Solomon Islands: Broadband for Development Project

Sovereign Project | 44382-022 Status: Dropped / Terminated

Summary

ADB is helping Solomon Islands provide affordable high-speed internet services in the country. The project will build a submarine cable system that will connect Solomon Islands to an existing international submarine cable network that runs between Guam and Sydney, Australia.  Improved connectivity will help expand access to markets and services for Solomon Islands’ geographically isolated areas.

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Project Name Broadband for Development Project
Project Number 44382-022
Country Solomon Islands
Project Status Dropped / Terminated
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0304-SOL: Broadband for Development Project
Asian Development Fund US$ 7.50 million
Loan 2897-SOL: Broadband for Development Project
Asian Development Fund US$ 10.50 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Private sector development
Sector / Subsector

Information and communication technology - ICT infrastructure

Gender Equity and Mainstreaming No gender elements
Description Under the project, the Asian Development Bank will support the development and operation of a submarine fiber optic communication cable system (SCS). The SCS will link Guadalcanal (landing in Honiara) and two domestic spurs linking Guadalcanal with Malaita (landing in Auki) and the Western Province (landing in Noro). Jointly, these provinces are home to roughly 72% of the population. The SCS will provide onward cost-effective broadband access to the rest of the world, which will boost opportunities to set the country on an inclusive growth path through the expansion of business opportunities in the ICT sector and the introduction of broadband solutions to service delivery constraints in key social sectors like health and education.
Project Rationale and Linkage to Country/Regional Strategy

Geography and economy. Solomon Islands is one of the largest countries in Melanesia, with a land area of about 28,000 km2.The country comprises six large islands, dozens of smaller islands, and hundreds of islets and atolls. About 85% of the population of 528,000 lives in rural areas and is spread across the islands, living in widely dispersed villages of a few hundred persons. The economy is based on primary commodities from agriculture, forestry, and fishing; alternative income-generating opportunities are scarce, especially in rural areas.

Disparity and isolation. Solomon Islands has the second lowest average income in the region, with an estimated gross domestic product (GDP) per capita of $1,347 in 2010 (current prices). Income distribution is uneven, with rural expenditure levels significantly below expenditure levels in urban areas. Social indicators, although improving, are among the worst in the region. Electricity, water, transport, and telecommunications services are not available to a large percentage of the population. Lack of access to markets and services , combined with high transport and communications costs, leaves large parts of the geographically isolated parts of the country economically isolated from national and regional markets. This also limits provision of access to basic services. Investments in submarine cables for the smaller islands of the Pacific have meanwhile been limited, primarily due to (i) the requirement for large upfront capital investments; (ii) a long period of return on investments; and (iii) the inability of the small private sector to mobilize the large investment that is required.

Expected benefits from broadband connectivity. Such constraints to economic and social development can be mitigated by improved access to and more affordable telecommunications, particularly high-speed (broadband) internet, that offers new economic opportunities domestically , as well as connections to larger markets, and new avenues for the delivery of key social services. In addition to the expected positive socio-economic impact in Solomon Islands, improved broadband connectivity is also expected to increase the frequency and quality of communications among the countries in the region, facilitating a growth in trade related services such as tourism and back-office functions. A recent World Bank study indicates that a 10% increase in broadband penetration results in a 1.38% increase in GDP growth in low and middle income countries. Such impact results 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 through (i) the introduction of e-education and e-health services; (ii) the remote delivery of agricultural extension, policing, judicial, employment, disaster management and other public services; and (iii) mobile banking.

Users of existing mobile services (voice and data) will enjoy an increase in their consumer surplus as a result of reduced prices. They may take this increase in the form of cash or (more likely) in the form of increased usage. Wholesale bandwidth prices are expected to halve, more or less, leading to a conservatively-estimated retail price reduction of 20%.

The telecommunications market. Solomon Islands introduced a second mobile operator in 2010, and competition has already resulted in a 29% reduction in mobile telephony prices and an improvement in the quality of services. Access to affordable good quality broadband internet based services, however, has so far remained out of reach (see Table 1). The limited capacity and high cost of international bandwidth is caused by a total dependence on satellite connectivity, which is also the principal constraint to higher broadband penetration, the introduction of new telecommunications services, and new market entrants.

The current wholesale price for two-way satellite capacity is roughly $3,600 per megabit per second (Mbps) per month. With normal growth, bandwidth demand in the Solomon Islands is projected to increase to 1.243 gigabits per second (Gbps) by 2032. With the current satellite capacity and price, it would be impossible to meet the growing demand. The SCS will provide substantially higher initial capacity of 10 Gbps and is expected to reduce international connectivity costs by more than 60%. Currently, the cheapest broadband internet subscription costs roughly $60 per month, which is about 28% of monthly income, approximated with GDP per capita in 2010.

