ANNA TIBAIJUKA: On the whole predictions now show that people are marching onto cities. Even in the developing countries.

MARTA SUPLICY: In order to have service city you have to have very qualified people and we have to have education.

SHEELA PATEL: Most people who come into cities come to, to transform the lives of their children, if not for themselves.

COMM: From Tokyo to Timbuktu, Cape Town to Quito, people are on the move, leaving the countryside for the big cities. A trend that's affecting even the South Pacific. Click on a search engine on the world wide web, north of New Zealand, you'll find the island of Fiji - just a small dot on a world map. A thousand kilometres north of Fiji and there's an even smaller dot, Tuvalu. Its nine coral reefs cover 25 square kilometres. This tiny island state with one of the highest population densities in the world found itself sitting on a 'virtual' goldmine and now the Internet is catapulting Tuvalu into the 21st century. There's been little development. Jobs are scarce, opportunities few and far between, and there's very little money. But in 1999 all this looked as if it was about to change.

IAKOPO MOLOTII, Television producer, Tuvalu: My name is Iakopo. I live on Tuvalu, one of the smallest countries in the world. Our nearest neighbour is Fiji, still two and-a-half hours flying from here so few people in the world know our country and even fewer come here. That's why the arrival of the plane is always an exciting moment in the week. Everyone wants to know who is arriving. Because not everyone can come I put it on a tape and broadcast it very Monday in the two hours of television that we can afford. I am working for the Tuvalu Media Corporation and I am actually working on a local TV programme, so this is why we need this for the programme tonight

DIRECTOR: So, people want to see this?

IAKOPO MOLOTII: Oh! Oh yes. They love to see this. We just started this earlier this year but people, seeing themselves on the telly is new to them so they love it now, so... Most of them before they - they just want to come to the airstrip where, where the plane is and see the people coming out but with this programme some of them really not bother now - just stay home and say, 'Oh, we will see on tonight's programme.' What we see now is er special guests who were invited to the 22nd Anniversary of Tuvalu Independence, and including the Minister of Foreign Affairs from the Republic of China and the, the two guys of dotTV.

DIRECTOR: What's that?

IAKOPO MOLOTII: dotTV's - we heard dotTV is a company that giving - they, they giving us money? A lot of money. That's what we heard, that's what I heard.

DIRECTOR : Why are they giving you money?

IAKOPO MOLOTII: Because, because they sort of selling the, the "TV" - TV is an initial for Tuvalu and something like that, I'm not - I don't really know what about dotTV, but ... I just heard that they're giving us money.

TED HONG, Marketing Director, dotTV, Pasadena, US: Basically what dotTV is, it's a top-level domain name so just like "dot.com" or like in the Netherlands you guys have "dot.nl" or in Germany "dot.de", Tuvalu ended up with dotTV. You have to understand that Tuvalu by geography is probably the fourth smallest country in the world - they have, you know 10,500 people that actually live on the island. So they probably wouldn't have a ton of need themselves, even if every citizen in Tuvalu had their own domain name there would still be the opportunity for dotTV to sell literally hundreds of thousands, if not millions of domain names out there ending in dotTV. And that's really our core business is that we sell these top level domain names to anyone who wants to buy it all over the world.

DIRECTOR: What did you hear about the island, what's your impression, what's your idea?

TED HONG: Yeah, I mean I think in general it has been an incredibly positive relationship with Tuvalu. I mean the people are very...

DIRECTOR: No, what do you expect to see when you go to Tuvalu?

TED HONG: Um, I mean, from what I hear, you know there's an absolutely beautiful location, very tropical climate you know, very warm, lot's of sand and beaches and er palm trees. Er looks very, very very nice and seems a fun place to go. To be honest I don't know a ton about the details.

COMM: But life in Tuvalu isn't that complex. A former British colony, it now has the smallest GDP of any independent state, it has eight kilometres of roads, one airport and no known mineral resources.

FOLAU KAPUMANAIA, Fisherman: This is a very good, good life to stay here, a very good life. No, no problem, eh? No trouble. When you go anywhere, no trouble, no. If you want to go and you can - if you want to eat some fish, you can, you can find some fish every time.

