The Mobile Economy Pacific Islands 2015 Copyright © 2015 GSM Association PACIFIC ISLANDS MOBILE ECONOMY 2015 About the GSMA This report is authored by GSMA Intelligence, the definitive The GSMA represents the interests of mobile operators source of global mobile operator data, analysis and worldwide, uniting nearly 800 operators with more forecasts; and a publisher of authoritative industry reports than 250 companies in the broader mobile ecosystem, and research. Our data covers every operator group, including handset and device makers, software network and MVNO in every country worldwide – from companies, equipment providers and Internet companies, Afghanistan to Zimbabwe. It is the most accurate and as well as organisations in adjacent industry sectors. The complete set of industry metrics available, comprising tens GSMA also produces industry-leading events such as of millions of individual data points, updated daily. 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Our team of analysts and experts Follow the GSMA on Twitter: @GSMA produce regular thought-leading research reports across a range of industry topics. www.gsmaintelligence.com [email protected] PACIFIC ISLANTHEDS MOBILEMOBILE ECONOMYEconomy 2015 CONTENTS EXECUTIVE SUMMARY 2 1 THE MOBILE INDUSTRY IN THE PACIFIC ISLANDS 8 1.1 Regional overview 8 1.2 Subscriber growth set to slow 10 1.3 A diverse region dominated by larger markets 12 1.4 Technology migration now underway 14 1.5 Market structure a challenge in many markets across the region 18 1.6 The role of satellite in the Pacific Islands 21 2 CONTRIBUTION TO ECONOMIC AND SOCIAL DEVELOPMENT IN 22 THE PACIFIC ISLANDS 2.1 Mobile contribution to economic development 23 2.2 Mobile contribution to social development 32 2.3 Digital Inclusion in the Pacific Islands 33 2.4 Delivering financial inclusion in the Pacific Islands 38 2.5 Disaster Response 40 2.6 Tackling the gender gap in the Pacific Islands 42 2.7 Mobile addressing a range of other social challenges in the region 43 3.2 Connected living: Mobilising the Internet of Things 50 3.3 Digital commerce 55 3 POLICY: SUPPORTIVE AND COLLABORATIVE ACTION 44 3.1 Spectrum – a scare resource requiring careful management 44 3.2 The importance of national broadband plans 47 3.3 Building regulatory capacity in the region: the potential role of the 50 GSMA PACIFIC ISLANDS MOBILE ECONOMY 2015 Executive Summary The mobile industry in the Pacific Islands has grown rapidly over recent years, despite the challenges of a region that is one of the most remote and geographically demanding. The unique mobile subscriber base in the region reached 4.1 million by the end of 2014, up from 2.3 million in 2009. This is an annual growth rate of 12.6%, well ahead of the global and developing region averages. Wake Hawaiian Islands Northern Johnston Atoll Mariana MARSHALL ISLANDS Guam M I C R Caroline O N Kingman Reef Palmyra Atoll E FEDERATED STATES PALAU Gilbert OF MICRONESIA Howland S Kiritimati Baker I Jarvis PAPUA NEW Phoenix A GUINEA NAURU TUVALU KIRIBATI INDONESIA SOLOMON Line ISLANDS M Tokelau E SAMOA Cook Is. Tuamotu Arch. L Wallis & Futuna Society A VANUATU A FIJI American I N Samoa E S Niue Tahiti S I A E New Caledonia TONGA N Y Pitcairn O L AUSTRALIA P Tubuai French Polynesia Norfolk Kermadec NEW ZEALAND *GSMA Intelligence estimates that the total number of active SIM connections at end 2013 was 6.3 billion. 2 | Executive Summary PACIFIC ISLANDS MOBILE ECONOMY 2015 The region is also beginning to see an increasing switchover (DSO) and freeing the Digital Dividend technology migration in its mobile networks and spectrum bands for mobile broadband will be essential devices, with both an increasing proportion of 3G steps in bridging the digital divide and meeting the (and to a lesser degree 4G) connections, as well as strong demand for data services going forward. smartphone ownership. Mobile broadband connections The GSMA has identified four frequency ranges are expected to see an almost four fold increase by within which the spectrum requirements for future 2020 across the region, growing from 1.1 million in mobile broadband use could best be satisfied. 