For over a decade, renegade telecom Digicel has made it their business to connect some of the world’s most remote regions. Now their strategy has left them reliant on maintaining the status quo.
The Karawari river valley in Papua New Guinea is not, from a business perspective, an obvious place to build a cell tower. The remote region is home to a fractured community of 16 villages and tribal groups that include approximately 15,000 people. It’s difficult to access, even harder to build in, and situated about a hundred miles from any kind of electrical grid. There is no modern sanitation. There are no health services to speak of, nor are there any banks. The majority of food and building materials are extracted from the land, and almost all hard cash is brought in by young men returning from work in downriver towns. Nevertheless, in 2014, Digicel, a maverick telecom company headquartered in Jamaica, decided to break ground on a tower in Karawari.
Nobody had any illusions that the tower would generate much revenue, if any at all. Yet to Digicel, the project served a different purpose: It was part of a corporate mission to put some of the world’s last disconnected cultures on the digital map. Nearly a decade on, even as the company’s unorthodox strategy has led to its collapse in various international markets, Digicel is hanging on to Papua New Guinea as a rare instance of success.
The company arrived in Papua New Guinea in 2007, following a decision from the National Executive Committee (effectively the country’s cabinet) to open up the market in mobile phone services. By then, Digicel had over two million customers across 16 Caribbean countries and had started expanding into the Pacific islands. Papua New Guinea, meanwhile, had previously been covered only by the state-run networks Telikom PNG and its subsidiary Bmobile. “Covered,” however, is something of an overstatement. Before 2007, less than 3% of the island’s population of 6.6 million had access to a fixed network or mobile phones, and even then only in urban centers. This was partly because of corruption and mismanagement — at one point, Telikom PNG went through six managing directors in 11 months — but also because of logistical challenges. Papua New Guinea has an average annual income of less than $2,500 per person and a largely rural population, and its civil infrastructure currently ranks 155th on the Human Development Index.
And then there’s its geography. Situated in the Western Pacific, just north of tropical Australia and south of thousands of miles of open ocean, Papua New Guinea occupies the eastern half of New Guinea, the world’s second-largest island, as well as a vast archipelago of more than 600 islets and islands. It encompasses a mind-boggling array of cultures and languages: around 1,000 different tongues — one-eighth of the world’s total — are spoken there. This is mostly the result of its gauntlet landscape: mountain valleys, sheer limestone cliffs, and endless rainforest swamp. “Think of building a network in a country the size of France with hundreds of islands, no roads, and cerebral malaria,” Digicel’s Irish CEO Denis O’Brien once told The Washington Post. Or as Simon Lardner, chief technical officer of Challenge Networks, the firm Digicel contracted to build its towers in Papua New Guinea, explained in terms more pertinent to network engineers, “PNG is hilly and full of trees.”
Yet the challenges of working in the region were a good fit for the company’s high-risk, high-reward strategy. Whereas most providers long ago capitulated to the trend of offering mobile contract packages, locking customers into rates for months or years at a time, Digicel has taken a different approach since its founding in 2001, relying on the pay-as-you-go model. (These dynamics are described in detail in a 2018 book, The Moral Economy of Mobile Phones.) This is especially well suited to countries without extensive banking systems, as customers can buy minutes when they have cash in hand. As of September 2009, more than 91% of Digicel subscribers used its service on a prepaid basis. This model also allows the company to set a per-minute rate that is far higher than it would be if folded into a rolling contract.
In rural Papua New Guinea, most users prefer to purchase small amounts over and over again rather than buying bigger bundles, even if the latter is better value. This is because if somebody has too much credit, friends and family will ask them to share (something that Digicel’s service allows customers to do easily). It’s comparable to how people in the Karawari never entirely fill the tanks of their motor canoes, but rather ask everyone they pick up to bring a little petrol with them on board.
According to experts who study Digicel, the wider thinking is that in developing countries, where interpersonal relationships are paramount, the company can win trust by positioning itself as a moral actor. Digicel representatives declined Rest of World’s repeated requests for an interview; current employees didn’t respond. In the South Pacific, Digicel rolled out a strategy that had served it well in the Caribbean: massive investment in public spending. When the company first showed up in Papua New Guinea, Deane Woruba, first secretary to the Governor of the country’s East Sepik province, where Karawari is located, recalls, “they painted the town red.” Digicel billboards went up everywhere, branded clothing was handed out, community organizations received grants from the Digicel Foundation. The company flooded the market with thousands of $6-a-pop mobile handsets and a seductive selection of prepaid packages, including hourly and nighttime contracts that incentivized after-hours use.
Within five months, the company had more than 350,000 customers, and by the end of the first year, it had built 130 towers in what rivals described as a land grab. By 2009, Digicel’s market share was above 80% — a bench mark it hasn’t dipped below since. “They had really good service,” Woruba explained. There was a lot of excitement that the rollout “was going to change how people lived, and it did!” That enthusiasm was widespread: a cell tower was printed on the country’s 100 Kina note, and in an impassioned speech the year Digicel arrived, the minister for public enterprise promised that telecommunications would transform society by “providing opportunities for businesses, opening access to the global marketplace, delivering a wealth of information, enhancing social interaction, [and] enabling greater community participation.”