COMM: If you don't want to eat you could always smoke.

CIGARETTE MAKER: This is a pandanus leaf.

DIRECTOR: And what do you do with it?

CIGARETTE MAKER: We use for 'smoke'

DIRECTOR: Smoke?

CIGARETTE MAKER: Yes.

DIRECTOR: Cigarettes?

CIGARETTE MAKER: Yes.

DIRECTOR: Can you show me a cigarette made out of this?

CIGARETTE MAKER: But I am not smoke.

COMM: Iakopo is keen they should know that the dotTV money could help their business opportunities.

IAKOPO MOLOTII: ... are part of this company, so the, that's where they - we get the money from. So like, you can ask the - your council, island council for any development you want to start here. Or, like build - buildings! You know? And a machine and install a small disk so that you can watch TV from here.

NBC4 WEATHERMAN: That's that constant that has been sitting off the coast. Oh, how I love these things.

TED HONG: The Internet is not time-sensitive, right? It's - you know, as long as you film it one time and you can store that broadcast on a server somewhere and you have the capability to stream it through your website you can come at noontime, you can come at 2 am in the morning you can come at 4 in the afternoon, whatever is most convenient for you. Anyone who wants to do it should be able to afford to do it and I think that is in one of the things that dotTV is evolving towards and what we want to be able to provide is basically a turnkey solution for anyone who wants to build this website of tomorrow - you know the next generation of online experiences. And I think the great thing that you are seeing by looking at all these different sites is that this is really happening on a global basis. It's not just happening in the United States. It is happening in the Netherlands, in Germany, it's happening in the UK, it's happening in Korea, in Japan, in Hong Kong.

COMM: But if the internet revolution hasn't quite reached Tuvalu, dotTV is sure that Tuvalu will participate.

TED HONG: Yeah, the agreement that we have with Tuvalu is actually 50 million dollars over the course of the 10 years. The contract is in perpetuity so after the ten years they stop receiving cash payments but they still maintain their equity stake in the company, so they actually have a double digit equity stake in our company and they have a seat on our board. So I think overall it's a very, very positive deal for them. And to know that the monetary gain that this company can have is affecting peoples' lives and actually doing a very good thing for the citizens and the country of Tuvalu - which you know, I think by any measure is, is a fairly poor country - but to be able to do good things for them is pretty exciting for us and all the employees here.

COMM: The Capital of Tuvalu is Funafuti. The city is Tuvalu's gateway to the outside world, home to its one airport. It's become a city island with electricity, television and a diet more varied than coconuts and fish. It's home to the Tuvaluan government. It's where 70% of Tuvalu's citizens who want to be part of the 21st century now live. But there's a downside to this new urbanisation: four hundred people per square kilometre means a squeeze on space and facilities. Tuvalu may have inherited the dotTV millions but it has still to develop a viable economy.

IAKOPO MOLOTII: On Tuvalu we have three kinds of people: poor people, less poor people and the government. Almost everyone who has a job works for the government. Tuvalu has very few products to sell. There are coconuts - but everyone has coconuts in the Pacific. There is fish - but everyone has fish in the Pacific and we cannot catch much because our boats are very small. But the government has sold the rights to fish large quantities to other countries and they help us in return. On Tuvalu we only have 130 telephones, but we have a satellite capacity for many more numbers. That surplus we sold to some businessmen from abroad but we didn't like very much what they did with it.

Excerpt from Premium Rate Telephone Sex Chatline: MAN ON CHATLINE: What are you wearing?

WOMAN ON CHATLINE: High boots and even leather skirts now and then. I have light skin that tans easily, large breasts and long legs.

KOLOA TALAKE, Adviser to Prime Minister/board of Directors, dotTV': And that is very bad, you know, we are really disappointed with a dishonest mob of people like that and we could even sue them because we were misled by them.

COMM: Koloa Talake is a special adviser to the Prime Minister. When the deal to sell the internet domain "dot.tv" was done he became one of the six directors of dotTV.

