telecom CI’s reception may about to get a little fuzzy, amid controversy over whether Government should be in an ownership position with an entity it also regulates; the high cost and slow speed of internet; and, perhaps most importantly, pending legislation that will allow other players to enter what is a very lucrative market.
There are mixed signals about how the situation will unfold but, no matter who is providing the service, there is one point all the concerned factions agree on: The internet is no longer a novelty used by Facebooking teens and techno-geeks. In reality, it is a vital link to the outside world (and the Outer Islands) and a valuable and necessary tool for every thriving business.
In this week’s feature, we examine the impact deregulation will have on telecommunications and the people and companies who rely on these services to survive.
The King
If Jules Maher is worried about deregulation, he’s doing an excellent job of not showing it.
“We’re agnostic on competition,” says the CEO of Telecom CI. “From my point of view, the best thing I can do is make sure we act so sharp that no competitor will even seriously think about coming into this market.
“I actually think that just the threat of competition is good for the Cook Islands. It means that Telecom remains sharp, keeps the pricing as low as it can, and tries to keep the customers happy.”
Rather than worry about the “what ifs”, Maher would rather concentrate on the “right now”.
“The fact of the matter is, Telecom has never put up prices,” he says. “We’re very proud of the fact that prices have continuously fallen for as long as Telecom has been here.”
Maher understands the importance of broadband as a tool, which is why Telecom CI is in the process of purchasing more satellite capacity. The company is also in line to hook up with the o3b (Other 3 Billion) consortium once its lower-orbiting stable of satellites is operable.
“I think everyone would agree broadband these days is so important to business that we just have to make sure that we’re up there, as much as we can be, with the rest of the world,” he says.
“In an industry such as ours, the technology industry, you’ve got to keep refreshing and keeping up-to-date, and we’re doing our best to do that.”
Initiatives such as adding more wi-fi hotspots and improving mobile phone coverage on Rarotonga and Aitutaki are just two of the projects Telecom CI hopes will help keep its customers onboard should competition happen.
“One of the risks of competition is that we can initially have some great lapses in prices and then minimal reinvestment in the industry,” Maher says. “So the long-term interest may not work out.”
As for the controversy over Government being a shareholder in Telecom CI, Maher says it’s up to the country’s politicians to decide if an exit strategy is in everyone’s best interest.
“They’ve announced publicly that they want to exit at some stage and they need to do that at a time that makes the most sense,” he says. “What they’re really saying it that it’s hard for them to be the gamekeeper and the poacher.
“They need to stand back and set the policy and not, at the same time, be seen to be benefitting from that in terms of protecting their own investments.”
The Pretender to the Throne
Eleven months. That’s how long William Framhein says his company, Mervin Communications, would need to be up and running once the prime minister pulls finger, recalls Parliament and gets around to ticking off the assorted bills that are currently gathering dust.
Framhein, one of the company’s directors, has spent five years knocking on assorted Government and Telecom CI doors in order to set up a competing network.
Asked why he has persisted where others may have lost interest or incentive, Framhein says it’s not in his nature to give up.
“That’s all there is to it,” he says. “When I start something, I like to see it through.”
What he was seeing in November appeared to be a light at the end of a very long, very dark tunnel, when Government agreed to change the law that has allowed Telecom to hog the entire telecommunications pie.
But just when he was dusting off the plate for his share of the market, the decision was made not to convene Parliament for fear of a non-confidence vote.
As for that light Framhein was seeing: “It just shut down again.”
Timing in the Cook Islands, he says, is just one of those things you have to deal with.
“As much as you get frustrated with politicians, you’ve just got to be patient with them, because they’re looking out for themselves as well as the country.”
When the legislation is finally in place, Mervin Communications will use satellite technology to provide wireless internet and mobile phone service to Rarotonga and several islands in the Northern Group.
“We’ve had preliminary discussions in terms of funding the project and the banks that I’ve spoken to have said this is a fundable project,” he says.
Framhein says his company will charge less than Telecom for its services and deliver faster internet speeds.
“It would be healthy competition for Telecom,” he says. “It would force them to do a lot of things they wouldn’t normally do, mainly (review) the pricing structure and some of the innovative things telecommunications can provide users.”
