44172-022: Tonga-Fiji Submarine Cable Project

Project Data Sheet (PDS): Details


Description

The Tonga-Fiji Submarine Cable Project will provide a submarine fiber optic cable system linking Tonga to Fiji where an existing international submarine cable system will provide onward cost-effective access to the rest of the world. This will provide substantially higher initial capacity of 10 Gpbs and reduce international connectivity costs by at least 50%. The submarine cable system will stimulate increased take-up of broadband internet, and lower the cost of telecommunications services. The infrastructure development under the project will be complemented by regulatory capacity development technical assistance from the Pacific Regional Connectivity Program (PRCP) of the World Bank.

Project Rationale and Linkage to Country/Regional Strategy

Tonga is far away from large economies in the region (Australia and New Zealand) and has a small population of 102,000 spread across 48 inhabited islands out of 171 islands. About 70% of the population is in Tongatapu where the capital city of Nuku'alofa is located. Main economic activities include fishery, agriculture, and tourism. Tonga's small size and distance from large markets do not allow the people to exploit economies of scale. A narrow resource base and small market have resulted in a highly undiversified economy. Remittances from about 100,000 Tongans overseas account for an estimated 30% of the gross domestic product. As the global economic slowdown affected the principal remittance-sending countries (Australia, New Zealand, and the United States), remittances are expected to fall by an estimated 18% in FY2010, following a decline of 12.5% in FY2009. Lack of economic opportunity within the country resulted in migration from rural to urban areas, and overseas. Tonga's isolation and other constraints to economic development may be mitigated in part by improved access to and more affordable telecommunications, especially high-speed (broadband) internet, which offers new economic opportunities both domestically and internationally and new avenues for delivery of services. A recent World Bank study indicates that a 10% increase in broadband penetration results in a 1.38% increase in gross domestic product growth in low and middle income countries. Such impacts result from (i) reduced transaction costs for business, government, and household communications; (ii) new business opportunities such as investments in e-commerce and business process outsourcing facilities; and (iii) improved public service delivery, in particular to support e-education and e-health services. Affordable high speed internet services will also help Tongans maintain social cohesion with their relatives residing abroad. Tonga was the first country in the Pacific to liberalize its telecommunications sector. Since 2002, access to basic telecommunications has increased significantly. Mobile teledensity , at about 60%, is among the highest in the region; and local and international call tariffs are among the lowest in the Pacific. Internet penetration, however, remains low with about 2,500 subscribed broadband internet users. This is because of the high cost and limited availability of international bandwidth, resulting in congestion. Internet service is also open for competition and five internet service providers (ISPs) have been licensed. However, because of the high cost of satellite infrastructure and capacity leases, only two telecommunications operators are operational ISPs. The limited capacity and high cost of international bandwidth is the principal constraint to higher internet penetration, the introduction of new telecommunications services, and new market entrants. This is due to Tonga's total dependence on satellite connectivity. The current market price for two-way satellite capacity is about $3,600 per megabit per second per month. With normal growth, Tonga's bandwidth demand is projected to increase to 1.243 gigabits per second by 2032. With the current satellite capacity and price, it would be impossible to meet the growing demand. In addition to the positive economic and social impact in Tonga, the submarine cable system will contribute to regional integration. It will increase the frequency and quality of communications among the countries in the region, thus increasing trade in services (tourism and back-office functions) and allowing the region to form a sizable market for digital products and services. It will also strengthen the existing regional public goods and encourage new ones by allowing countries to share the limited knowledge and human resources available in the Pacific.

Impact

Widely available and affordable ICT services improve Tonga s economic performance and public service delivery.

Project Outcome

Description of Outcome

The population of Tonga has access to good quality broadband internet services at an affordable price

Progress Towards Outcome

Progress of implementation stands at 70%. A supply contract was awarded to Alcatel on 5 July 2012. On 11 June 2013, the cable arrived in Tonga and commissioned on 21 August 2013. Three weeks after commissioning, Tonga Cable Corporation and Digicel have connected to the cable.

Implementation Progress

Description of Project Outputs

Establishment and efficient operation of the Tonga submarine cable system by TCL Efficient and effective project management services by TCL

Status of Operation/Construction or Implementation Progress

Contract for the supply and installation of the cable was awarded and the building for the cable landing station completed. Landing station completed in Fiji and Tonga and cable equipment received.

Safeguard Categories

Environment: B
Involuntary Resettlement: C
Indigenous Peoples: C

Summary of Environmental and Social Aspects

Environmental Aspect
Cable laying and the minor civil works proposed will not result in any significant adverse environmental impact, and all potential environmental impacts can be adequately mitigated and monitored

Involuntary Resettlement
The project does not involve any land acquisition

Indigenous Peoples
No indigenous peoples' issues have been identified



Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

Project Data Sheets (PDS)

Timetable

Concept Clearance
07 Jul 2010

Fact-finding
12 Sep 2010 to 24 Sep 2010

Management Review Meeting
16 Mar 2011

Board Approval
23 Aug 2011

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