CARIBBEAN: Governments Take First Step Toward Liberalising Telecom Sectors

By IPS Correspondents Reprint | | Print |

Peter Richards

PORT OF SPAIN, May 24 2000 (IPS) - á The sole provider of telecommunications services in the region for more than a century, British telecom giant Cable and Wireless PLC is going to have to move over to make room for competition.

Five regional governments have come together to form a telecommunications watchdog agency whose principal role will be to foster competition in the industry.

The five, Dominica, St. Lucia, Grenada, St. Vincent and the Grenadines and St. Kitts-Nevis formalised the accord establishing the Eastern Caribbean Telecommunications Authority (ECTEL) at a summit in Grenada earlier this month of the Organisation of Eastern Caribbean States (OECS).

The eight-member OECS acknowledged that the telecommunication industry was a vital tool for socio-economic development and that liberalising the sector would only redound to the benefit of their economies and consumers.

But not all eight are participating in ECTEL. OECS officials say that Antigua and Barbuda has decided to pursue its own path to liberalisation of its telecommunication industry. In the case of Montserrat and the British Virgin Islands, their political status with Britain – they are both dependent territories – prevent them from joining the ECTEL.

ECTEL’s budget is yet to be finalised, but OECS officials say it is likely to be generated from fees collected from the sale of radio spectrum from the five participating countries.

The OECS countries are hoping that demands for radio spectrum – electronic magnetic waves that cross boundaries – will increase as data broadcasting, videoconferences and other range of internal businesses for companies come on stream.

ECTEL will be headquartered in St. Lucia and will serve “to ensure that the telecommunications sectors in the five participating states have fair competition, consumer protection and investor confidence.” The members of ECTEL have also agreed to speed up new legislation setting the stage for the new liberalised telecommunication sector.

“Those already in the business will need guidance for example in controlling anti-competitive behaviour, universal service and access obligations. The new people providing service will want to enter on the basis of fair play and transparency,” a statement from the OECS Secretariat said. St. Lucia’s Communications Minister Calixte George urged unity in the liberalisation process.

“If we are to succeed, we should never allow ourselves to be divided. We must be prepared to work with our brothers and sisters for convergence,” he remarked.

The OECS countries have, over the years, been setting the stage for liberalising their telecom sectors. In 1998, they established an OECS Telecommunications Reform Project, with a budget of 10.2 million US dollars.

The International Bank for Reconstruction and Development (IBRD) and the International Development Agency are providing six million dollars between them with the five participating governments and grants accounting for the remainder.

The main objective of the project is to introduce pro-competitive reforms in the telecommunication sector. The OECS Secretariat said that such reform “speaks to the on-going negotiations with the current monopoly provider Cable and Wireless.”

Cable and Wireless got a taste of its future in the Caribbean when it lost a court battle in Dominica last year against a local upstart.

The court victory for Marpin Telecoms and Broadcasting has encouraged the other OECS member states to hasten the liberalisation process. Their positions have been strengthened by the fact that, as in the case of St. Lucia, many of the current contracts with Cable and Wireless have either expired or on the verge of doing so.

St. Lucia’s George regards the expiration of the accords as a release ôfrom bondage, not from purgatory, but from hell.”

The sheer muscle of the company has not been easy for regional territories to deal with. Cable and Wireless has interests throughout Asia, the Caribbean, Britain and the United States. The company reported global profits totalling 3.5 billion pounds sterling for the fiscal year ending Mar. 31, 2000, up from the 1998-99 figure of 908 million pounds sterling. Global revenue for the British telecom giant stood at 9.2 billion pounds sterling up to Mar. 31 this year, a 16 percent increase over the 1998-99 figure of 7.9 billion pounds sterling.

And it did not get this big by just simply rolling over for the competition. This company will continue “to be committed to the customers not only in Dominica, but throughout the region,ö says Carl Roberts, Cable and Wireless Manager in Dominica undaunted by the court ruling.

“Our pledge is to continue to work with the governments and people of the region,” the company says in a promotional publication entitled “A Caribbean Story, Cable and Wireless.”

“The goal of Cable and Wireless is to be partners with governments, to help to grow the region’s economies, while providing a variety of basic and sophisticated phone services to more people around the region,” it added.

The company has produced a video entitled “In Touch With You” in which it demonstrates how Cable and Wireless has made a significant contribution to the lives of the people in the Eastern Caribbean, in areas such as health, infrastructure development and sports.

Further it says, its commitment to the region is demonstrated through the investment of more than 1 billion US dollars over the past five years and plans to do the same over the next five. In addition, the company says it has been spending millions of dollars annually to train its staff as well as contributing to the development of West Indies cricket.

Prior to a meeting of OECS ministers responsible for telecommunications and their negotiators in Dominica last year, Cable and Wireless issued a fact sheet in which it said it was “anxious to change” and was looking forward to working with the governments to implement new pricing structures. The company also offered incentive packages on its Internet services.

The OECS Telecommunications Reform Project is now developing a training programme to improve the infomatics skills of the member territories. The training programme is considered vital to OECS governments who regard infomatics skills as being necessary to “attract investment from foreign companies wanting to outsource information processing tasks and to support local firms needing to implement new technologies to increase competitiveness.”

They are aware that advanced technologies are driving the convergence of office equipment and telecommunications, blurring the traditional distinctions between data processing and telecommunications and enabling new value- added services, which the OECS countries say they want to take full advantage of, as companies spend billions of dollars to network their products.

Last month, several issues critical to a liberalised telecom industry, such as inter-connection, tariffs and pricing, universal service and numbering were discussed at a major conference of stakeholders.

American Consultant Martin Taschdjian, who addressed the conference on the “United States experience in Inter-Connection”, has recommended that the OECS regulators set the price of “call termination”, where a subscriber to one provider can speak to those who subscribe to other providers.

Taschdjian, a former senior official who worked with the International Telecommunications Union (ITU) and Bell Atlantic, believes it would prevent a situation where the incumbent “will want to entrench its dominance of the “call origination” market by denying or over-pricing call termination to competitors.”

Donnie De Freitas, Project Manager at the OECS Telecommunications Reform Project says the draft legislation for the member countries provides for universal service to include public voice telephone, internet access, telecommunications services to schools, hospitals and to the disabled.

He says the emphasis will be on ensuring that “as wide a range of people as possible share in the freedom to communicate by having access to efficient and modern telecommunications at an affordable cost.”