At this point, it might have seemed as though Papua New Guinea’s future depended on Digicel. Ironically, the reverse would prove true.
Almost from the beginning, expanded connectivity transformed Papua New Guinea society in a host of different ways — some anticipated, others not. Regina Lius, an accountant from the maritime province of Milne Bay now living in the capital of Port Moresby, explained how Digicel suddenly made it easy for her to communicate with family. “Even if they’re out in the open sea,” she said, “I can get in touch with them.” But Lius, like many others in Papua New Guinea, struggled to afford the rates. “It’s about $1.40 for one GB, which lasts three days,” she complained. In a country where the average income is less than $200 a month, that’s a significant cost. To make services more accessible, Digicel introduced a feature that enabled customers to send credit to other people’s phones so they could remain connected in lean months. This had the side effect of creating a secondary tier of economic exchange, with phone credit flowing into rural areas. As electronic banking in Papua New Guinea remains underdeveloped, it became a form of currency, a way of cementing old relationships and forging new ones.
Before long, it also became a common practice on a quiet night, when rates are lowest, to dial numbers at random and make friends with whoever picks up. Many of these “phone friendships” are based on embellishments and outright lies; after all, a phone call is an opportunity for people to escape not only their physical space but their real lives. Sometimes this leads to unfortunate outcomes. There are many stories of Papuans making perilous trips across the country to meet phone friends with whom they established a romantic connection. These frequently end in heartbreak when it turns out that one party has been spinning more elaborate falsehoods than the other. But not always: “My aunty met her partner over a random phone call,” Lius giggled, “and then they eloped. Quite funny.”
Assessing Digicel’s impact according to more concrete metrics, Papua New Guinea’s economy has expanded at a steady rate of around 4% per year since the mid-2000s. While it’s impossible to say how much of that is due to improved connectivity, according to the Asian Development Bank, the company’s arrival did have a strong initial impact: the telecoms sector contributed to a spike in GDP growth of up to 21% in 2008 and 2009. Still, improved telecommunications have not been a magic bullet for persistent poverty and social problems. The country ranked 137th out of 180 countries in the 2019 Corruption Perceptions Index, and Port Moresby is often cited among the world’s most dangerous cities. As well as aiding the police and other government services, mobile phone networks have been used by gangs to orchestrate armed robberies and vandalism, and to spread low-level warfare across the island.
The challenges and contradictions in Digicel’s strategy came to a head in 2014, seven years after arriving in Papua New Guinea, when it broke ground on the Karawari tower. The project was promoted for a number of reasons: One was pressure from the World Bank and the national government, which hoped to improve the region’s economic and social prospects. Another was Digicel’s desire to expand its physical presence, to plant a flag in the Karawari. Since the tower wasn’t expected to make money, its construction was presented as a philanthropic act.
It was expected that the tower would take about four weeks of actual construction at a cost of about $1 million. Technicians were recruited from among the island’s Filipino population, and working conditions were tough. In the Karawari, they faced long days of sodden tropical heat, the air a constant static of mosquitos, and building materials had to be airlifted in or delivered in motored canoes. As there was no electrical grid to connect to, Digicel’s tower, like all remote cell towers in Papua New Guinea, had to be powered by solar panels.
After months of bureaucratic delay, there was another complication: construction took place against the backdrop of a protracted negotiation between Digicel and Indigenous groups over land rights. This was a problem that Digicel had encountered throughout the Pacific region. As Lardner remarked, “It happens on almost every hill.” Much of the land in Papua New Guinea is legally owned by its traditional guardians, and over the years ancestral boundaries have blurred — especially along natural breaks in the landscape such as hills, which happen to be the best locations for cell towers. In the midst of these discussions in the Karawari, a tribe called the Kundimans came into conflict with a nearby tribe called the Yimas, with both claiming the tower as their own.
As the dispute was ongoing, the tower was completed. It was operational but underutilized. Because of the difficulty of recharging handsets and the high cost of phone credit, traffic remained low. And while neither the phones nor the tower itself were seen by locals as possessing supernatural qualities, they were folded into local cosmologies: Handsets were deployed as transmitters to cast spells at a distance, and like the drums that preceded them, they were sometimes used to summon the spirits of the dead. Borut Telban, an anthropologist who has spent decades studying the Karawari and performing on-the-ground fieldwork, noted that the technology already had a place in their mythology. While white people are said to have originated on the island alongside the New Guineans, he explained, the belief is that they later left and took technology with them. “So they say, ‘Digicel is ours,’” he said, “‘but white people took it from us.’”
The tower had been envisioned as a salve for the local economy, and it did lead to some broad improvements: In East Sepik, Deane Woruba noted that Digicel’s network helped the government better organize policing and public health services — over the past ten years, there’s been a steady if undramatic rise in life expectancy and a drop in infant mortality rates. Yet, as time passed, other potential gains never materialized, including basic amenities like electricity, clean water, and health services. Then, in 2018, years after construction was completed, tensions reached a breaking point: The two tribes had continued to spar over ownership, and some felt it was simply better to destroy the tower than allow it to continue to exist as a lightning rod for conflict. There are contrasting opinions about which clan attacked the tower first — as Telban likes to say, “in the forest, things are not very clear” — but regardless, members of both parties cut wires, bashed screws, and ripped out solar panels and batteries. Nobody documented the destruction, and tracking down eyewitnesses proved almost impossible. In less than 12 hours, the transmitter that was supposed to bind the Karawari to the rest of the world was gone.
