BY GIFF JOHNSON
Marshall Islands Correspondent
MAJURO, Marshall Islands — After more than a decade of multiple World Bank-funded projects promoting privatization of the Marshall Islands telecommunications sector, the government is now taking steps — albeit slowly — toward bringing in a private operator.
Over the past year, the fourth World Bank project has funded a team of 13 telecommunications consultants with the Australia-based firm, Castalia, who are recommending, among other initiatives, to end the government’s National Telecommunications Authority’s control of the sector in favor of a private operator.
An important point of contention over the World Bank consultants’ claim that a private operator, providing services at a reduced cost, would see internet penetration rise significantly. But many, including National Telecommunications Authority General Manager Tommy Kijiner Jr., believe the small market in the Marshall Islands is constrained by poverty and low incomes.
NTA has seen good growth in use of 4G, but not much expansion in the number of individual Sim cards/MiFi units. “Usage has tripled on 4G in three years,” he said. “Three households may share one cell card (for a 4G modem). People are chipping in to pay for using it.”
But seven — or more — people on one unit doesn’t show up in a report about internet “penetration” and usage. Kijiner believes the market is limited by a substantial portion of the population not having money in their pockets to pay for their own connections. “Even the best price in the world wouldn’t change the penetration rate much,” he said.
The World Bank consultants — who did all their work virtually because of the COVID border closure in the Marshall Islands — paint an optimistic picture that contrasts dramatically with Kijiner’s assessment.
They said that household monthly telecommunications spending “for significantly improved services” will decline by about two thirds. “This will enable more households to purchase connections,” the team said, adding that, “Mobile and fixed line penetration in Marshall Islands is expected to grow rapidly, reaching around 80% within five years, which is in line with levels achieved on other small Pacific Islands.”
When Kijiner took over at NTA in 2012, NTA was in default on its loan to the U.S. Rural Utilities Service, a loan that was needed to pay for the submarine fiber cable that links Majuro, Ebeye and the U.S. Army missile testing range at Kwajalein with Guam. It was installed in 2009. The government at the time agreed to subsidize half of the annual loan payments — approximately $1.5 million annually — but later governments didn’t provide the subsidy, and NTA struggled, failing to make its payments to RUS, while local services, for lack of money, declined.
“My first priority was to stabilize loan payments to RUS,” Kijiner said. “Since 2015, we’ve been in good standing with the loan.” He reported that, after years of financial losses, NTA has generated an operational profit the past three years.
“We feel we are finally turning the corner; next year we might be able to pay a dividend to shareholders and break $1 million in operational revenue (profit),” he said.
“We’re the first to admit there are problems at NTA,” he said. “We don’t hide it.”
But, he said in relation to the option under consideration by the Marshall Islands government to privatize NTA: “If you get a cut on your hand, do you amputate it or fix the cut?”
In a statement issued Feb. 26, Education Minister Kitlang Kabua, who chairs the cabinet-appointed Digital Marshall Islands Steering Committee, said the government must move on a path to dramatically improve telecommunications services, a signal that the government is supporting the privatization proposed by the World Bank.
A big component of what could be a nearly $30 million World Bank telecommunications project if the government endorses it, is funding to expanded e-government operations. The Digital Marshall Islands Project will enable the Marshall Islands government to substantively invest in digital government services, Kabua said. Under the Digital Marshall Islands Project, $10.5 million would be available to invest in the development of digital government services, she said.
The concept of the privatization plan is the government would retain ownership of the core telecommunication infrastructure, including the proposed new fiber-to-the-home network investment for Majuro and Ebeye, the submarine fiber cable, and the telecommunication towers.
“There will still remain a National Telecommunications Authority continuing to oversee our important infrastructure,” Kabua said. “What we are assessing is the case for a private operator to look after customer services, which is a fast-changing area that requires constant investment. This is better suited to private regional operators of scale. NTA itself has demonstrated this (through) the investment in the 4G network and its operation (which) is actually done by a private operator, Blue Arcus.”
A decision on a private operator will not be made quickly, she said. “It will be at least two years before a final decision” on a private operator will be made by the cabinet. “If the government does opt for a private operator for customer services it will be done with new regulation that protects the public interest in the reforms, including a contract setting out service standards and prices that the operator must meet,” she said.
A key action required for managing the process is buying out the private shareholders, who control about 16% of NTA’s stock. “It would start with a shareholder buy-back offer,” Kabua said of the privatization process. “Depending on how that went, the government would then move to assess which private operators would be best for the Marshall Islands.” mbj