Government policy and strategy. Following the endorsement of the Government's Debt Management Strategy in June 2012, the Solomon Islands is resuming the first borrowing since 2005. The Government considers the submarine fiber optic communication cable system (SCS) a national asset and an immediate investment priority, thus recognizing the potentially significant contribution that improved broadband connectivity can make in addressing the constraints imposed by geographical and economic isolation, and steering the country on an inclusive growth path. The proposed SCS will build an independent cable from Sydney to Guadalcanal (landing in Honiara) and two domestic spurs linking Guadalcanal with Malaita (landing in Auki) and the Western Province (landing in Noro). Jointly, these provinces are home to roughly 72% of the country's population.

ADB, development partner, and private sector support. Supporting inclusive growth and investment in the information and communication technology (ICT) are important elements of ADB's Pacific Approach (which provides broad operational focus) and the COBP 2012-2014 for Solomon Islands. ADB's sovereign financing has leveraged roughly $40 million of commercial financing for the Solomons Oceanic Cable Company, thereby containing the public debt liabilities to a minimum. ADB's investment support is complemented the World Bank technical assistance (TA) to support the Telecommunications Commission of the Solomon Islands (TCSI), which holds regulatory responsibility for the telecommunications sector. Finally, ADB plans to support the development of broadband applications in the delivery of critical public service, such as health and education.

Impact Increased broadband-based economic opportunities, and broadband-based improvements in the inclusive delivery of social services

Project Outcome

Description of Outcome The population of Solomon Islands increasingly uses good quality broadband internet services at affordable prices.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs Establishment and efficient operation of the Solomon Islands submarine cable system by SOCC
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Solomon Islands

Safeguard Categories

Environment B
Involuntary Resettlement B
Indigenous Peoples C

Summary of Environmental and Social Aspects

Environmental Aspects

The Project is classified as category B in accordance with ADB's Safeguard Policy Statement (2009). An Environment Management Plan is prepared to provide the institutional framework responsible for executing the environmental monitoring, mitigation and management strategies. The Environmental Management Plan (EMP) contains a number of components crucial to effective management within the project.

The EMP summarizes the environmental management recommendations based on the environmental assessment undertaken for the project (i.e. Section V of the IEE).

The overall responsibility of developing and implementing the environmental management plan will rest with the Solomon Oceanic Cable Company (SOCC) and will include overseeing that environmental considerations are addressed in the pre-construction, construction and operation phases.

Involuntary Resettlement The Project is classified as Category B. It will not involve any physical displacement. The cable will be laid along existing road and property boundaries on public, customary and private land. Land access will be obtained through negotiated service agreements with the respective landowners, guided by a Resettlement Plan consistent with ADB's Safeguard Policy Statement (2209).
Indigenous Peoples The Project is categorized as Category C under ADB's Safeguard Policy Statement (2009). There will be no negative impacts on indigenous peoples associated with the project.
Stakeholder Communication, Participation, and Consultation
During Project Design Key stakeholders were consulted on the proposed project design to get inputs and identify potential benefits and challenges of building a submarine cable in the country. Stakeholder communication and participation was also undertaken in the preparation of safeguards documents.
During Project Implementation The project is yet to commence. Stakeholder communication strategy was prepared to ensure key information will be shared during project implementation.

Business Opportunities

Procurement Advance action will be required for procurement of the international spur and the indefeasible right of use (direct procurement) and the domestic spurs (international competitive bidding). Retroactive financing may be required to ensure mobilization payments to the suppliers of the international and domestic spurs.

Responsible Staff

Responsible ADB Officer Bhattacharya, Sibesh
Responsible ADB Department Pacific Department
Responsible ADB Division Urban, Social Development & Public Management Division, PARD
Executing Agencies
Ministry of Finance and Treasury
P.O. Box 26
Honiara, Solomon Islands

Timetable

Concept Clearance 14 Mar 2011
Fact Finding 04 Jun 2012 to 15 Jun 2012
MRM 16 Jul 2012
Approval -
Last Review Mission -
Last PDS Update 30 Mar 2016

Grant 0304-SOL

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Sep 2012 14 Nov 2012 - 30 Apr 2018 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 13.80 Cumulative Contract Awards
ADB 7.50 25 Sep 2012 0.00 0.00 0%
Counterpart 6.30 Cumulative Disbursements
Cofinancing 0.00 25 Sep 2012 0.00 0.00 0%

Loan 2897-SOL

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Sep 2012 14 Nov 2012 - 30 Apr 2018 - 29 Feb 2016
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 20.50 Cumulative Contract Awards
ADB 10.50 25 Sep 2012 0.00 0.00 0%
Counterpart 10.00 Cumulative Disbursements
Cofinancing 0.00 25 Sep 2012 0.00 0.00 0%

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
Broadband for Development Project Resettlement Plans Jul 2012
Broadband for Development Project Initial Environmental Examination Jul 2012

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


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