Healthy competition, Framhein says, would help improve the education and health sectors, as well as help create other industries in the country.
“There are industries out there, staring us in the face right now,” he says. “There are other opportunities, outside of tourism, that telecommunications, and its applications, can bring to the Cook Islands.
Framhein says there are two key areas that have a direct impact on the country’s future – energy and telecommunications.
“Get those two right,” he says, “and we’ll have a great country.”
The Government
Deregulating the telecommunications industry could be as close as the next sitting of Parliament. Or as far away.
Mac Mokoroa, the CEO to Prime Minister Jim Marurai, who holds the Telecommunications portfolio, says a draft bill is currently being fine-tuned. As well, a committee has been struck to keep Telecom New Zealand in the loop.
“Inside the new act, there is going to be a commissioner, or a regulator, who is going to be appointed, and whose task will be to set the fees, develop the policies and look after the implementations of the act,” says Makoroa.
The idea of opening up the market, he says, is to attract competition, with the idea that lower pricing will follow.
Digicel has made noises about coming to the party, but Mokoroa says that company wanted to be in total control of the country’s telecommunications. While that would, in effect, simply be passing the monopoly torch, Mokoroa says he has had no contact from Digicel since November and isn’t sure they are still interested. That could be because it is fighting an uphill battle in Fiji, where it is attempting to take on that country’s equivalent of Telecom CI.
“Digicel is finding it very difficult to compete in Fiji because (the established company) is still dominant and they are still able to slash and beat whatever prices Digicel is promoting,” says Mokoroa. “For a small country like us, we still have to wait and see if that will work for us.”
Asked if Government should continue owning shares in Telecom CI, Mokoroa says “I can’t answer that. That would have to be decided by Cabinet.”
The Cyber Café
Graeme Whitfield would welcome another player in the telecommunications market, if only because competition should result in lower prices.
As the owner of Click Internet Café for the past five years, Whitfield has watched as Telecom Cook Islands has lowered the cost of internet to households without giving independent on-sellers much of a break.
“The pricing structure hasn’t really changed a whole lot since we’ve been running our internet café,” he says. “We take our cost and try to make a small margin of profit and try to on-sell from there. We’d like to reduce our prices significantly but until our costs are reduced, we’re stuck.”
Click charges $12 an hour to use one of its eight machines. To date, visitors have not complained too loudly.
“I think they’re aware of the fact that internet is expensive to us,” says Whitfield. “That we are a little wee island in the middle of nowhere.”
Whitfield labels the current monopoly situation as “restrictive”.
“We also don’t really agree that the only people legally allowed to provide internet to businesses like ours to resell are also in the retail side of that,” he says, referring to the two cyber cafes Telecom Cook Islands operates. “We very much want to see an opening up of the market and let consumers decide where they want to go and give everyone a chance.”
Whitfield says he’s frustrated with having to deal with a company that has such a firm grip on the telecommunications market.
“We’ve done whatever we can to lobby for a lifting of the restrictive monopoly legislation,” he says. “I would imagine (Telecom) would aggressively compete with anyone who enters the market, should it be opened up. They may well still be the best alternative after the market opens.
“But at least the pricing will be reflective of a competitive market and not the current restrictive situation.”
The Watchdog
The Internet Action Group may be in its infancy, but it has plans to take some giant steps into the future.
“The group is made up mainly of people who are interested in the internet and the use of the internet for its various purposes,” says spokeswoman Maureen Hilyard. “Not only for information and communication, but also to broaden the boundaries of how it can contribute to economic growth in the Cook Islands.”
Made up of people from the both the private and public sector, Hilyard says the group’s members want to play a part in the future of broadband and mobile services operating in the Cook Islands.
“The potential is there for people to be better informed and to be able to get a wide range of services from Government and from the private sector,” she says. “For personal growth as well as enhancing the opportunities the internet can provide to build their businesses.”
There are three main areas, the group is looking at – IT training, the establishment of a regulatory body to set policy and guidelines, and the proper disposal of IT waste.
“Government is integral to this whole development, of course,” Hilyard says. “Government needs to encourage people to use the internet and they have to make sure the quality of the delivery of broadband and mobile services is totally adequate.”

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