The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas has quietly dropped its appeal to the Utilities Appeal Tribunal (UAT) over the previous regulatory decision not to approve a 27 per cent increase in the price of its basic pay-TV service.

The BISX-listed communications provider’s decision to end the appeal was made in October 2014, coinciding with the relaunched bid for a price increase of the same magnitude.

The move was disclosed not by Cable Bahamas, but is instead inserted quietly into the Utilities Regulation & Competition Authority’s (URCA) draft annual plan for 2015.

“In October 2014, Cable Bahamas withdrew its appeal against URCA to the UAT relating to decisions that were made by URCA in its Universal Service Obligation (USO) Implementation Framework,” the URCA document reveals.

“URCA also received in 2014 an application from Cable Bahamas in respect of its USO pay-TV obligations, consideration of which was on-going as at the end of 2014.”

That is a reference to Cable Bahamas’ relaunched bid for the 27 per cent price increase which, as the same URCA document reveals, was submitted to the regulator on October 7 last year - right at the time it dropped its UAT appeal.

The timeline confirms what Tribune Business reported on December 23, namely that Cable Bahamas has been pursuing a ‘twin track’ approach to achieving its basic pay-TV price increase goal.

The two separate tracks were the Tribunal appeal and the revised basic pay-TV price rise application, which involves the launch of its new, six-channel service called ‘Prime Local’.

This initiative, priced at $10 per month, is a compromise that seems to have (for the moment) won over URCA. It is clearly designed to counter the rationale that the regulator employed in its February 2013 rejection of Cable Bahamas’ first bid for price increases related to its basic TV package.

URCA’s logic then was founded on the fact that Cable Bahamas had failed to comply with its legal obligations to provide ‘affordable basic television services to all populated areas and specified institutions’.

As this newspaper reported at the time, it appears that ‘Prime Live’ is the carrot, or bait, being dangled in front of URCA to overcome its USO-grounds resistance and achieve the main goal - a basic pay-TV package increase.

The first public consultation on Cable Bahamas’ new price rise application is due to be held tonight, and URCA’s draft annual plan described it as “perhaps the most significant in terms of impact” out of all such submissions it has received.

The BISX-listed company seems to be ‘keeping its head down’ on the basic pay-TV price proposal, which if approved would impact customers on the islands of New Providence, Grand Bahama, Abaco and parts of Eleuthera.

Company management has not responded to a detailed list of questions submitted to them by Tribune Business, indicating Cable Bahamas wishes to say nothing ahead of what are likely to be some fiery Town Hall meeting-type consultations.

Tonight’s meeting, like those held in 2012 for the first price rise application, is likely to degenerate into an all-consuming anti-Cable Bahamas rant, and the company probably does not want to risk inflaming passions further.

Tribune Business previously reported that Bahamian consumers in the four biggest population centres will be less than pleased about the prospect of $8 (residential) and $14 (business) monthly increases in the cost of basic pay-TV services, especially with Value-Added Tax’s (VAT) implementation.

It is likely that, as in 2012 and 2013, there will be much public opposition to the price increases, which will also attract more in VAT payments.

Outlining the need for an increase in the basic pay-TV price, Cable Bahamas has argued that the losses incurred in providing the service will continue to grow and threaten “the economic viability of the service”.

“In setting out its justification for the price increase, Cable Bahamas opined that without any price increase, the current ‘revenue shortfall’ in its ‘basic TV business’ segment would continue to grow and jeopardise the economic viability of the service,” URCA said.

“Cable Bahamas presented relevant financial information to demonstrate that it is earning less than its regulated rate of return on the service... It should be noted that Cable Bahamas has argued that it would still have a ‘revenue shortfall’ after the price changes.”

Cable Bahamas has consistently argued that the monthly basic pay-TV price has remained unchanged since 1994, and that increased programming costs make it impossible to comply with URCA’s requirements when it comes to the regulated cost of capital employed on the service.

Prime Local’s line-up, though, may not be sufficiently attractive to Bahamians. It will only offer ZNS, Jones Communications (JCN), a weather channel, PBS, the Parliamentary Channel and the Bahamas Christian Network.

While agreeing that the monthly $10 charge for Prime Local appeared affordable, URCA said Cable Bahamas needed to offer more flexible payment arrangements for one-off, upfront costs such as security deposits and installation.

Cable Bahamas, though, appears to have won over URCA for the moment. The regulator said in its consultation document: “Under the circumstances, and without prejudice to URCA’s concerns on affordability and Prime Local channel line-up, URCA is minded to accept Cable Bahamas’ partial compliance with the [universal service] obligation.”