2014 to 4.1 million, reaching almost half of the total These bands, which include a portion of the C-Band connection base, helped by ongoing network build outs (3.4-4.2GHz), should be identified for International and more affordable devices. Mobile Telecommunications (IMT) at the World Despite the progress to date, subscriber penetration Radiocommunication Conference in 2015 (WRC-15). The rates in the Pacific Islands continue to trail behind C-band is one of the few bands where a harmonised those in other regions, both in terms of the broader portion could be made available for potential future Asia Pacific region as well as other developing regions mobile broadband use worldwide and which is large such as Sub-Saharan Africa. By the end of 2014, unique enough to support very high levels of data traffic and subscriber penetration stood at 37%, a figure that is the fastest data rates. Governments in the Pacific forecast to increase to around 42% by 2020. This will Islands may be reticent to support an identification still leave the region trailing the developing market because local mobile data demands are less intense average of 55%. and the C-Band is heavily relied upon for fixed satellite services (FSS). An IMT identification at the international Market liberalisation and the creation of more enabling level simply provides more flexibility to each country regulation has helped spur growth in the region in to react to their specific market conditions, and does recent years. The more modest rate of subscriber not act as an additional constraint to existing services. growth over the next few years largely reflects It will not impact C-band satellite services in the Pacific difficulties in extending connectivity to the outlying Islands for as long as they are deemed necessary. regions and islands, issues around affordability for low income populations, and the challenge many of The Pacific Islands may also need an alternative to the the smaller markets face in supporting more than one C-band to provide capacity in the future, to cater for operator. demand from both domestic usage and tourism. The 2.7-2.9GHz band is a realistic and attractive option, However, if the connectivity gap between the Pacific with several countries from Europe, APAC and Africa Islands and the rest of the Asia Pacific region is not supporting its identification for IMT. The Pacific Islands to widen further, smaller and less developed markets should also consider supporting the proposal for a need a more supportive regulatory framework, with sub-700MHz UHF IMT identification at WRC-15, as possible government collaboration or incentives, to proposed in the USA and Canada. This band represents ensure sufficient investment in the future. Robust and the most cost efficient way to cover the whole islands implementable national broadband plans can play with mobile broadband connectivity. Other regions can an important role as part of a broader focus on ICT then benefit from lower price equipment when capacity development in local economies. becomes a problem and these alternative spectrum Spectrum is a precious and finite resource and bands are required. fundamental to the delivery of mobile services. With The mobile ecosystem is directly responsible for driving global data traffic set to see an almost ten-fold increase major economic progress and welfare across the Pacific by 2019, the ITU predicts that mobile broadband Islands. In 2014, mobile technology was responsible networks globally will need between 1340MHz and for 4.7% of the region’s GDP, representing nearly US$2 1960MHz of spectrum to meet the anticipated demand billion in value added terms. The mobile ecosystem in 2020. In many countries in the region, concrete directly accounted for more than a third of that value, commitments to the harmonised allocation and with indirect and productivity impacts accounting for assignment of sub-1GHz spectrum are yet to be fulfilled. the rest. Coordinating and accelerating the analogue to digital Executive Summary | 3 PACIFIC ISLANDS MOBILE ECONOMY 2015 The period to 2020 will see mobile networks becoming services means mobile has the best opportunity to the gateway to the internet for many of the people in drive connectivity and internet access throughout the the region who remain unconnected today, overcoming Pacific Islands. in some cases barriers such as geographical However, mobile operators, regulators and other remoteness which seemed unassailable just a few industry stakeholders should recognise the scope for years ago. Broader and easier access to the internet partnerships and the ongoing role for complementary will enhance economic and social prospects for many alternative technologies (particularly satellite) in and drive strong growth in the period to 2020. The addressing the connectivity challenges in the region. economic contribution of mobile technology will grow The unique challenges to infrastructure roll out in the at a faster rate than the rest of the region’s economy, region, as well as a lack of scale in many small island claiming over 6% of the region’s GDP by 2020. states, may require innovative new business and The economic footprint of the mobile industry can partnerships in order to reduce the cost of services also be seen through the number of jobs it supports and so make mobile accessible to the still unconnected in the region.