COMMUNICATIONS-JAMAICA: Former Monopoly Creaks under Weight of Competition

By Zadie Neufville Reprint | | Print |

Zadie Neufville

KINGSTON, May 23 2001 (IPS) - Under threat of competition for the first time in its 100 year history in Jamaica, telecommunications giant Cable and Wireless Jamaica (C&WJ) went on a blitz to sign up new customers with attractive offers of lower price and improved quality for its cellular services.

It worked. In just 10 months, more than 200,000 cellular customers signed up, swelling the customer base to over 355,000.

But the promise of better service proved to be a nightmare as the technical infrastructure buckled under the weight of the additional customers, bringing down the executive who engineered the rapid expansion and drawing warnings from government regulators that the company’s licence could be in jeopardy.

Now, government’s Office of Utilities Regulation (OUR) which regulates the performance of all the island’s public utilities– says it wants to hear from the multinational before the end of this week how it plans to improve its cellular network.

Absent a satisfactory improvement plan, the regulator said it could recommend withdrawal of the company’s licence to provide a mobile service.

C. Courtney Jackson, the Deputy Director General of telecommunications at the OUR said the agency has informed the company that it could lose its license if the service does not improve by August.

In the face of the warnings, the company called for help from the Swedish-based telecommunications multinational, Ericsson, which has been C&WJ’s major cellular equipment supplier.

C&WJ is a subsidiary of the British-based multinational, Cable and Wireless, which has enjoyed monopoly status in telephony throughout the English-speaking Caribbean for most of the last century.

Under pressure from consumers, regional governments, new technologies and potential competitors the monopoly has been broken in some islands including Jamaica where government this year sold licences to two providers of cellular services. The monopoly for fixed line service will continue for sometime.

One of the new entrants is Digicel, an Irish-based company, which began offering mobile service in April and reportedly attracted 50,000 customers in the first week.

C&WJ has been widely criticised for rushing to add too many customers to its network in the face of competition from Digicel and a second licence holder that is expected to begin operations by the end of the year.

The call to Ericsson came last Saturday after the fourth breakdown in two weeks stopped thousands of customers from making or receiving calls.

Since May 8 customers of the telecom giant’s cellular network have been affected by system crashes that have crippled the network.

Jackson said the recent network failures, high levels of dropped calls and complaints ranging from inability to make calls, to late delivery of text messages, poor reception and non-functioning mail boxes, show that the company has failed to honour the terms of its agreement.

C&WJ’s Public Relations Manager Errol Miller explained that the breakdowns were the result of the rapid expansion of its customer base from an average of 9,000 a year for the first nine years of mobile service..

By contrast, in the 10 months from April 2000 to January this year, the company added some 200,000 customers, thus pushing its cellular system beyond its capacity.

In response to criticisms and determined to keep its market share in light of new competition C&WJ recently offered various cash incentives and free calls to keep existing customers and attract new ones.

The company’s strategy brought in the customers but it also crippled the network as customers took advantage of lower rates to make more calls and talk longer.

One casualty of the debacle is Steve Twomey, Sr. vice president in charge of mobile services, who was fired Monday.

Before his dismissal Twomey said the problems were due to a combination of factors: congestion, resulting from customers taking advantage of free calls, and upgrading work being carried out on the network.

Even as C&WJ’s pre-paid customers are denied service , the company continues to advertise this service, further angering regulators. This is a breach of the Fair Trading Act, Jackson says, because it is advertising a service it cannot provide.

It would not be the first time that C&WJ has breached the law which is designed to promote competition and protect consumers.. In October 1999 C&WJ was fined