Not all of our work involves engineering marvels. BSCC is governed by legislation, and by-laws, which you can find in the new Governance section of the web site. By-law Section 7.2 requires BSCC to develop a Reference Access Offer (RAO), which must be approved by the Minister of Public Infrastructure, Industries and Commerce (MPIIC).
Reference Access Offer. To further the objectives set forth in the Incorporation Act and Section 7.1 above, the Board will cause to be drafted, revised as necessary and submitted to the Ministry of Public Infrastructure, Industries, and Commerce (MPIIC) or the successor relevant regulatory agency for approval a Reference Access Offer that will serve as the basis for contracting with all relevant communications technology service providers for the sale of wholesale capacity from the Corporation to such providers.
In essence, the RAO spells out BSCC’s product (we are a special purpose vehicle with only one product – wholesale capacity), pricing, access arrangements and service levels. This is an important milestone for BSCC. We now have firm information on which to base our sales discussions. It is also very important for our customers, since they are now sure of an important part of the cost equation that allows them to develop appropriate products for high speed broadband. Our customers, the three Palauan retail service providers (RSPs), have made substantial investments to enable these new products.
Of course, BSCC held detailed discussions with our customers on the RAO before submitting it to the Minister, and we incorporated their comments, so they already knew what BSCC pricing would likely be, but it is good to have it confirmed. We can all now move to solid commitments.
There is a new Products section on the web site, where you can check out the RAO.
However, the most important point is not evident in the RAO at all. The BSCC pricing is pitched at below 50% of current satellite capacity pricing in Palau. As the broadband market grows, we expect further price reductions. This is not to say that everyone in Palau should expect to see a 50% reduction in their telecoms bills. While international capacity is expensive in Palau, it does not make up 100% of an RSP’s cost of providing service. This pie chart is meant to explain the idea, not represent an accurate cost analysis of any particular RSP.
BSCC is required to sell at cost, but even if BSCC could give away capacity for free, it might only mean a 25% reduction in the RSP’s cost structure.
What we should expect is that retail customer spends will remain the same, but for much more data download and upload speed. Retail customer spends might even go up, as the benefits of reliable high speed broadband are more widely realised. The biggest benefits to Palauans and Palauan visitors and Palauan organisations will be in terms of the speeds available and the reliability of services, and that the wholesale price per Megabit per second (Mbps) will continue to fall dramatically as demand increases. That should flow through to more and more data per end user customer per month, for the same sort of spend. And more reliable service, since submarine cables do not suffer rain-fade like satellites.
We should not expect miracles, but the difference should be evident as soon as BSCC is in service. I think high speed broadband will initially be delivered by the new 4G mobile networks currently being rolled out by two of the RSPs. Other Palau infrastructure will likely take a little more time to fully realise the speeds available, since it is a network that was constructed before the internet era. No doubt we can expect RSPs to elaborate on their plans now that they have certainty of BSCC capacity pricing.