Wednesday, September 22, 2010

Jamaica - Cheaper broadband is now available and there is infrastructure-based competition, but demand is still only modest

[jamaica observer] THE liberalisation of Trinidad and Tobago's telecommunications sector may have lagged Jamaica's, but residents here already have access to 100 megabits per second (Mbps) speed while in Jamaica -- where Internet penetration in homes come in at 17 per cent — users may have a long wait yet.

"Businesses are already getting those speeds... We definitely will bring 100 Mbps to households but our priority right now is to get broadband Internet into as many Jamaican households as possible," said Flow Jamaica's marketing director, Sharon Roper.

Like with computers, and all other things, low demand, as measured by the level of penetration in Jamaica, means that Flow, or other Internet service providers, won't be able to benefit from economies of scale that result in lower prices for modems, offerings of cheaper laptops and PCs and eventually the offering of 100 Mbps service to Jamaican households. In other words, the number of households with Internet access will have to dramatically increase before the speed offerings will jump significantly from the present highest offering (Flow boast 15 Mbps service as being the highest in Jamaica).

By Roper's reckoning, the cost of Internet service doesn't factor heavily in the sluggish growth in penetration into homes.

Placed against a long list of OECD countries, Flow says the cost to consumers in Mbps ranked fourth, only behind Korea, France and the UK, while competitors in Jamaica, such as LIME, which now offers up to 8 Mbps to residential users, have been pricing its service to be more competitive.

The 100 Mbps offering to residents launched in August in Trinidad, where over 60 per cent of the island (Flow has no presence in Tobago) has broadband Internet access, is priced at US$120 (J$10,320) per month or about US$1.20 per Mbps making it roughly the cheapest in the world.

Certainly, the infrastructure exists to accommodate higher penetration.

Flow Jamaica's president and COO, Michelle English says that Flow now has full digital service running past 40 per cent of all households, even though rollout has been slowed by significant devaluation of the dollar, among other things. LIME boasts even higher coverage and claims 80 per cent of the broadband market, which it includes service offering upwards of 256 kilobits per second. While Digicel says that its 4G wireless service covers 60 per cent of the population, or 410,000 households, with further roll-out planned.

English says Flow is looking at a new timetable for reaching most Jamaican household but hopes to reach the majority of residences within three years.

Roper believes the solution to driving growth in penetration lies in getting cheaper computers for consumers.

"We currently petition manufacturers to get cheaper laptops and PCs or to look at providing a solution for developing countries," she told the Observer. "We also petition the Government to reconsider the tax on computers. When they removed it they found that retailers weren't necessarily passing on the savings on to consumers but there may be other ways to address that challenge."

Low demand for Internet in the home aside, the telecommunications sector's push to get cheaper devices to further infiltrate a market yet to realise penetration as deep as mobile phone companies, the technical impact also has to be considered, Roper added.

"Modems have to be changed out to accommodate the higher speeds... even web browsers have to be changed on users' computers."

Internet penetration lagging broadband speed

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