Despite all the groundwork that was put in place to open up Papua New Guinea’s mobile communication market, there are those who still think of the interest shown by Irish-owned, Jamaica-headquartered GSM giant Digicel as a war that is being waged.
To incumbent carrier Telikom PNG, this is a war that it believes is being fought in a playground where unethical tactics and cleverly executed manoeuvres would be employed by the newcomer in order to get what it wants.
In August, Telikom PNG warned its workers through its corporate newsletter of “an opponent who might play by different rules”.
By last month, Digicel and competition in general had become to it as “enemies at the gate”, and in an attempt to motivate patriotic sentiments against these “enemies”, called on its workers to “stand together”.
“Telikom has many enemies at the gate at the moment and the last thing we need as a family is enemies within,” urged PNG Telikom acting CEO, Peter Loko.
He went on to implore the increasingly agitated workers to “look at the forces lined up against us at the moment”.
“We have competitors who do not always appear to act ethically. While we follow the laws of PNG, others do not always seem to feel the same responsibility. We have regulators who make decisions that go against us, although we are obliged to act under the laws and regulations of the country. This sometimes does not seem fair, especially when others seem to be able to break the rules without penalty.
“We have some people in positions of influence in the media who seem to take delight in showing up our faults. They may be acting honestly and in the public interest as they see it, or they may be influenced in some way to write against us. We should not give them gossips or backdoor stories. There are already enough lies told about us. We will continue to be honest and ethical, and try at all times to tell our side of the story factually and hope for fair treatment, letting the public decide.
“We are being physically attacked. There is evidence on all sides that a war of criminal sabotage is being waged against us, cutting our cables, destroying our network, disrupting our services, stressing our staff and costing us money…there are enemies at the gate. Let us fight them as a family.”
Having abruptly “awoken from a deep sleep and found that they suddenly had the spectre of some competition looming on the horizon” as described to this magazine by an industry observer, Telikom PNG is going all out to take on the new force in what is increasingly looking like a David versus Goliath showdown.
Except this time, it looks like God has left town and the actual battle is being fought in the middle of serious allegations of corruption, criminal activities, accusations of favour-buying and industry uncertainty as government proceeds to put in place a new ICT policy that would nationalise all networks and liberalise service.
War started: “This war has just started,” Loko told ISLANDS BUSINESS. “We have had cable cuts (by vandals) where we have never had it before and strangely, they just cut it and leave it there. We had to ask why? Why are they doing this?”
It couldn’t possibly be Telikom PNG, he argued, for “why would we go and kill ourselves?”
Earlier on during mid-month, PNG’s Ombudsman Commission issued a press release and expressed concerns over “allegations that a certain telecommunications company is issuing bribes to lure political support at the national parliament to promote its business interest in the country”.
“Elected leaders have a duty to conduct their public duties as required by the Constitution,” said chief ombudsman Ila Geno in a statement he jointly signed with ombudsman John Nero and acting ombudsman, Roderick Kamburi.
“On the same token, the commission appeals to business enterprises, foreign or otherwise, not to approach the decision-makers and leaders of this country in this alleged manner. If the allegations are true, it is a serious corrupt conduct and a serious threat to good governance, good leadership and democracy in PNG. This country is battling with corruption. What is the political party in government doing with this company? What right does this company have to approach PNG’s elected leaders in this alleged manner?”
The relevant licensing and regulatory authorities have also been roped in and are teetering at the edge of being polarised by the politics of this war. On one corner is the Independent Consumer and Competition Commission (ICCC), a victim of its own doing when, in 2005, acted upon the gazetted notice by the Somare government to introduce competition in the mobile telecommunication market after March 2007.
“The ICCC is required by law to ensure that government policies, which are approved by the NEC (National Executive Council, the government cabinet) and notified to ICCC, are carried out. And we did,” said ICCC commissioner and CEO Thomas Abe in his speech to the Port Moresby Chamber of Commerce and Industry early last month.
“Unfortunately, not every government agency apparently felt the same way. The IPBC (Independent Public Business Corporation—created by government to support the commercialisation of public enterprises), as the sole shareholder in Telikom, continued to advocate a position that would have prevented the introduction of mobile competition from March 2007. Telikom, from about mid-2006, also tried to frustrate the policy by instituting multiple legal actions against the ICCC, several of which were dismissed by the courts as an abuse of process,” said Abe.
“Earlier this year, the ICCC was on the brink of agreeing with Telikom, at the most senior levels, to settle all legal proceedings and work towards a sensible introduction of mobile competition. Telikom was instructed to stop talking to us and not to agree to anything.”
Coming in as a counter force is PANGTEL (Papua New Guinea Telecommunications Technical Authority), seen by critics as being influenced by special interests after its failed attempt to withdraw Digicel’s radio spectrum license in July.
As tension and uncertainty in PNG’s telecommunication industry slowly gathers pace. Some fear it could snowball into something unpleasant. It is also clear that this is also a war of technology and one where PNG Telikom has been caught napping.
“Digicel has ‘been there and done that’ so they are experts in the art of fast rollout of network that I think Telikom vastly underestimated the opposition’s ability to get things moving that fast,” said Terry Griffiths, PNG-based radio frequency consultant and former manager of Pacom, distributors of radio equipments in PNG.
