By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas Telecommunications Company (BTC) has complained that the 113 per cent call termination “premium” enjoyed by its rivals has placed it at a competitive disadvantage, allowing them to offer consumers ‘below cost’ pricing.
The incumbent operator laid out its charges in feedback to the Utilities Regulation and Competition Authority’s (URCA) retail pricing regulation consultation, calling for the regulator to recognise this in its tests for anti-competitive behaviour.
“Currently, other licensed operators (OLOs) charge a significant premium for fixed local call termination on their networks compared with BTC (1.98 cents per minute versus 0.93 cents per minute, which represents a premium of 113 per cent for OLOs),” BTC said.
“This rate premium will allow an OLO to obtain higher wholesale revenues from a fixed-line customer than BTC would, which in turn allows the OLO to lower retail prices below costs without incurring an economic loss. This anomaly, while it is allowed to persist, should be reflected in any margin squeeze tests applied to BTC.”
Describing the situation as “asymmetric”, BTC added: “When an OLO competes for a fixed-line customer, it will therefore do so in the knowledge that any wholesale revenues related to that subscriber will be significantly higher than BTC’s wholesale revenues relating to the same customer.
“This puts BTC at a competitive disadvantage, and it allows the OLO to charge lower retail tariffs than BTC without incurring economic losses as a consequence of the available cross-subsidy from the call termination service.
“It is bad enough that this situation is allowed to persist in the market, but it is even worse that it is not recognised in margin squeeze/predation tests described by URCA,” the carrier said.
“BTC therefore proposes to adjust the margin squeeze/predation formulas to reflect incremental wholesale revenues related to fixed-call termination services available to OLOs, and to lower relevant retail price floors for BTC accordingly.”
Comments
John 10 years, 11 months ago
Calls are not the only thing being terminated by BTC.. Many top up vendors are losing their shirts trying to operate on BTC's five cents margin. Many are giving up the top up business completely. Some have gone broke trying to make it work but there is just no profit. Not even enough margin to break even. In fact to try to run a business with a five cent profit is financial suicide. Some are switching back to selling phone cards just for the convenience of their customers. Some of BTC's franchise stores are also showing signs of cracks.. P R OF I T Margin is too small. Meanwhile the top up business have dropped as much as 30 percent in some markets. Stores run out and have no money to buy refills. And BTC executives sit on their hands and do nothing. GREED has them blind and they will not see! Another shame and scandal in the making.
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