Sat | Sep 23, 2017

Flow rivals against extended termination rate reduction

Published:Wednesday | August 30, 2017 | 8:04 AMMcPherse Thompson
Graphic

Telecommunication providers Digicel and Verge Communications want the proposed reduction in fixed termination rates implemented as soon as possible, suggesting that it would unduly benefit Cable & Wireless Jamaica (C&WJ) financially if done over an extended period.

The Office of Utilities Regulation (OUR) said it would make a determination in mid-September on when the reduction in rates will before effective. The OUR had initially ordered a six-month implementation timeline or glide path for the rate adjustments ending on January 1, 2018.

However, C&WJ, which trades trading as Flow Jamaica, the island's dominant fixed-line operator, is pushing for a glide path of two to three years and sought a stay on the initial price adjustment that was slated to take effect on July 1.

The OUR agreed to delay implementation for further consultations.

In response to C&WJ's request, Digicel said the six-month timeline should be maintained and argued that the extended period would be unreasonable.

 

NO BASIS FOR EXTENSION

 

Digicel said it can see no basis for the OUR to extend the transition period to a more cost based rate beyond the initially proposed date.

"In these circumstances, Digicel believes that the initial price reduction should be as effective as soon as possible, but in any event pure LRIC based fixed termination rates should apply in Jamaica from January 1, 2018, so as to align the regulatory frameworks for the fixed and mobile sectors," the telecom said.

Start-upVerge Communications suggested that a prolonged glide path of two to three years will only serve the purpose of maintaining a fixed termination rate, which is above cost.

It argues that this would enable C&WJ to continue collecting high revenues at the expense of other licensed operators whose interests the OUR is also required to take into account as part of its mandate to promote fair and open competition.

The company said that any further delay in the implementation of the long overdue determination wrongly and illegally exacerbates the financial harm suffered by interconnected operators.

Should the OUR accept C&WJ's proposal of a glide path of a minimum of two years or a maximum of three years for implementation of the reductions in fixed termination rates, this would extend the financial and commercial harm other interconnected operators are suffering, it suggested.

Digicel said that in relation to the market impact of an extended glide path, it agrees with Verge's conclusion that it would benefit C&WJ unduly.

However, Digicel said such a market impact arises primarily because of the asymmetry in regulatory approach between fixed and mobile termination rates. Hence the use of an extended glide path for fixed termination rates is a form of regulatory discrimination to the detriment of mobile operators, it added.

In response to Digicel and Verge, Flow said it maintains its position that in all the circumstances surrounding the determination on rates, it had a legitimate expectation of a longer glide path than the six-month period set out by the OUR.

It said it continues to seek the following remedies: a glide path of a minimum of two years or a maximum of three years for the implementation of the reduction in rates, and a stay in the effective date of the first reduction from July 1, 2017 to a date when the new glide path is determined by the OUR or pending an appeal.

mcpherse.thompson@gleanerjm.com