The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators aim to release a decision on Cable Bahamas’ bid for a 27 per cent basic TV price increase “within the first half” of 2015, after rejecting the company’s claim they are ‘sitting’ on the application.

Stephen Bereaux, the Utilities Competition and Regulation Authority’s (URCA) director of policy and regulation, told Tribune Business that “ongoing correspondence” between the two sides meant Cable Bahamas knew the exact status of its application.

He disclosed that Cable Bahamas had submitted its latest “position” on the price increase application as recently as late May, and emphasised it was not something URCA could take a rushed decision on.

The application, if approved by URCA, would increase the monthly price for Cable Bahamas’ basic REVTV service by $8 and $14 for residential and business consumers respectively.

Mr Bereaux said it was “a major issue” that URCA could “not take lightly”, given that the proposed price increase would impact 70,000 Cable Bahamas customers spread across the three major Bahamian islands plus Eleuthera.

And he pointed out that “genuine concerns” about the proposed increase had been raised by consumers at Town Hall meetings earlier this year, requiring a response from both Cable Bahamas and URCA.

Mr Bereaux was speaking after Gary Kain, Cable Bahamas’ chairman, accused URCA of allowing its basic pay-TV price increase application to “languish with no end in sight”.

Writing in the company’s 2014 annual report, Mr Kain said that by ‘sitting’ on its price increase application, URCA was creating “difficulty” for Cable Bahamas by preventing it from offsetting rising programming costs, which grew by 12 per cent in 2014.

Mr Bereaux, though, told Tribune Business: “We don’t agree that it was languishing without sight. They know exactly where the application is.

“There has been ongoing correspondence between Cable Bahamas and URCA on its application, and Cable Bahamas as recently as the end of May submitted an additional position on some discussions we had had.”

Mr Bereaux added that those discussions between the BISX-listed communications provider and URCA took place in March, after the public consultation close. Cable Bahamas subsequently provided its position on those talks at last month’s end.

“URCA is in the final stages of making its decision,” Mr Bereaux added. “We hope we will have a decision shortly, hopefully within this half of the year.”

Tribune Business understands URCA has already reached ‘a draft decision’ on Cable Bahamas’ 27 per cent price increase application, but this has yet to go through the various internal approval processes at the regulator and could yet be subject to change. It is thought a final decision may be released next month; July.

Mr Bereaux said that given the far-reaching impact the proposed price increase will have on Bahamian households and consumers, it was not a case where URCA could rush to judgment.

“This is a major issue which will have a major impact on the public in the Bahamas, and it’s up to URCA to look at all the issues,” Mr Bereaux explained, “and that Cable Bahamas has a full opportunity to respond and address all matters that may come up.

“It’s a huge impact. You have 70,000 customers that will be impacted. There were genuine concerns raised in the consultations that have to be addressed.”

Cable Bahamas re-launched its bid for a first -ever increase in the $30 per month basic TV price in August 2014, although the relevant documents were only released for public consultation in late December last year.

Yet nothing had been heard from URCA on the application’s fate until Mr Bereaux’s latest comments to Tribune Business. The only subsequent activity was the staging of a ‘Town Meeting’ on New Providence where, not surprisingly, consumers beset by Value-Added Tax (VAT) and high living costs expressed strong opposition to Cable Bahamas’ price increase demands.

URCA previously rejected the same 27 per cent basic TV price rise application in early 2013, on the grounds that Cable Bahamas had failed to comply with its legal obligations to provide ‘affordable basic television services to all populated areas and specified institutions’.

Cable Bahamas, though, argued that the regulator was mistaken to link its universal service obligations (USO) to the basic pay-TV price increase bid, with the BISX-listed company appealing the decision to the Utilities Appeals Tribunal (UAT).

It subsequently withdrew this appeal in favour of the revised December 2014 application submitted to URCA which, at the time, seemed to have won over the regulator.

In applying for the same 27 per cent increase, which would increase the monthly price for residential and commercial customers by $8 and $14 respectively, Cable Bahamas also offered to launch a new pay-TV service called ‘Prime Local’.

This initiative, priced at $10 per month, will feature six channels and was clearly designed to counter the rationale that URCA employed in its February 2013 rejection of Cable Bahamas’ first bid.

Meanwhile, Mr Bereaux told Tribune Business that URCA was “co-ordinating” with the Government and its own investigation into Cable Bahamas’ tower construction before finalizing its infrastructure-sharing regulations.

“In parallel with the infrastructure sharing guidelines we are doing, the Government is also reviewing its own tower construction and application process,” he told Tribune Business.

“We are co-ordinating with the Government to ensure that the processes are properly aligned, and also co-ordinating with ourselves to ensure that any issues that may arise in the course of the investigation [into Cable Bahamas] are not left out of the ongoing discussions on the tower construction process.”

The infrastructure-sharing regulations are vital to meeting the “ambitious” network roll-out/service delivery targets that the second mobile licence winner must meet.

Until they are completed, the remaining two bidders – Cable Bahamas and Virgin Mobile (Bahamas) – will not know the ‘rules of the game’ facing them. Thus the wait to finalise the infrastructure-sharing regulations may be another factor delaying the mobile liberalization process.

The winning bidder must provide 75 per cent mobile services to New Providence/Paradise Island; Grand Bahama; Abaco and all its cays; Eleuthera, including the likes of Harbour Island and Spanish Wells; Andros; Bimini (including Cat Cay and Ocean Cay); and Exuma and its main cays within six months of being awarded the licence. This coverage must increase to 99 per cent of these islands after 12 months, and 85 per cent on Andros.

Mr Bereaux declined to comment on the likely date, and progress towards, the mobile licence spectrum auction – the second key stage in determining the winner.

Cable Bahamas, though, wrote in its annual report that it expects the Government will not select the winning bidder until fall 2015.

That would place the process around six months behind the Christie administration’s May 2015 target for choosing a winner, thus giving the Bahamas Telecommunications Company (BTC) and Cable & Wireless Communications (CWC) their fifth mobile monopoly year post-privatisation.