Thu | Oct 19, 2017

Paulwell strikes again

Published:Friday | June 12, 2015 | 12:00 AM
Floyd Green

By now the country would have been made aware of another missed deadline for the implementation of number portability by Minister Paulwell. This disappointing development has become par for the course with the minister of announcements having now missed five deadlines dating back to December 2012. There is, however, another area of equal importance that I would like to focus on, which is the recent approval of the Cable & Wireless-Columbus Communications merger.

No one can deny that there are distinct differences between the Jamaican approach and that taken by our regional counterparts, and I am left with the distinct impression that much more care and caution has been taken in other countries to ensure that the consumer was protected.

The parliamentary Opposition has repeatedly expressed its position in welcoming the acquisition, but there were many lingering issues and unanswered questions surrounding the process.

Prior to the acquisition, Cable and Wireless and Columbus controlled a combined 99 per cent of the residential broadband market and a combined 99 per cent of the fixed-telephony market in Jamaica. As such, this acquisition creates a virtual monopoly for CWC in those areas.

However, the area of most concern to the ICT sector is the fact that this acquisition will result in ALL of the submarine cables running between Jamaica and the rest of the world being owned, operated and controlled by one entity, CWC. These submarine cables are responsible for almost ALL Internet traffic entering or leaving the island and the implications of one entity controlling all four of these are massive.

 

The Regional Approach

 

In Jamaica, Minister Paulwell received the request for approval of the acquisition in November 2014 and announced that he signed off on the deal in January 2015. So in just two months, Minister Paulwell adequately weighed the benefits of the acquisition against the possibility that the new entity could negatively influence pricing, competition and downstream market growth. In contrast, our Caribbean neighbours took a much more measured and cautious approach.

Trinidad's determination was made in March 2015, denying the acquisition until certain conditions were met. Likewise in Barbados, their announced decision approved the acquisition subject to the acceptance and implementation of 14 conditions by CWC and Columbus. In St Lucia, they opted to have a public consultation on the process, which ended in April.

 

preferred approach

 

Our Caribbean neighbours in Barbados have already stipulated the preferred approach: Divestment of assets where there is overlap. In the Barbados FTC ruling approving the acquisition, the FTC mandated that "one set of fibre cables in the zones where there exists total overlap of the CWC and Columbus Networks be divested". The ruling went on to stipulate a fixed time frame for the divestment.

In the Jamaican case, there was no such condition imposed by Minister Paulwell on the deal. Divestment of these overlapping assets would serve to preserve competition. Only then could he have guaranteed the natural outcomes that flow from increased competition.

Industry experts all agree that international bandwidth is the key component used to provide Internet and content services in the Caribbean.

Internet access and content delivery have become so important that a day without Internet access is almost inconceivable. More and more content is being delivered and consumed via the Internet, whether it be content from CNN, NBC, TVJ or CVM, Netflix, Hulu, YouTube or voice and video communications via Skype, Facetime or Webex. All of these modes depend on those four subsea cables.

Add to this the fact that all current and hopeful broadband service providers, including Digicel, will now have to purchase or engage in a wholesale bandwidth purchase relationship with their competitor in an effort to provide services to their clients with seemingly no clear mechanisms, policies or legislation for protection against anti-competitive pricing regimes.

Where has Minister Paulwell taken us with his approval of this acquisition? It is clear that the minister is not fully seized of the long-term effects of the way in which he has facilitated this deal. The good of Jamaican consumers - fair competition and a level playing field - was clearly not a priority if the minister has apparently brought us full circle from liberalisation back to monopolisation.

The Jamaican experience of liberalising the telecommunications market, an initiative for which Minister Paulwell is regularly credited, resulted in, among other things, a significant expansion in the provision of mobile and broadband services. Not only have the prices of cellular phones and mobile call rates fallen in light of increased competition, but competition has also seen reduction in the price of broadband with complementary increase in Internet speeds. The ultimate effect is, of course, sector growth.

It is a retrograde step for Minister Paulwell because of his hasty, and non-forensic approach, to return us to the dark ages, where lack of competition and monopoly reign supreme.

- Floyd Green is an attorney-at-law and the JLP's deputy spokesperson on science, ICT & digital economy development. Email feedback to columns@gleanerjm.com.