BTC attacks Cable's 'double rate subsidy'


Tribune Business Editor


The Bahamas Telecommunications Company (BTC) has blasted Cable Bahamas’ call termination rates for being “double” its own, arguing that this results in “unfair competition” by creating a ‘subsidy’ that allows its rival to undercut its fixed-line voice prices.

Responding to the Utilities Regulation and Competition Authority’s (URCA) consultation on call termination rates, BTC said that while the regulator had ordered it to reduce its call termination fees, no such burden had been imposed on the BISX-listed company or other competitors,.

This, the incumbent carrier argued, had resulted in Cable Bahamas charging it fees that were 100 per cent higher than its own for terminating phone calls on its network.

However, in its own response to the URCA consultation, Cable Bahamas shot back by alleging that BTC was abusing its ‘dominant market position’ to force it to reduce its call termination rates.

Referring to the dispute with BTC over the former’s alleged ‘blocking’ of calls from Cable Bahamas’ network to international mobile roaming customers, the BISX-listed communications provider said its chief rival was adopting a ‘take it or leave it’ stance.

It alleged that BTC was requiring Cable Bahamas to reduce its fixed-line call termination rates in line with its own, “as a pre-condition” to allowing calls to roaming customers to terminate on its network.

The two URCA consultation responses again illustrate the numerous disputes that are likely to ‘rear their heads’ between the two Bahamian communications giants as the market inches towards full liberalisation and competition.

BTC, for its part, said that prior to URCA mandating a 2012 reduction in the call termination fees it charged other operators, it had “negotiated reciprocal termination rates” with Cable Bahamas and others.

“Cable Bahamas, which is not currently subject to regulation on its termination rates, has refused to reduce its termination rates in line with BTC’s, resulting in its termination rates being double BTC’s,” BTC alleged.

“Because of the regulatory requirement for BTC to interconnect with all other licensed operators, BTC has to accept Cable Bahamas’ charges, whatever they are.

“In addition, BTC cannot in return vary the conditions for its termination services, due to BTC’s regulated status in this market.”

Cable Bahamas’ “unregulated termination rates” were damaging the Bahamian communications market, its rival added.

“BTC considers that Cable Bahamas’ refusal to reduce its termination rates in line with BTC’s reductions has resulted in excessive charges by Cable Bahamas, which are producing a subsidy from BTC to Cable Bahamas and are enabling Cable Bahamas to engage in unfair competition at the retail level by using this subsidy to reduce the prices.”

Pointing out that Cable Bahamas “ability to be benefit from economies of scale and scope on its large and well-established cable network”, and numerous product lines, BTC said its ‘above average’ call termination rates could also “distort” the broadband Internet and cable TV markets.

This, it added, was especially so given Cable Bahamas’ tendency to ‘bundle’ its fixed-line telephone service with those products in a ‘Triple Play’ offering to customers.

“Any distortions in the retail markets stemming from above-cost termination rates would therefore have a significant and detrimental impact on consumers in multiple retail markets in the Bahamas,” BTC said.

Not surprisingly, Cable Bahamas sees things slightly differently. It focused on BTC’s so-called countervailing buying power (CBP), and said: “BTC’s unique ability to influence market condition is derived from its incumbency (as a former long-standing monopoly operator in the fixed market, and a current monopoly operator in the mobile market), scale and market experience. Incumbency provides significant relative market advantages and market power.”

Explaining how BTC was using this in practice to its benefit, Cable Bahamas alleged: “Cable Bahamas notes that in its negotiations with BTC regarding the termination of calls to roaming customers on BTC’s mobile network, Cable Bahamas faces what amounts to a ‘take it or leave it’ offer from BTC.

“But further still, as part of those offers, BTC has sought to force Cable Bahamas to reduce its fixed-call termination rates as a pre-condition to allowing Cable Bahamas to terminate calls to roaming customers on BTC’s mobile network.

“Here again, BTC is exercising its CBP to force reductions in Cable Bahamas’ termination rates, while Cable Bahamas has no offsetting CBP to even compel BTC to provide a termination service to roaming customers on BTC’s mobile network, let alone set a fair and reasonable price for the termination of those calls.”

And Cable Bahamas also alleged that BTC’s incumbent status allowed it to “dictate technological arrangements in the market”, since all other operators had to connect with the market share leader.

“For example, Cable Bahamas operates an Internet Protocol (IP) based network,” the BISX-listed company said.

“However, to interconnect with BTC, Cable Bahamas must convert its voice traffic to Time Division Multiplex (‘TDM’) circuit switched protocol to exchange traffic with BTC and accommodate BTC’s legacy network technology.

“This is a significant additional interconnection cost that Cable Bahamas incurs to interconnect with BTC, one that BTC can readily impose on new entrants by virtue of its incumbency.”


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