Man on a Telco mission - Mike Johnston in verbatim
Written by Cherelle Jackson
Tuesday, 26 February 2008
Cherelle Jackson interviews the Chief Executive Officer of SamoaTel, Mr. Mike Johnston about the state of telecommunication in Samoa and the recent increase in calls from fixed lines.
Reporter: Talofa Mike, tell us, why has there been an increase in the cost of calls from SamoaTel fixed lines to mobile phones?
Johnston: First of all what we did, two weeks ago on everyone’s telephone account we put in a mail advice, as of February the 18th, we would be increasing the calls only to Digicel Mobiles and to SamoaTel GoMobile cellphones, so all other charges remain unchanged from the landline.
At this stage no has had an increase on their bill because we started from the 18th we don’t do the bill until the end of the month, we wanted to make sure everyone had known and understood what was happening.
Secondly, coincidentally with this change, we also changed the billing, if you like, from 30 seconds or more down to 10 seconds.
So its less charge for less time, which means in theory the charge is reduced.
The reason why we did this change was the regulatory rate that’s been imposed on SamoaTel is such that SamoaTel has been subsidizing calls for Digicel for the last seven months, and in terms of magnitude of what this means is, were paying hundreds of thousands of dollars to Digicel, the Samoan people are, for the right to terminate their calls under the Digicel network, and so that’s non-sustainable long term.
What SamoaTel has taken as a minimal increase, which again is less than 8cents, and 10.9, we should add that the ratio difference between what we pay versus what Digicel pays for us is substantial, as it stands now it is significantly in Digicels favour. Being midful of that fact we are awaiting the outcome of the regulatory decision, and pending the regulatory decision which could affect our rates in the future.
Reporter: When will this decision be made?
Johnston: I’m not going to pre judge on whether the court is going to make a decision, on whether the Regulator followed the judicial process as part of the review of the tariff rates.
Reporter: So why have the changes been imposed now?
Johnston: Because we thought, like everyone else, the rates happen, there’s a dispute on, it gets resolved and we resume as normal.
But we’ve waited and waited, and its gotten to the stage where SamoaTel for the last six months have been subsidizing every call to Digicel, only from the fixed line plan. So we’ve taken from the minimal increase we can do, just to break even.
Reporter: Why increase to GoMobile phones:
Johnston: Because when we applied to the Regulator, he gave us an order to increase the rates, we had to show that we weren’t subsidizing the costs to GoMobile phones so we’ve basically presented all our facts at cost, the margin is very miniscule.
Reporter: Is this a loss for SamoaTel?
Johnston: Well it’s a loss in a sense, if you’re subsidizing a minute for every call that goes to Digicel, just for the fixed lines. Now luckily our business is not just for fixed lines, we’ve been managing the cost, its just virtually been breaking even and in the telco world we have to make a profit to invest and survive and were not getting the returns. But weve held our costs for over six months.
Reporter: How is the go mobile industry going?
Johnston: The fact is we have grown so much, unlike other situations we have gone from zero client base, to a growth of 2000 a month, which is substantial.
If we can keep that up that’s fantastic, but I think the market is getting close to the optimum size now.
Importantly we have looked after our business customers, and as of now we have the true international and domestic reach of the whole country which we did not have before, so now we can claim we are still the most competitive in price, we have the best comparative coverage and the reason why we say it like that, is there will be areas where Digicel will be better than us and vice versa. But overall both companies have significant coverage.
It is unlikely that anyone in the country now should be without some form of telecommunications.
Reporter: How do you think more access to cell phones will effect the Samoan society?
Johnston: I think what’s happened is that people can be comforted in the knowledge that they can be contacted by their relatives overseas, at any place, anytime any where. What’s happening now, which is also similar to worldwide trends is that people are moving away from just having one device of telephone in their fale or house to that most of the members of the family have a mobile phone.
Reporter: And you feel that is beneficial?
Johnston: Communication is all about keeping in touch and from communications things can grow, and from a business point of view, they cant survive without communication. There is growth from the economic point of view in business, tourism and other areas, and there’s also the social value of being able to communicate, which is very important.
Reporter: You have been industry for more than 20 years all over the world and you have seen first hand the impact of communication on people, there have been concerns that Samoans simply cannot afford to maintain cell phones, even if it is prepaid. Is there a concern from your end in regards to this?
Johnston: What’s happening is actually quite interesting, if you like, mobile phones are quite expensive and sophisticated technology but its allowed the situation as you have pointed out, through prepaid where people can have a telephone device and it is amongst the cheapest devices in the world to operate, and what I mean by that is, particularly with SamoaTel with free texting on the weekend and if they were to spend a minimal just to keep the phones, they can receive calls all the time, they can be contacted by anyone from around the world.
That is a unique phenomenon and there’s no other technology that emulates that. That’s really an outcome out of the mobile phone technology, having said that, in time that same technology encourages the use of even greater communication like the internet and whatever else, so in time the technology helps to encourage growth in the industry as well.
Reporter: I understand that GoMobile introduced internet via the cell phone, there are issues of internet pornography. What is your opinion on this, in regards to people having that freedom in light of pornography being illegal in Samoa?
Johnston: Well first of all, there are all sorts of ways that people can access the internet, through mobile phones, wi-fi network through computers, so the controls that are there, there are various filters that can be put on to limit or manage pornography, but at the end of the day, particularly on the mobile phone that is a very expensive way of doing it. Because the actual cost to download data is phenomenally high and I don’t see people using it that way. You can’t stop people looking where they want to look, Australia has tried it, adult filter and all that, it hasn’t worked.
Reporter: Do you see a move away from using fixed lines?
Johnston: Well worldwide that’s a trend, what’s happening now is that, particularly as countries develop, the increase use of portability, no one wants to be fixed in one location anymore and what’s happening is that the mobile phone has been taken as a norm to communicate. Just at this stage it’s quite expensive to put data on mobile phone, but in time that will merge and we will have a true norm.
Reporter: Do you think communications in Samoa is healthy in comparison to the rest of the Pacific?
Johnston: In Samoa we are probably ahead of just about everyone else in the Pacific, we have all technologies available, broadband, video conferencing and we have full peripheral range of the choices of mobile phones available here, as well as the alternative with the fixed line communication.
You know it’s really about matching what your business needs are. Prices of communication here are exceptionally cheap compared to anywhere else in the world. The fact that we have such extensive coverage in Samoa is a credit to the investment that’s been made into the industry.
Reporter: What is the net profit SamoaTel made in the last year?
Johnston: We don’t disclose that. We are a Corporation and we will be publishing our figures, what I can say in the last 3 years SamoaTel has paid over 4million back to the Government in the form of dividends, and that is a statutory percentage of the net profit.
Reporter: Do you have any further comments?
Johnston: I should point out that even now with that small increase in cost, our rates are still the cheapest of virtually all Pacific islands. Since the opening of the markets here, everyone now has got a telephone device and a choice on how to communicate, but you know there’s a cost associated with that.
This is still going to be an exciting place for telecommunications.
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