KOLOA TALAKE: I am beginning learn about Internet, yes.

DIRECTOR: Yes, cause I saw your assistant was advising you how to use the computer.

KOLOA TALAKE: Er, that's right. I was trying to send an email to, the dotTV, answering a message from them and you know? I did not know the... you know, the right way - the right way, you know, to do it.

TED HONG: Um, you know, he - he really functions a lot like a lot of the other board members. You know, to make sure that he is aware of all the decisions that the company makes, that, you know he has a say, he can voice his opinion. He can, you know, help guide the direction of the company. Um, and just, and just plays a pivotal role. And also really maintains the liaison, so there is a constant flow of information between us and the government of Tuvalu so that they are always very well informed and that they understand all the goings-on of the company.

DIRECTOR: Why do you think media companies are so interested in dot.tv? Why do they want to have these domains?

KOLOA TALAKE: Um, well, I really don't know, but I presume it's a, it's a new thing but it's, the most meaningful two figure - you know in, er - what do you call? And er it's there, you can see the logo on the door, it says 'dotTV', 'the New Frontier' - er, 'Internet Frontier'. Probably that, that's a layman's answer, yes.

DIRECTOR: [At the same time] Yes.

COMM: The sale of the domain name, "dot.tv" has raised the profile of computers on Tuvalu, schools are promoting the new language if not the new technology...

STUDENTS READ ALOUD: 'Microsoft Excel is an electronic spreadsheet that runs on Windows computers. What is an electronic spreadsheet? An electronic spreadsheet uses a computer to perform numeric calculations rapidly and accurately. Title bar: the title bar displays the programme name and the file name and also contains a control menu box with a close button and resizing button. Formula bar: the formula bar allows you to enter or edit data in the worksheet.'

TUAVAI HALO, Director, Computer school: Here on Tuvalu, if you know how to type or type in the computer or manual people will offer you a job.

DIRECTOR: Yeah, but who's offering jobs?

TUAVAI HALO: The government. You know the first girl to start this school, she is working in the parliament. The other one there in the island council, and the other offices are full of my students.

IAKOPO MOLOTII: I want to get a computer as soon as possible.

DIRECTOR: Why?

IAKOPO MOLOTII: Because it's, it's so handy, I mean, you know...

DIRECTOR: Do you know how to work with a computer?

IAKOPO MOLOTII: A little bit, like typing things and save - I think that's all I need. I was sort of encouraged by some friends to get into this system.

DIRECTOR: Who are they?

IAKOPO MOLOTII: It's, it's two, two couple - a couple from, from the United States, from LA, Julie - Julie and Josh, yeah. They gave me some information on what to buy.

DIRECTOR: You can afford it?

IAKOPO MOLOTII: Um. No. Er, that's why I had to save some money -save a lot of money, but um...

COMM: Computer technology has arrived here at Tuvalu's Customs Office. But the question is will computers really bring prosperity to Tuvalu?

KOLOA TALAKE: People need their computers on the island and as their income, you know, grows up they should be able you know to buy that equipment which is so useful for life, you know?

DIRECTOR: How?

KOLOA TALAKE: Because the stomach is you know, it's full with plate like that and it is limited to that quantity, yeah? And you can't eat more than one plate full of food. One plate is - you will satisfy your, your belly but the surplus income you have, you start to look around, and buy a car and buy a boat, buy computers, you know? And enjoy.

DIRECTOR: What happened?

GIRL'S VOICE: [Laughter] Maybe there something wrong with our - powerhouse?

DIRECTOR: What do you think is wrong?

GIRL'S VOICE: Their lining - something short!

DIRECTOR: How often does this happen?

MAN'S VOICE: Twice a week or three times a week, or even more than that in the day time. It is really uncomfortable with people like travellers, you know?

KOLOA TALAKE: This fuel-generated one is too expensive! The cost of fuel goes up and up and up, up... But there are also other sources which might be good.

DIRECTOR: Like what?

KOLOA TALAKE: Like diesel and coconut oil. We have plenty of coconuts.

