The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to “hold true to its promise” to eventually licence a third mobile operator in the Bahamas, and bring “true competition” to the industry.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, agreed that this nation now has a ‘duopoly’ dominating its communications market as a result of Cable Bahamas winning the battle to become the nation’s second mobile provider.

This effectively sets the stage for the BISX-listed provider to go ‘head-to-head’ with its Bahamas Telecommunications Company (BTC) rival across all four key market segments - Internet, mobile, TV and fixed-line voice.

With these two relative ‘giants’ dominating the market there will be little room for anyone else other than niche providers, hence the creation of a ‘duopoly’ - a situation that Mr Sumner acknowledged was “a little better than a monopoly”.

The last remaining monopoly, BTC’s mobile exclusivity, is set to disappear with the impending award of the second mobile licence to Cable Bahamas, but the Chamber chief executive urged it to go further in liberalising the market.

“It is a duopoly; that’s what we have,” Mr Sumner said of the market impact of Cable Bahamas’ success. “Duopoly is a little better than monopoly, but another player in the market will bring true competition.

“Right now, it’s either or. I think the Government should hold true to its promise to introduce a third licence into the market in the next few years.”

Mr Sumner readily acknowledged that he had a personal interest in any third mobile licence, given his position as chief executive of IP Solutions International (IPSI).

The company had been expected to join the race for the second mobile licence, but decided not to participate after finding the terms in the Government’s Request for Proposal (RFP) “too onerous” - especially the aggressive network roll-out timetable, and the requirement that the winning bidder relinquish a majority 51 per cent stake to Bahamian investors.

Still, Mr Sumner, speaking as Chamber chief executive, reiterated: “I think that if we were to get a third provider it would deliver true competition, so that we would not have a choice of either or; a coin flip.”

He added that a third major mobile player would “further improve” service quality, pricing and coverage in Bahamian mobile telecommunications.

The RFP for the second mobile licence, though, pledged that the Government would delay the entry of a third operator until “at least three years” after the second one has begun commercial operations.

With Cable Bahamas (via the new NewCo operator) likely to launch mobile services by mid-2016 at earliest, this would mean no third provider could enter the market until the same point in 2019.

However, the Government will have to amend the Communications Act’s section 114, as this only mandates that it cannot issue a licence to a third cellular operator until April 2016 - a date BEFORE Cable Bahamas will commence services.

“The Government intends to amend the Electronic Communications Sector Policy to delay the entry of a third cellular mobile operator for at least three years from the commercial launch of the second mobile operator,” the second licence RFP said.

The RFP also made clear that much market analysis remains to be done to determine if the Bahamian market can sustain three players.

“Before any decision is made to initiate a process for licensing a third mobile operator, the Government will consider such factors as it deems necessary,” the tender documents state.

The “size of the market”, given that the Bahamas’s population size is currently around 350,000, and whether it can support a third operator, is listed as one such factor.

Others include competitive conditions in the market following the second mobile operator’s entry, and the availability of spectrum needed to operate cellular services.

Advice from the Utilities Regulation and Competition Authority (URCA) will be sought, with another factor listed being “the extent to which there may be further demand for variety in, or an increased level of, cellular mobile services”.

Finally, the “commercial viability” of different ways to provide cellular services, such as by virtual mobile network (MVNO) model, will also be taken into account by the Government when deciding to issue a third mobile licence.

Thus it is by no means certain that a second licence will be issued, despite Mr Sumner’s pleas.

Digicel, which withdrew from bidding on the second licence before the ‘spectrum auction’ stage, indicated that it would not be interested in a third Bahamian mobile licence, hinting that it believed the market was too small to support three players.

And by mid-2019, both BTC and Cable Bahamas will have become heavily entrenched in the market, with rival shares that will be difficult to dislodge.

Mr Sumner, meanwhile, paid tribute to Cable Bahamas’ achievement in being selected as the successful applicant for the second mobile licence.

“It’s been a very onerous process from the beginning, and the fact they’ve been able to make it through to this point proves they’ve got the drive and ability to get some things done.”

He added: “We look forward to having this new entrant in the market. The competition they will bring will certainly be good for the consumer, good for the business community, as they will have two options in selecting their service provider, taking away that monopoly that has existed for so long in this country.

“The fact we have another player coming to the table, BTC will be even more compelled to improve the level of service they provide. This one will be very beneficial to the country.”