“When Digicel launched its system a few weeks ago, it immediately commenced very aggressive advertising and pricing of its products and services and again, this caught Telikom offguard. Now the two companies are trading advertising blows in the local papers and billboards around the country,” Griffiths told ISLANDS BUSINESS.
Major upgrade: “The Telikom infrastructure is also very tired and in need of a major upgrade.This includes all the remote sites they are using for the GSM system as well as their microwave backbone and fixed line cable system. It is obvious that the excessive spending on advertising has resulted in them having problems funding any real upgrades at this stage. In comparison, the Digicel system is all new, latest version system and the coverage and general operation leaves Telikom for dead. The only real issue is the restriction on Digicel to interconnect into either the Telikom fixed line or mobile network and this appears to be a political issue rather than any real technical reason. It obviously means that Telikom is missing out on a lot of revenue through their networks because of the restrictions. In essence, the competition has woken Telikom up, increased the connection of the Telikom GSM phones on to their network and made them a bit more market-oriented, which is long overdue.”
The issue has all the makings of a very difficult problem for the Somare Government, who is now perceived to have changed course from its initial intention to open up the mobile communication market. Whatever picture it had in mind when it envisioned that, liberalisation was obviously far removed from what became of the industry in 2007.
Last month, Somare made it clear in the country’s parliament that competition was welcomed but any telecommunication infrastructure, its management and its control must remain the sovereign property of PNG and its people, as will be the result of the new servco/netco model that the PNG Government has now adopted. And among the hues and cries against this, there are those who seriously believe that something should indeed be left behind in the liberalised industries for Pacific people to own.
“I support the major telecommunications network remaining in the hands of the government, as well as power and water for that matter. But if, as has been agreed you are going to let competition in, then give them a fair go and meet them with a vibrant and competitive operation,” Griffiths said.
Politics aside, the ball is now in Telikom PNG’s court.
Tomorrow: Digicel to fight tax raid in court – Jamicia
I often wonder if O’Brian’s operation motto is, “who do we reach? What do we pay?”
One suspects when it comes to cutting a deal the bold Denis may have more than just have a passing acquaintance with *P2P etiquette.
March 2010, a judicial tribunal found that a former minister for communications, Michael Lowry, “secured the winning” of the 1995 mobile phone license competition for Denis O’Brien’s Esat Digifone. The tribunal also found that O’Brien made two payments to Lowry, in 1996 and 1999, totaling approximately £500,000, and supported a loan of Stg£420,000 given to Lowry in 1999. In his 2,348-page report, Mr. Justice Michael Moriarty found that the payments from O’Brien were “demonstrably referable to the acts and conduct of Mr. Lowry” during the licence process, acts which benefited Esat Digifone. In effect, O’Brien was trading in influence or ‘legal corruption’
The Moriarty Report states that it is ‘beyond doubt’ that Michael Lowry imparted substantive information to Denis O’Brien that was ‘of significant value and assistance to him in securing the licence’.
It states that documentation, which contained ‘sensitive information’, was found in files in the possession of Esat Digifone. The report states it is unable to conclude how the company obtained the information on the weighting matrix adopted by the project group.
The report states that Michael Lowry displayed ‘an appreciable interest’ in the process and had ‘irregular interactions with interested parties’ at what it terms ‘most sensitive stages’.
It also found that Mr. Lowry made his preferences on the leading candidates known.)
Forbes magazine said of O’Brian
“Despite coups, corruption, and kidnappings, Denis O’Brien keeps pouring money into the world’s poorest, most violent countries. His bet: Give phones to the masses and they will fight your enemies for you.
Is it just one of those oddities of life that O’Brian just happens to likes doing business where corruption is endemic?
History would suggest that this is no mere coincidence.
Let us look at how some of the countries that Digicel operates in, and see how they stack up in terms of corruption
This first figure is the ranking position of the country. The number of countries measured is 176
The Corruption Perceptions Index scores countries on a scale from 0 (highly corrupt) to 100 (very clean). While no country has a perfect score, score below 50, indicate serious corruption problems.
Haiti sits in 165th position, with a corruption index of 19
Papua New Guinea, 150 -25
Guyana, 133- 28
Jamaica 83- 38
Panama, 83- 38
El Salvador 83 – 38
Trinidad & Tobago 80- 39
Possible soon to be added to the Digicel list is Myanmar sitting in 172nd position with a corruption index of 16
O’Brien’s Jamaica-headquartered company, Digicel Group, began offering cheap cell phone service recently from Papua New Guinea. Razor wire and half-dozen guards carrying shotguns and pistols protect the Digicel office in Papua New Guinea.
The murder rate in this Pacific hellhole is one of the highest in the world. Corruption is also rife in PNG
Bermuda-incorporated Digicel was founded in 2001 and has operations in 28 countries in small markets in the Caribbean, Latin America, and the Pacific. Its main market is Jamaica where it has about a 75% market share and in June was fined by the regulator for anti-competitive behavior. In May, the Jamaican tax authorities raided its Jamaican offices.
*Pay to play
Tomorrow we will have a look at O’Brian’s good friend President Michel Martelly of Haiti that upstanding man of impeccable honesty