Peace Corps Videos

Thursday, May 15, 2008

Business Changes in Tonga

Foreign Competition and Great Marketing

There is very little foreign investment in Tonga and almost all businesses are small and locally owned.  That changed in a big way last Thursday when cell phone giant Digicel entered the local market.   From a business perspective, the way they did it was masterful.  

 

There have been two cell phone companies in Tonga.  The largest, called UCall is owned by TCC, the Tongan telephone company.  TCC is probably the largest business in the Kingdom.  The other company called Tonfon, was owned by the King and other investors.   Last year, Tonfon sold out to Digicel.  Since taking over they have been quietly adding cell towers and improving their infrastructure.  This process has taken months and until last week, they operated Tonfon as it had always been run.   I don't know the exact market share for each company, but I would have to guess that until last week, TCC controlled the market and Tonfon was a distant second.

 

Early last week, while I was staying in Nuku'alofa, Digicel started promoting a free concert with Reggae star Shaggy.  At times, there were four commercials an hour on the radio for the concert with just a mention that it was being brought to you by Digicel.  There was no explanation as to who Digicel was or why they were having the concert, only that it was free and everyone was invited.   That started the buzz.  Concerts are VERY rare in Tonga especially from performers who are known outside of Tonga.  One person told me it's been several years since the last concert was held here.

 

There were no signs all week that indicated the Digicel was about to launch in a very big way.  I went to bed Wednesday night without seeing a single Digicel sign or advertisement.  When I got up on Thursday, the day of the concert, it was as if Nuku'alofa had been painted Digicel red overnight.   There were bright colorful billboards everywhere, something else that is not common in Tonga.  There were new offices with bright red Neon signs on them saying "Digicel" that were not there the night before.  There were Digicel vehicles and a huge red bus with Digicel painted on it driving all over town.  And there were people in the streets handing out flyers, promoting Digicel and the free concert that night.   Almost every store, big and small now had a red Digicel sign on it saying that you could buy your Digicel calling cards there.  Even the bus terminal was painted with a bright shade of red.   This all happened literally overnight.   Tongans went to bed with Tonfon and woke up to Digicel.   For most Americans, this might sound like simple marketing, but it is brand new in Tonga.  I spent 23 years in Television News and I've never seen a company do such a masterful job of marketing and launching than Digicel did here in Tonga last week.

 

Thursday night, it was pouring rain and I decided to skip the concert, but an estimated 10 thousand Tongans showed up in the rain for the show.  To put that in perspective, 10 thousand people represents about 10% of the entire population of the Kingdom of Tonga and 15% of the population of Tongatapu, the island where the concert was held.   Digicel handed out free backpacks, umbrellas, shirts, pens, etc.  The next day, their new offices were packed, literally lines out of the door with people anxious to buy a new phone and sign up for their service.

 

When I flew back to Vava'u on Monday, I found a brand new Digicel office in downtown Neiafu and rode pass a party sponsored by Digicel in a village where they had just installed a new tower.

 

On Tuesday, Digicel employees were going door to door in villages offering a brand new Nokia cell phone, a backpack, a SIM card and three dollars of credit for TOP$40.00.  That's just over US$20.00.  Three Digicel employees came into the bank where I work and sold about five phones to employees here, including me.   It was a great deal.   Until the Digicel launch I have never seen a new phone in Tonga for less than TOP$100.00. 

 

So you might ask, since TCC has known for months that Digicel was coming to Tonga, what did they do?  As far as I could tell - NOTHING.   They sat back and let it happen.   As much as I respect the way Digicel came into the market, as a business volunteer who wants to help Tongan businesses, I wish I had been working with TCC to help them.  From my perspective, there is a lot they could have done to minimize the impact of Digicel, but now it's too late.  They are in a catch-up position.  One of my fellow volunteers told me that TCC has discounted one of its phones to TOP$80.00, which is twice the price of the Digicel phone.  There is some hope for TCC.   Since cell phones are interchangeable between systems here, new customers could buy a cheap Digicel phone and then use it on the TCC network.  Too bad TCC didn't think to offer to switch any Digicel phone back to TCC for free.  Instead they are doing it by selling new SIM cards for TOP$20.00.  Not exactly a reason to switch back.

 

Completely Cut off

The timing of the Digicel launch was perfect for me since my phone and many other items were stolen from the Friendly Islander Hotel.  That included my passport, drivers license, a credit card and ATM cards for both my local bank account and the one I have in Florida.  For two weeks now, I have had no ID and am not sure when I will get replacements.  I am able to access my local bank account by going into the bank and asking to withdraw money.  (They rarely ask for ID).   However, I can also only get money when the bank is open.

 

Since I've been in Tonga, I've been able to live on my small Peace Corps stipend without using money from home.  However, psychologically, it does bother me a bit to be completely cut off right now from my money at home and to have no access to a credit card.  While I haven't used either the home ATM card or credit card, there is a feeling of security knowing that if I need money in an emergency, I can get it.

 

Without a passport, if I wanted to leave the country, I wouldn't be able to leave.  I also have no visa which shows that I am in Tonga legally.   And even if I got out of the country, I wouldn't be able to drive anywhere since I don't have a license.  (Peace Corps volunteers are not allowed to drive in their country of service).  Thankfully I have a lot of confidence that in an emergency, Peace Corps would bail me out, at least temporarily.  Hopefully the replacement IDs and cards will arrive soon.

 

Volunteer Changes

The make-up of our volunteers is changing again.  The good news is that Jason, who was medically separated earlier this year, has been cleared to return to Tonga.  Jason is a great volunteer and we were all sorry to see him go.  It's terrific that he is coming back.

 

However, John, another volunteer decided that Peace Corps was not for him and he ET'ed, which is Peace Corps speak for Early Termination.   Since moving to Vava'u, I haven't seen much of John, but I hope he finds much happiness in his future endeavors. 

 

With Jason's return and John's departure, we are holding at 29 volunteers out of my training group of 33 who are still here after 7 ½ months in Tonga.

 

New Phone Number

I now have a new phone number.  It is 886-1680.  From the US, dial 011-676-886-1680.  All incoming calls are free to me, but it can be expensive to call from the US unless you use a calling card or a service like Skype or Vonage. 

3 comments:

  1. Hi Steve,
    Thanks for your service to the Tongan people. I'm originally from Tonga -- Neiafu, Vava'u -- and was happy to read your posts.

    Quick question, my mother is returning to Tonga and was hoping to buy a cell phone in the US that she can still use when she gets to Tonga. Do you have any suggestion?

    Thanks,
    Duane Harris
    dharris@turbinemedia.com

    ReplyDelete
  2. Duane:
    Both cell phone companies in Tonga operate on the GSM standard. That means any phone from ATT or T-Mobile in the USA should work in Tonga. She will just need to pick up a SIM card once she arrives and put it in the phone.

    However, some phones are locked to a specific carrier so make sure the phone you bring or buy is unlocked. There are usually plenty of unlocked GSM cell phones for sale on E-Bay and Amazon.

    Thanks for the kind words.

    Steve

    ReplyDelete