Statement on the Regulatory Forum held on 10-11th December 2014 at Cascadia Hotel, St Anns, Trinidad and Tobago

Hosted by the Caribbean Telecommunications Union, a regional Regulatory Forum, held in Trinidad and Tobago on 10-11th December 2014, looked in-depth at “Developing Regional Regulatory Approaches to Current ICT Issues”. The issues discussed were:

1. Over The Top (OTT) services and the associated regulatory issues;
2. A regional approach of Number Portability as a measure to deepen competition;
3. Appropriate regional responses to market consolidation in the telecommunications sector.

Service Providers and more than ninety persons from more than 10 Caribbean nations were at the meeting. More than half the participants came from countries other than Trinidad and Tobago.

The meeting was probably the first in Trinidad and Tobago to be held under the Chatham House Rule, by which participants are free to use the information received in the meeting, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed. Effectively this rule allowed for and encouraged openness and the sharing of information while providing anonymity to speakers.

Over The Top Services (OTT)

Service Providers noted that OTT services fell into different categories and stated that they were not against all OTT services but only those VoIP OTT services that rely on telephone numbers to identify their customers and enable them to terminate traffic on the Service Providers’ networks without compensating them.

They argued that VoIP OTT Service Providers fell within the definition of public providers of a telecommunication service in most of the Caribbean countries in which they operate. Accordingly, they urged Regulators to apply existing laws or to at least pronounce that VoIP OTT providers are in breach of laws regulating the telecommunications sector.

Regulators indicated the limitations they face in implementing controls on companies not registered in their jurisdictions. However, it was generally accepted that OTT services are part of the telecommunication landscape to which consumers have become accustomed and believe that is paid for in their data packages.

Regulators agreed to examine the issue and one stated that it will begin consultation on the matter in the first quarter of 2015. Despite the concerns, it was generally recognised that these innovations will continue as the technology landscape continues to evolve and that legislation will continue to lag behind technological developments.

Number Portability

Service Providers expressed mixed views on the implementation of number portability. It was noted that Jamaica has set a target date of May 2015 for the introduction of Number Portability, and Trinidad and Tobago February 2015 and May 2015 for mobile and fixed number portability respectively. An operator in Trinidad and Tobago indicated that it is ready to begin number portability immediately while a second stated that it was four months behind its readiness schedule and may not be ready by May 2015. Another Service Provider argued that our markets are too small to support number portability and requested that a cost benefit analysis study be undertaken as a prerequisite.

Cable TV

The Service Providers in the Cable TV markets took the opportunity of the Forum to appeal to the Regulators to urgently address the issue of the broadcasting of content without rights from the owners. They emphasised that this was a violation of the laws under which they operate, and is a continuing violation of their concession.

Some Regulators said they had taken steps to correct the situation, which had improved overtime. However, it was indicated that the matter is still on their agenda and appropriate action will be taken. One Service Provider stated that they will address this situation in due course.

Market Consolidation

The discussions confirmed that the proposed acquisition of Columbus Communications by Cable and Wireless International, both of which operate in Jamaica, St. Lucia, Grenada, St Vincent & the Grenadines and Barbados would result in the combined entity being dominant in the provision of a variety of services in those markets.

For Trinidad and Tobago, however, it was felt that the issue of Cable and Wireless holding a 49 percent stake in its national telecommunications organisation is critical and needs to be addressed separately.

On the one hand, participants expressed the concern that the trend towards consolidation, could lead to an erosion of the gains derived from the liberalisation of Caribbean markets, which began in 2000, if it was not met by appropriate measures to encourage competition and safeguard consumer rights.

In particular, as a result of the proposed merger between two Pan Caribbean Service Providers, concerns have been heightened across the region that the issue of market consolidation must be addressed through the development of new regulatory frameworks and laws to ensure that consumers are not disadvantaged.

On the other hand, the meeting revealed that the Pan Caribbean Service Providers had all been expanding their businesses by integrating both horizontally and vertically to take advantage of the convergence of technologies, which accommodate the provision of a variety of services.

It was argued that the CWC/Columbus merger would be more likely to ensure that the markets remain competitive in the longer term particularly since competitors are pursuing similar objectives. It was represented that the merged organisation would be customer-centric and would undertake several activities that will benefit consumers, including investment plans in fibre systems in their various markets.

The ownership structure of subsea fibre systems, which are the connectivity arteries for both regional and international data traffic flows, was identified as a matter of priority concern to all countries of the region. It was felt that the significant consolidation of ownership of this essential infrastructure, which would result from the proposed acquisition transaction, highlights the urgent need for improved regional cooperation in addressing the activities of Pan Caribbean Service Providers.

Regulatory Considerations

The Regulators and policy makers met in two closed sessions to consider all of the issues discussed but in particular to deliberate on matters relating to the market consolidation trend. The Regulators developed and agreed to the following five guiding principles that should inform their deliberations on such activity:

• Access to the Internet and other telecommunications services is a significant enabler of economic growth and human development;
• Affordability is key to improving access and increasing opportunities for innovation, growth and development;
• Open and competitive markets are the most effective way to drive reduced delivery costs, affordable consumer pricing and new innovations;
• Appropriate harmonised policies and regulations at the regional and national level are fundamental to the stability and growth of the telecommunication sector and wider markets; and
• Regional collaboration amongst policy makers and Regulators is key to ameliorate individual national capacity limitations and regulatory arbitrage.

In addition, the Regulators agreed that, until such time that stronger competition laws are enacted across the Caribbean, when considering mergers and dominance in the sector, they should consider the following matters to ensure the public interest is safeguarded…

Treatment of Critical Infrastructure

• That critical infrastructure is not used in a discriminatory manner to hinder competition and impact on consumers negatively. In the proposed acquisition, it was agreed that Regulators should examine carefully the implication of dominant ownership of the subsea fibre systems.
• There should be full disclosure of capacity, utilization, ownership, life, cost and wholesale bandwidth pricing of Caribbean cable systems.

• In relation to roaming, that all territories in which the operator provides services should be treated as one market.
• Entry-level broadband should be defined at a minimum network speed of 5 Mbps and priced as appropriate for each jurisdiction. A maximum pricing of 5% of the national average wage was cited as an example of a price point that should ensure maximum uptake of internet services.
• Lesser speed could be provided but for lower pricing, but not be marketed as broadband.

• There should be no restrictions on sharing of operator information amongst CARICOM Regulators.
• Regulators should provide open-use platforms for release of relevant national and regional market data.
• Service Providers should provide quarterly quality of service statistics, clear explanations of their packages of products and services and any other relevant information requested by Regulators. This information would be put in the public domain so as to empower consumers by providing them with the information to make informed decisions. This is seen as a significant competitive tool on the demand side.

Regulatory Tools to safeguard competition

• The Regulators agreed that these considerations should not only apply to the current proposed transaction but to all Pan Caribbean Service Providers engaged in past, current or future consolidation activities.
• They further agreed that this is not an exhaustive list of considerations but an initial step in the process of revisiting our laws, regulatory tools and frameworks, which is to be undertaken with greater regional collaboration.

There should be divestment of critical infrastructure elements to independent wholesalers, which are not involved in the provision of retail services or in competition with retail service providers.