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Aliv: Third mobile player will damage consumers

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Aliv is urging regulators to stop viewing the mobile market as “silos” in its approach to over-the-top (OTT) services such as What’s App, while warning that permitting a third market entrant could undermine investment in 5G technology.

The mobile operator, in its response to the Utilities Regulation and Competition Authority’s (URCA) recently-published market assessment, argued that the supervisory body must view OTT disruptors as part of the market because they are increasingly used as substitutes for text messages and calls.

As for the deployment of 5G or fifth generation mobile network technology in The Bahamas, Aliv warned that this will only be “commercially viable” in the more populated islands of New Providence and Grand Bahama. And it added that the incentive for itself and the Bahamas Telecommunications Company (BTC) to invest in such an expensive roll-out would be undermined if a third operator was permitted to enter the market and dilute their revenues and customer bases.

“URCA’s conclusion shows that there would be no additional benefits to consumers from a third operator, as they already have access to the benefits that arise from effective competition. Indeed, another operator would only dilute the revenues that the existing operators need to support further investment in networks (such as 5G), thereby making consumers worse off,” Aliv, which is owned by the Government and Cable Bahamas, argued.

“As the experience of similar jurisdictions elsewhere in the Caribbean region shows, the mobile market in The Bahamas cannot support more than two mobile network operators, but does provide a competitive marketplace that benefits consumers. The majority (17 out of 22) have two operators, and the number of countries with more than two operators has fallen from 11 to five, illustrating how small markets, such as The Bahamas, cannot support more than two operators.”

Many will view Aliv’s argument against a third operator as self-serving. Using International Telecommunications Union (ITU) data, Aliv said mobile prices had fallen “significantly” in The Bahamas since 2018. Mobile data and voice prices had declined by between 26 percent and 33 percent over that period based on the ITU’s “price baskets”, it added, while costs associated with “low” mobile use had gone down 6 percent. Just “data only” packages had increased, and that was by 2 percent.

“URCA should move ahead with the issue of spectrum for 5G and develop a plan that will enable all parts of The Bahamas to benefit from 5G. As Aliv has explained in its submissions to government, the roll-out of 5G to New Providence and Grand Bahama appears to be commercially viable,” Aliv said.

“However, its roll-out to the Family Islands is not, and so will need a different approach by government, for example by permitting a single wholesale 5G network and deploying universal service funds. URCA’s finding that the mobile market is competitive means it can move ahead to 5G without being concerned about the implications for market regulation. The advent of 5G networks should result in new mobile services and products that will give a boost to growth and competition in the mobile market.”

Elsewhere, Aliv rejected URCA’s decision not to classify OTT services as competitors and part of the mobile market. “By continuing to define the markets in silos, URCA does not recognise one of the main trends in telecommunications: The gradual replacement of traditional services like TV, messaging and voice by OTT data services, with customers accessing such services across multiple platforms including mobiles,” it said. 

“In the context of this consultation, URCA presents significant evidence that OTT messaging and voice services are substituting SMS (text) services, and OTT services therefore form part of the mobile market. The results from URCA’s consumer surveys make it clear that the vast majority of mobile customers use OTT services, and that substantial substitution does take place between mobile call and messaging services and OTT services.

“In addition, faced with a 5-10 percent price increase in mobile services, 30 percent of customers would make fewer mobile calls and use OTT call/messaging instead.... URCA notes that OTT users can only make calls to others who have downloaded the same app as a constraint on substitution. Aliv wishes to point out that the cost of such downloads is zero, and so is not in itself a limitation,” the mobile operator continued.

“As most calls and messages (whether made on the mobile network or on OTT services) are to a circle of friends and relatives (or, in the case of small businesses, to repeat customers and suppliers), they are likely to share the same app and so the majority of calls and messages will be sent over the OTT service.

“URCA’s primary research reveals that 93 percent of mobile users said they use WhatsApp to make calls or send messages. This is the main alternative platform for voice and messaging services, and so URCA’s argument about the download being a constraint does not hold.”

Comments

bahamianson 2 months ago

Let a third and fourth in. We need competition to drive prices down

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Sickened 2 months ago

A third provider may not be good... but, having 1 decent and reliable provider would be great.

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