RPPL 11-4, the fourth bill signed into law in this 11th national government, amends Palau’s Telecommunications Act of 2017, extending protection to existing telcos in Palau, Palau National Communications Corporation (PNCC), a semi-autonomous government owned telecommunications corporation, Palau Telecom and Palau Wifi.

Two changes engendered by the law include requiring PNCC to pay its loan directly to RUS as well as deducting other loan payments from its 15% universal service payment.  

The other change extended the moratorium on issuance of frequencies or new telecom services licenses for another 5 years.

The Telecommunications Act of 2017, which sought to deregulate telecom industry and bring in more participants, initially established a 2 years’ moratorium on new telecom companies.  That moratorium expired last year but this new amendment extends it until 2025, or five more years.

The Telecommunications Act of 2017 was a required concession for the $25 million dollar loan to bring in a submarine fiber optic cable.  

In order to ensure that that loan will be paid, the law deregulated the market place, giving existing telcos 2 years’ head start by imposing the moratorium.   

The local telcos last year requested the government to extend the moratorium, citing COVID impact on their businesses and on their ability to recoup losses while facing potential competition from outside.

PNCC had suffered financial losses before the pandemic, which in its 2019 audit showed losses of over $149k in net income.  The loss was attributed to revenue losses from its cellular and internet services.

President Whipps said that he believes competition is important and has some reservations about the 5-year moratorium.  “We don’t want PNCC to think it’s protected so they can be careless with their services,” he said. He urged PNCC to work hard to be competitive while ensuring services to the people.

Meanwhile, the extended moratorium may impact Belau Submarine Cable Corporation’s (BSCC) future revenues.  The anticipated increase in telcos after the moratorium in Palau was to contribute to BSCC’s revenue, ensuring that it can continue to pay its loans, as of now amounting to nearly $50 million.

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