Digicel states position on proposed merger
THE EDITOR, Sir:
I would like to thank J. Paul Marshall for his piece on Sunday "Columbus buyout may balance out the scales" which posed a number of pertinent questions which I will utilise this forum to respond to.
To recap briefly - the two key points raised by Mr Marshall were what Digicel's defence of the anti-competitive argument would have been if we had indeed acquired Columbus Communications and why there was a seeming lack of calling for regulatory oversight when Digicel was acquiring Claro.
First, one of the main issues in understanding Digicel's point of view in asking for close regulatory scrutiny of the proposed deal is in relation to Digicel's position in the market. Put simply, people are not comparing apples with apples. It's no secret that we lead the mobile market in Jamaica with over 70 per cent market share - but our dominance starts and ends there.
When it comes to our position in the fixed line, broadband and cable TV markets - our position is much more marginalised - versus a combined potential might of Cable and Wireless and Columbus of some 90 per cent plus in the cable and fixed telephony markets and over 75 per cent in the fixed broadband market. That is where our cause for concern lies as it relates to anti-competitive activity in the market. We're talking about different markets, different services, different consumer offerings.
Second, there seems to be a commonly held misconception that there was no call for regulatory oversight of our deal with Claro a few years back. This is simply not the case. The Digicel/Claro transaction was closely scrutinised in all of the markets involved (as indeed is absolutely appropriate) - in fact, our competitor here in Jamaica was active in calling for scrutiny from the relevant regulators. Lest we further forget, our plans for our El Salvador business were changed based on the views of the Superintendencia de Competencia (SC), the regulator in El Salvador, meaning that we mutually agreed to shelve that part of the proposed deal and, to this day, continue to do business in accordance with the recommendations of the SC in El Salvador.
Avoidance of Doubt
For the avoidance of doubt, Digicel's concerns with regard to the proposed acquisition by Cable and Wireless of Columbus Communications are straightforward and transparent and can be summarised as follow:
The good of consumers must be paramount - we cannot risk an environment of higher prices, slower investment and degraded service which often flow from virtual or actual monopolies;
The region has come so far in terms of technological and economic development, and steps should be taken to ensure this is maintained;
A level playing field is vital for competition to thrive and consumers and the economy to benefit from it;
The proposed merger must be examined properly and in the fullness of time, to ensure that competition is preserved and protected;
These required processes should not be rushed through and approved with indecent haste - the regulators in Jamaica and across the region have a very important job to do and should be allowed to complete their market review and provide recommendations for the protection of consumers and the continued development of the industry.
As the company which brought competition to the Jamaican market more than 13 years ago, we are in absolute support of the continued development and sustainability of the industry, supported by a strong regulatory regime which ensures that providers are held accountable and consumers' right and interests are protected and promoted. That is all we are asking for in this regard.
Thank you for the opportunity to respond.
Head of Legal and Regulatory
Division, Digicel Jamaica