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Competition in telecoms expected to drive down costs, boost coverage

Macauhub - January 2, 2013

Timor-Leste (East Timor) is preparing to liberalise its telecommunications market in the first quarter of 2013, which is expected to drive prices down and expand the country's telecommunications infrastructure.

East Timor, which since 2002 has had a single telecoms operator, Timor Telecom, has comparatively high telecommunications and Internet costs and limited coverage for most of the population. These factors, which are considered to be an obstacle to economic growth, are due to be changed in the first few months of the year.

According to estimates from the World Bank, which is supporting the liberalisation process, opening up the market to two new operators (Digicel and Telin) will expand coverage of the population to 90 percent.

"Services are expected to become more varied and affordable to most of the population," the World Bank said in a statement on the sector issued last week.

The country largely depends on mobile telecommunications as most cables were destroyed in the conflicts that followed the referendum on Timorese independence in 2001.

However, only half of the population has access to mobile phones and around two thirds of these people live in the country's capital, Dili. "The vast majority of people living in rural areas are not linked up due to high costs and a lack of service," said the World Bank.

Taking mobile communications to the interior of the country also means opening it up to the markets, as it makes it possible to set up new businesses and better circulation of information.

The current cost of fixed line (256 kbps) Internet access is estimated at US$900 per month and US$6000 per month for a high speed unlimited service. These figures are high even by the standards of more developed countries.

The prices reflect the cost of bandwidth on international satellites, but are also due to the monopoly on the market.

Sector reforms implemented by the government also include creating an independent regulator – the National Communications Authority – which will be charged with developing a programme to support universal access to areas that are less commercially viable and to ensure compliance with competition rules.

In the summer of 2012 the Timor government announced it would grant the first new telecommunications licenses to Digicel Pacific Limited (Digicel) and PT Telekomunikasi Indonesia International (Telin).

Digicel committed to launching a mobile GSM and high speed 3G Internet networks that would provide access to over 91 percent of the population within four months.

Telin pledged to launch its services within six months and committed to reaching 94 percent of the population with its mobile GSM network as well as providing high speed 3G Internet access.

The companies that were not granted a license in the tender were PT Gapura Caraka Kencana (Indonesia) and Viettel Global Investment Joint Stock Company (Vietnam).

Alongside this, the Timor government announced a programme to build and repair infrastructure, including roads, bridges, airports, schools, hospitals and power and communication networks, will be carried out over the next five years.

During the presentation in parliament of the Government Programme for his second term, Prime Minister Xanana Gusmao said that the large-scale programme, "aims to repair, improve or build a number of facilities that are fundamental to allow access to health, to schools, to markets, to industries, and to businesses."