Regret set in almost immediately among the villagers, and in about a week, councillors from several villages along the river met at Karawari Lodge, a guesthouse less than two kilometers from where the tower once stood. The lodge, built on the site of a former government station, had been decorated in the style of a traditional Sepik longhouse with slit-drums and carvings of local idols — a Western imposition intended to reflect a culture Westerners were chasing away. Tribal elders who’d spent most of their lives without electricity convened to discuss the prospects for rebuilding the tower and reconnecting their phones. They were hopeful a solution could be found. Thanks to their efforts, 14 of the 16 looted solar panels were eventually reclaimed; the batteries, however, were never located, so the tower couldn’t be reassembled.
There are no additional plans for repair. Freed from political pressure, and having sufficiently established itself as a good civic actor, Digicel declined to fix the tower, deeming it too expensive for the small amount of traffic it received. As a result, when locals in Karawari want to use a mobile phone today, they must rely on workarounds. “At the Karawari Lodge, there’s a tree that they climb up now,” said Andrew Neufeld, the general manager of a local tour company that owns the lodge, “[and] they can catch a signal from the next tower downriver.” He added that at certain times of day, when a person was properly positioned in the right tree, tiny pools of network would appear.
As remote areas struggle with basic connectivity, Digicel continues to build out its 4G network in more densely populated parts of the country. The company’s gamble in Papua New Guinea — which as of 2018 totaled over $850 million in investment — has been a success. Although its rates proportionate to income remain among the highest in the world, there are currently over 1,000 towers in Papua New Guinea, and over 2.1 million people in the country are Digicel customers. Digicel PNG now has an annual revenue of $340 million, and analysts claim that the mobile industry contributes to 6.2% of the GDP, up from 4.7% in 2014.
Globally, however, Digicel is suffering. The culture around mobile phones is changing, with customers in developing nations spending more of their minutes on data rather than the considerably more expensive — and, for phone companies, more lucrative — network-based calls. “That doesn’t mean that people have stopped talking,” John Haydon, a telecommunications regulatory adviser for the Pacific region, explained to Rest of World. “It just means that they don’t use the call-per-minute system; what they’ve done is go straight to using call functions on social media.”
While Digicel has diversified its strategies across multiple territories — they’ve rolled out fixed broadband and are trying to introduce data bundles for its pay TV service — voice calls still account for near 50% of its dwindling income. As such, Digicel filed for bankruptcy in New York earlier this year, declaring $7.4 billion worth of debt. Not long after, the world’s most used telecom, state-run China Mobile, expressed interest in taking over Digicel’s Papua New Guinea operations.
After years of investment in underserved markets, Digicel is in a new kind of bind: On the one hand, it must meet demand and modernize, on the other, the very act of modernizing undercuts their profits. In a market where average income could remain low for a long time, it would benefit the firm more if Papua New Guinea’s telecom growth remained where it is, with nearly 40% of the population still only able to access 2G connectivity and forced to pay a premium for it. Yet this is precisely what the firm’s infrastructure projects in the territory have been working to fix. Nor is the company alone in this effort: The recently-launched Kacific1 broadband satellite is expected to service 600 million people in 25 countries across Asia Pacific; and a 4,700-kilometer fiber optic “Coral Sea Cable” is now being laid between Sydney, Port Moresby, and Solomon Islands.
All this is good news for Papua New Guinea’s cities, but in remote areas there’s yet another twist: The question of connectivity doesn’t come down to towers but electricity. While personal solar or petrol generators can charge old-fashioned cell phones for limited periods of time, the more sophisticated phones have a much shorter battery life. And as more and more people adopt smartphones, it remains a profound challenge to generate enough electricity to charge them on a daily basis.
For now, even as its cities grow more connected, Papua New Guinea’s remote areas are falling further behind in the digital transformation, with new technology outpacing people’s ability to access it. For all the fiber-optic cable laid, satellites launched, 4G and 5G and even more advanced base stations built, the simple obstacle of access to electricity keeps the dream of comprehensive access from being realized.
However, the government remains optimistic, as does John Haydon. “Digicel knows the terrain, it knows what things cost, it knows how to get things done,” he said of the company’s prospects in the region. In October, Digicel partnered with a local electronics retailer to give out free data bundles with every sale of a solar-powered computer that could be used in the bush. Deane Woruba, the East Sepik official, is also hopeful that better cellular connectivity can lift his province’s fortunes. It could be used for e-learning, for helping the area’s hospitals, for setting up a cashless economy. He also stressed that increased coverage might improve life on a more individual level. “We are very social people,” he said. “We are always communicating. So we can only hope that it will make us better people, more than anything else.”
View this as first published on Rest of the World