By NEIL HARTNELL
Tribune Business Editor
Regulators yesterday rejected Cable Bahamas’ arguments that the impending change in majority control at its major rival would undermine competition in the pay-TV and international bandwidth markets.
The Utilities Regulation and Competition Authority (URCA) branded the BISX-listed operator’s concerns as “highly speculative”, and instead ruled that Liberty Media’s acquisition of the controlling equity stake in the Bahamas Telecommunications Company (BTC) would not impact competition.
In its February 2016 submissions raising concerns over Liberty’s Cable & Wireless Communications (CWC) acquisition, Cable Bahamas argued that BTC would be able to “leverage” its new owner’s scale to acquire exclusive rights to premium pay-TV content.
This, in turn, would attract increased advertising revenues to BTC, “depriving competitors” of the funds needed to subsidise so-called public interest broadcasting.
“Cable Bahamas contended that the transaction will impede, if not preclude, robust competition in the television and broadband markets in the Bahamas by effectively blocking Cable Bahamas and other licensed operators in the Bahamas from accessing popular content and audio visual programming,” URCA said.
“Cable Bahamas further asserted that BTC would be able to leverage the acquirer’s size and buying power in the global marketplace to negotiate exclusive rights for the dissemination of premium content and popular programming in the Bahamas.
“Consequently, Cable Bahamas argued that this is a serious competition issue of significant public interest concern, since advertising revenues associated with content are used to subsidise public interest programmes and other, less remunerative services.
“Cable Bahamas expressed the view that BTC, through [Liberty], would secure exclusive rights to popular English-speaking content, thereby allowing BTC to increase its television market share as well as deprive competitors of advertising revenue needed to provide new and other broadcasts of public interest.”
Cable Bahamas urged URCA to prohibit BTC from entering into exclusive programming distribution contracts, or at least “impose a mandatory obligation” on its rival to re-sell such content to other Bahamian operators.
These arguments, though, cut little ice with URCA, which suggested that Cable Bahamas was being hypocritical, given the exclusive content and programming rights it has previously negotiated - such as the soccer World Cup in 2014.
Pointing out that Cable Bahamas was the ‘dominant provider’ for pay-TV services, URCA said: “URCA considers that, in the absence of any evidence that BTC intends to act in the manner as suggested by Cable Bahamas, Cable Bahamas’ proposed scenario is highly speculative and cannot form the basis for a finding of any harmful effect on competition.
“In any event, URCA notes that exclusive contracts or arrangements are not uncommon practice for pay-TV service providers.”
Cable Bahamas also expressed concern over its access to international fibre optic and bandwidth capacity, given that Liberty would also take over ownership of the ARCOS cable system via its CWC purchase. The latter last year acquired ARCOS’s former owner, Columbus Communications.
Pointing out that it relied on the ARCOS cable “to transport a significant amount of its traffic between the Bahamas and the US”, Cable Bahamas argued that the links between BTC and Columbus would be “strengthened” via the Liberty deal to its detriment.
“Cable Bahamas further noted that the transaction raises an even greater threat to competition in the Bahamas as there is a significantly increased likelihood of a substantial lessening of competition in the market for international capacity and related wholesale and downstream services,” URCA said.
“Cable Bahamas believes that the relationship between BTC and Columbus Communications will be substantially strengthened as a result of the ownership structure of Liberty Global.
“Cable Bahamas also asserted that following the acquisition, BTC will have an even stronger motivation to use the ARCOS-1 cable to impede effective competition from Cable Bahamas and other licensed operators in the Bahamas.”
URCA rejected Cable Bahamas’ concerns, noting that it had already dismissed similar in approving CWC’s 2015 purchase of Columbus Communications.