Challenge
High call prices put basic telecommunications services out of reach for most Samoans. This lack of access increased the cost of doing business and added to economic isolation within the country. Other constraints included:
- Poor phone coverage and access to networks: At the time the project became effective in 2003, fixed-line penetration was just 6.5 per 100 inhabitants (compared to an average of 12 for countries of a comparable wealth level), while mobile phone penetration was just 1.7 percent.
- Inadequate postal service: Collection and delivery of post by SamoaTel (then the operator of the postal service) was limited, and below Universal Postal Union standards. Samoa lacked home and business delivery.
- Ineffective sector regulation: SamoaTel’s self-regulation of the industry restricted sector development and interconnection agreements were limited. This situation affected the mobile phone provider’s capacity to deploy a network capable of reaching across the nation.
Solution
Like many Pacific Island countries, Samoa faces challenges from geographic and economic remoteness, including unusually high transaction costs for governments and businesses. Reforming the telecommunications and postal sectors was crucial in helping Samoa overcome these limitations, and has made a big impact on people's lives.
The Samoa Telecommunications and Postal Reform Project played a critical role in making this happen by:
- Helping the government introduce a more competitive telecommunications sector that would reduce costs and build usage, including in remote rural areas.
- Supporting vital reforms to the debt-ridden SamoaTel to improve management operations, including the separation of telecommunications and postal business units.
Samoans wanting to use phones, the internet or postal services for business or social purposes stood to benefit directly from a reduction in costs, and an improvement in services and reliability.
Results
Around the world, increased competition in the telecommunications sector has helped expand networks and reduce usage costs. In Samoa, more mobile phone operating licenses resulted in lower call costs, and a more reliable and better service. This development led to a significant increase in phone usage, with 165,500 people gaining access to mobile phones between 2002 and 2010. The growth of mobile phone subscribers can be attributed to a network that expanded to rural areas previously not connected, and to the decline in call costs.
- A second digital phone license was achieved in 2006.
- Total customers (fixed and mobile) climbed from 12,500 in 2002 to 152,800 by 2008 and 168,000 by 2010.
- The Internet subscription target was met in 2010, when the number of subscribers increased from 3,000 in 2002 to an estimated 12,000.
- The 2010 target for an increase in the number of telecommunications customers in rural areas was 7,000. The actual number reported of customers in rural areas that year was an estimated 57,943.
- SamoaPost is now self-sustaining and saw revenues increase from about WST 1 million in 2003 to WST 2.5 million in 2010.
- The number of sub-post offices jumped from 30 in 2002 to 41 in 2010 (37 in Upolu, 4 in Savai’i).
