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OUR to spin off telecoms division: Big 2 backs plan for single regulator

Published:Sunday | July 24, 2011 | 12:00 AM
Prime Minister Bruce Golding (left) is seen here with Columbus Communications Chairman Brendan Paddick at Flow Jamaica's fifth anniversary celebrations at Devon House in Kingston last Thursday night.- CONTRIBUTED

Prime Minister Bruce Golding said Thursday that the telecommunication division of the Office of Utilities Regulation (OUR) would be spun off as a separate entity as the Government tries to keep pace with the complex and ever-evolving sector.

As he celebrated with Flow Jamaica on the telecom company's fifth anniversary (related story on Page C3), Golding suggested that the sector was expansive and intricate enough to require its own watchdog.

"We will establish a single regulator for the telecommunications sector," said the PM.

Digicel Jamaica, now seen as the largest player with some two million subscribers, is backing the plan; as is its closest rival, LIME Jamaica.

"As of now, telecommunications falls within the broad ambit of the OUR, but the sector is so important and dynamic and peculiar that we felt it was important for the regulator of the telecommunications sector to be separate from the other areas of utilities regulation," said Golding.

"So we will be creating its own regulator with necessary authority to provide the regulatory framework and oversee the operation of that regulatory frame-work."

The OUR currently regulates water, elec- tricity and telecoms and oversees bus-fare increases. In the telecoms arena, the regulatory agency polices such companies as Digicel, LIME, Claro and Flow - four of the largest players whose investments run into billions of dollars.

Flow, as a cable company offering triple-play services, answers chiefly to the Broadcasting Commission.

Golding's announcement comes against the background of Digicel's pending acquisition of the operations of Claro Jamaica. Industry sources said at the weekend that the idea of a single telecoms regulator gained traction as the Golding administration considered ways to appease the broad sector, which is fearful that a stronger Digicel could crowd out competition and dissuade new market entrants.

Good move

Digicel said it had not been consulted directly on the spin-off, but sees the move as a plus for competition.

"We haven't been approached, but we would be broadly supportive since preserving competition in the telecoms market is of paramount importance. The water and power markets in Jamaica are by their very nature very different," said Richard Fraser, legal and regulatory head at Digicel Jamaica.

LIME Jamaica said the idea of a single regulator was alluded to in the ICT Policy and was the subject of industry discussion before the policy's tabling in Parliament.

"The current framework has in several ways not met the needs of the changing dynamics of

Big 2 backs plan for single regulator the Industry, including the regulation of the company which has become dominant, and the removal of regulation of LIME in markets in which we are no longer dominant," said the telecoms company that up to a decade ago held a monopoly on phone services.

"LIME is therefore hopeful that more responsive and appropriate regulation will result from the new legislative framework. In any event, LIME will continue to support the pursuit of independent, transparent and efficient regulation of the sector. We are certain that this will redound to the benefit of all consumers."

Golding did not disclose the precise timeline for the spin-off, but hinted it could occur after the drafting of the new telecommunications act.

He said the law needed to be updated notwithstanding that it is a relatively new piece of legislation.

"Even though it is a statute of relatively recent vintage, we found that it had already become obsolete and it was in fact impeding many of new areas of competition that did not exist at the time when that legislative work was done," he said.

Golding concluded that Flow's investment in Jamaica allowed the country a second option in communicating with the world.

"The fibre-optic link they established is of fundamental importance and critical to the infrastructure that connects us to the rest of the world. I want to commend them for the work that they have done," he said.