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Digicel raises spectre of monopoly in CWC-Columbus merger

Published:Wednesday | February 25, 2015 | 12:01 AM
Chris Dehring, chairman of LIME Jamaica and head of government relations at Cable & Wireless Communications Plc.

Irish-owned telecommunications provider Digicel said on Monday that the proposed merger of Columbus International and Cable and Wireless Communications (CWC) will lead to a monopoly in St Vincent and the Grenadines and other regional markets.

Digicel is urging regional regulators to prevent or impose conditions before approving the merger, a call it has made since the deal was announced last year.

Jamaica has already approved the merger.

In St Vincent on Monday, general counsel for Digicel David Geary said at a public forum that the merger was "without doubt, the most important thing that's happened in the telecoms industry since the industry was liberalised all those years ago".

But he also said it was about Columbus, which trades as Flow, and CWC, which trades in the region as LIME, "creating what will be a monopoly over fixed telephone, fixed Internet, and subscription TV services".

CWC and Columbus representatives at the forum pushed back at the claim.

Head of government relations at CWC, Chris Dehring, referred to the company's 140-year legacy in the region, saying the Cable and Wireless monopoly and its legacy of high prices and poor customer service are things of the past.

"It's been 140 years, and as I said, good, bad and ugly. The reality is that that company that we all knew and love to hate no longer exists. That company, which is this massive company called Cable and Wireless ... has been demerged over the years ..." he said.

He told the national consultation organised by the Ministry of Foreign Trade, Commerce and Information Technology that what is left of Cable and Wireless is a small company called Cable and Wireless Communications, which operates in the Caribbean, "which, probably the biggest mistake they made was to keep a piece of the name".

Dehring, a Jamaican, said the fact that he is the longest-serving and the oldest member of the senior executive team of CWC is evidence of how much Cable and Wireless has changed.

"So, when you try to give us all the lashes, we understand, but the reality is it is hard for us to, I guess, to be bogged down by that ... we try to move forward. It is a tough past to get by," he said.

John Reid of Columbus Communications said that his company has invested US$32 million in St Vincent and the Grenadines and will create 500 jobs over the next five years.

consumer protection

He said regulators should hold the companies' feet to the fire and ensure that consumer protection is central to the their plans.

"So for us, it is all about investing the money, building the network, providing standard products across the region - not just TV, the broadband as well - and we've done that," said Reid.

"And I can tell you, when I look at who is going to compete against us in these markets, I know if we don't get it right, they will eat our lunch. They will get the customer. They will earn the right to take the customer from us, if they do it better than us. And that's the last thing I want to do ... - not exactly a part of that legacy I want to create," he said.

Geary told the consultation that in each of six Caribbean markets where LIME and Flow now compete, the impact of the merger will be the elimination of a major competitor.

"Plain and simple, that's what will be happening ..." he said.

CWC has pushed back in the past against those arguments, saying Digicel itself commands a customer base across the region and would continue to do so after the merger.

Addressing the argument about which company will be bigger after the merger, Geary responded: "It doesn't really matter, to be honest. Just to take Cable and Wireless at their word, they are telling us that they are going to be the leading ICT provider. Who are we to argue? That's probably right," he said.

He also warned that contrary to CWC's claims, prices are likely to rise under the merger.

"Let's not forget that Cable and Wireless is spending US$3 billion to buy this company and it is going to have to get back that US$3 billion somehow. So, who is going to pay for that? I think it is going to be you and me, ultimately," Geary told the forum.

He said that in light of the proposed merger, telecommunication ministers and regulators have much work to do.

"This is truly a seminal moment in the industry, and I think everybody has said we have to get this right at the moment. I think the telecoms industry can either go forward and progress, or it can go backwards to where it was in 2000 with a monopoly and poor services, and so on," he said.

"The point is, the time to protect the consumer is now. It's before the merger takes place. It will be too late after the merger to impose conditions retrospectively or to try to control the monopolist. So, it's only by putting in place comprehensive conditions, after a thorough analysis now, that we can prevent the industry from spiralling backwards and we can ensure that it thrives for the future," Geary said.