DIRECTOR: But you need thousands of coconuts to do that?

KOLOA TALAKE: Sure!

DIRECTOR: But do you have them?

KOLOA TALAKE: Well we have to do, do it. I think we have.

IAKOPO MOLOTII: [Laughter] Take care!

RICHARD HUMPHREY VSO Volunteer: Just making sure the white lines for the centre of the runway are in a straight line. We use all the black here. We need to make sure that when they paint to put the boards down, so we keep the lines straight, otherwise it wobbles - doesn't look to good. OK? It is where - where do you spend the money? They don't have an enormous amount of money - or they hadn't until recently had an enormous amount of money. They have struggled for many years. I think the situation is probably different now with the dotTV money and the fishing licences money and suchlike.

DIRECTOR: So it stops being an underdeveloped country, then?

RICHARD HUMPHREY: Possibly yes. Yes.

COMM: Tuvalu has one hospital and two doctors for ten and a half thousand people. Five out of every hundred children die before the age of five - one of the highest infant mortality rates in the Pacific.

ESSELA NATANO, Physician, Tuvalu Hospital: Normally like, you know, when someone is in labour in a country like New Zealand, like you know you are, you are put in a delivery suite that's where you are, you know that's where you are monitored. But here like, you know, you have to wait, you know? In queues, like you know you are put on, you know, like just before delivery.

MIDWIFE: If they come at the same time to the labour ward, one will deliver on the delivery bed and the other one will deliver on the patient's bed like this, this bed -beside, no? Or sometimes the other one will deliver outside.

ESSELA NATANO: Tuvaluan doctors and myself as well, we are not trained as obstetricians and gynaecologists. Which means like, you know, we lack the, the experience as well. That is really one of our acute, acute, acute cases: obstetrics and gynaecological problems. Most of the patients they bring their own, you know like someone - like a caregiver, just to give the nurses a hand. And most of them like, you know, sleeps on the, on the floor. And when it is really, really busy as well -like you know, when there is no beds. And there is only - how many? Two nurses that looks after the wards and including the very sick patients. And, but at night one nurse only is looking after the whole two wards including the very sick. This is one of my patients and he's a cardiac, you know, patient and normally this type of patient should be in intensive care, but we don't have any intensive care on Tuvalu.

DIRECTOR: But is there really no money, there is income from dotTV?

ESSELA NATANO: So they say, but I haven't seen any. I don't know who's got them.

SAUFATU SOPOANGA, Tuvaluan Government Secretary: So far these expenditure levels are being contained and maintained through, you know, very prudent management of our financial resource and so that our budget, our annual budget is estimated at a level that is sustainable.

RICHARD HUMPHREY: I would like to think that they would actually want to be a developed country and they would actually wish to spend the money to develop. But I know if they do so then the aid money that presently comes in will probably stop flowing because once this becomes a developed country there's no need to pour aid into it. So there is a big argument for not pushing for development too hard because that maintains your multi-million dollar aid funding.

COMM: Before the DOTtv deal in 1999 Tuvalu's main source of income was international aid. But the windfall from the sale of Tuvalu's domain name could revolutionise life here forever. It's as if Tuvalu has won the lottery but still doesn't know how to invest the proceeds to benefit all the islanders. And there are still questions about how safe incomes from Internet businesses will be in the future.

TED HONG: Obviously this company is in the business of selling domain names so we have to believe in that fundamental business but every business has threats. Right? So I mean that's something that, you know, obviously we obviously we think about, you know. And, and things that you're being concerned about.

DIRECTOR: Yes but, but to you it means you move into something else...

TED HONG: Yeah, potentially - potentially.

DIRECTOR: But to Tuvalu it means that they lose their entire budget.

TED HONG: Er, you know, I-I mean really part of the process here is right, like - you know if Tuvalu really is expanding their, their capital infrastructure and that, you know, they are building things that would expanding their entire revenue base, right? So if they are going off and, and actually start expanding their runway such that they can expand into tourism, you know that really sort of diversifies their risk.