by the World Bank and conducted by Polyconseil suggested that international connectivity could cost as much as US$1310 per Mbps per month14,15. This is hundreds of times more expensive than IP Transit in developed markets—e.g., in New York a comparable price is US$3.50 per Mbps per month, with pricing for short-term promotions and high capacities below US$1.00 per Mbps16 (i.e., 374-1310 times cheaper). Assuming a 1:20 contention ratio, the wholesale IP Transit costs would translate into US$65.5 per Mbps per month for retail users, or US$6,550 for 100 Mbps package per month (not including national infrastructure). The context for this could be provided by the United Nations Broadband Commission’s recommendation for the broadband price not to exceed 5% of average monthly income17—in Vanuatu this would be US$1118. Thus the costs and resulting prices are likely to remain a significant obstacle to an aggressive expansion of the broadband Internet use, as affordability of such services remains an issue. In addition to the international connectivity costs, topography and the current level of supportive infrastructure make deployment, operation and maintenance of national networks challenging and costly as well. First of all, 234,023 residents of Vanuatu19 inhabit 60 islands (out of 83 in total). These islands are dispersed in a rather large ocean territory (around 1300 km from north to south). Only 25% of the total population live in the two urban centres. Furthermore, the road infrastructure outside main areas of Efate and Espiritu Santo is not well developed. Grid power is provided only in 4 islands, and even where it is available it is rather costly. 25.5% of all households and 32% of rural ones have no access to electricity20—this makes powering ICT devices, including end-user equipment, rather challenging. Furthermore, climatic conditions (including humidity) as well as prevalence of small generators as a source of power makes for an unfavourable environment for the use of laptops and other ICT devices. Development and operation of ICT and supportive infrastructures are made more challenging by the Vanuatu‘s vulnerability to tropical cyclones and In addition to the international connectivity costs, topography and the current level of supportive infrastructure make deployment, operation and maintenance of national networks challenging and costly as well.” 14 $1000 for the Vanuatu-Fiji segment, $250 for a backhaul from Fiji to Sydney and $60 for IP transit from Sydney. Polyconseil (2011). Technical, Economic and Financial Connectivity Study for Vanuatu. World Bank. 15 Even if increased utilisation of the submarine cable could drive the costs lower, OGCIO’s assessments suggest that it is unlikely for the wholesale costs to go below US$300-500 per Mbps per month (depending on scenarios). This is without prejudice to a possible assessment of costs that could be conducted by the TRR as per its functions. TRR has not contributed to the cost assessment referred to in this document. 16 Telegeography (2012). IP transit price declines steepen. CommsUpdate. 2 August 2012. 17 Broadband Commission for Digital Development (2011). Broadband Targets for 2015. Target 2. 18 The calculation is based on the Vanuatu’s Gross National Income (current US$) per capita in 2010—US$2640 (World Bank (2012). World Development Indicators). 19 20 2009Census. Pacific Institute of Public Policy (2011). Net Effects: Social and economic impacts of telecommunications and internet in Vanuatu. Current Situation and Challenges 19