By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
THE publication of separate accounts and cost accounting information is being opposed by the Bahamas' two leading communications providers who described the requirement as "disproportionate" and "not fit for purpose."
In response to the Utilities Regulations and Competition Authority (URCA's) public consultation document on proposals for publication of accounting separation and cost accounting information, both the Bahamas Telecommunications Corporation (BTC) and Cable Bahamas Limited (CBL) said that the publication of separated (regulatory) accounts was unlikely to achieve the main objectives indicated by URCA and therefore imposing the requirement was disproportionate. URCA said that imposing the accounting separation and cost accounting requirement would support retail price regulation where it is applied; overcome the information asymmetry between the regulator and regulated entities; guarantee audit independence and objectivity in the cost information provided to URCA.
In its response, BTC maintained that the publication of its separated accounts would put the company at a disadvantage to its competitors without meeting URCA's stated goals. BTC said: "When compared to URCA's stated objectives, the requirement for BTC to publish its regulatory (separated) accounts is disproportionate and not fit for purpose. BTC is of the view that, except for a flawed benchmarking study, URCA has not presented any arguments as to why publication would be merited."
BTC said that the publication of separated accounts in relation to its mobile business would serve no regulatory purpose while it maintains a mobile monopoly, citing that the regulator is currently able to adequately carry out its ex-post investigations on a case by case basis in the absence of publication of data that BTC deems commercially sensitive. "BTC is firmly of the view, that URCA's proposals for the Publication of Accounting Separation and Cost Accounting Information is disproportionate and not fit for the purpose. Other Licensed Operators (OLOs) and interested parties cannot be expected to monitor for anti-competitive behaviour by way of the publication of BTC's separated accounts," BTC said, adding that it had "serious reservations" with the methodology and logic through which URCA had come to the preliminary conclusion that publication is merited. "BTC is of the view that URCA's benchmarking exercise does not meet international standards of due care. Based on BTC's detailed evaluation of URCA's benchmarking sample, the company is of the opinion that the study rejects, or at best fails to support, URCA's preliminary conclusion. If URCA were to act upon this conclusion, and require BTC to publish its regulatory accounts, such action would impose substantial costs without any significant benefits by way of the advancement and development of the Electronic Communications Sector.
"BTC is of the view that, except for a flawed benchmarking study, URCA has not presented any arguments as to why publication would be merited in The Bahamas," BTC said. The company proposed that URCA introduce an approach similar to that adopted in a number of EU countries whereby the review of an operator's confidential information is carried out by the regulator.
Cable Bahamas Limited (CBL) in its response said that it was of the view that the publication of its separated (regulatory) accounts is unlikely to achieve the main objectives indicated by URCA and "therefore imposing this requirement is disproportionate, unnecessary and unreasonable." The company said that the proposal if applied by URCA would likely to continue to contribute to the rising cost of regulatory compliance without any corresponding benefit to competition or the consumer.
"CBL is of the opinion that the obligation to prepare and publish separated accounts imposed on it is unreasonable and pioneering in the cable television business. CBL's objection to the imposition of an accounting separation requirement has already been canvassed and a fortiori we do not believe that CBL's regulatory accounts should be published," the company said. CBL noted that Cable TV operators are usually not required to prepare and publish regulatory accounts and that if an obligation to publish is imposed, CBL would be the only entity of its kind to publish such information. "The information supplied by URCA does not support a divergence from usual or best practice. The publication of its regulatory accounts would therefore only increase information asymmetry with its peers and likely foster unfair competitive issues. With respect to other licensees in The Bahamas, it is unclear how there could be an information asymmetry with respect to CBL," the company said.
CBL said that it believed that the high cost of preparing, auditing and publishing regulatory accounts is "disproportional relative to the hypothetical benefit and is actually counterproductive to the promotion of market entry and therefore investment in the Electronic Communications Sector."
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