The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The arrival of a second mobile provider in the Bahamas has been further delayed, Tribune Business can reveal, after the final phase of the selection process was postponed yet again.

Sources close to the liberalisation process, speaking on condition of anonymity because they were not authorised to talk publicly, confirmed that the spectrum auction scheduled to be held this week had been put off for a second time.

“It was set to be held and it was postponed again, with no indication as to why,” one contact familiar with the state of the process told Tribune Business yesterday.

Another source confirmed that the spectrum auction, which represents the second and final phase of Bahamian cellular liberalisation, had been “pushed back” from this week.

They added, though, that the latest delay was “not material”, and that the long-awaited spectrum auction would soon be staged.

This was confirmed by another contact, who said of the auction: “It’s absolutely imminent; there’s no question about that.”

All this was effectively confirmed by a senior official with the Utilities Regulation and Competition Authority (URCA), the communications industry regulator which has been tasked by the Government with running the spectrum auction and making recommendations on who the winning bidder should be.

Stephen Bereaux, URCA’s director of policy and regulation, neither confirmed nor denied that the auction process had suffered a further delay.

He did, though, say it was “expected” that the auction would take place this month, suggesting that “scheduling” difficulties in getting URCA and its advisers, and the bidders and their advisers, together at the same time had been responsible for the latest delay.

“I don’t want to say anything about actual dates,” Mr Bereaux told Tribune Business. “Scheduling the spectrum auction means ensuring all the parties, and their consultants and advisers, and URCA and its consultants, are together at the same time.

“Scheduling is a significant task. The expectation is that it [the auction process] will be completed during September. That’s the expectation.”

Tribune Business understands that the two remaining bidders, Cable Bahamas and Virgin Mobile (Bahamas), have already set-up their respective ‘war rooms’ from where they will submit financial bids to acquire the spectrum frequencies that will be used to deliver mobile services to the Bahamian people.

Both bidders have already passed through a first round that assessed their financial and technical capabilities to meet the requirements set out in the Government’s tender document.

Their respective scores there will be added to what they achieve in the spectrum auction, and from there the Task Force and URCA will supply the Government with recommendations as to who the winning bidder will be.

The mobile/cellular liberalisation process is already about five months behind the schedule set by the Government. The preferred bidder was supposed to have been selected in May 2015, but the process was only restarted on August 19 after a four-month delay.

The Government and its Cellular Liberalisation Task Force, in a statement, blamed the delay on URCA’s investigation into Cable Bahamas’ construction of several communications towers throughout New Providence.

The probe resulted in a public row between Cable Bahamas and URCA, with the BISX-listed company arguing that the towers were for the delivery of wireless broadband (Internet) services and that the regulator was blocking competition and improved communications.

URCA, though, is likely to have been concerned that Cable Bahamas was trying to get a ‘jump start’ on its cellular infrastructure roll-out obligations via the tower construction - something that would have compromised the integrity of the liberalisation process.

“Subsequently, URCA advised the Task Force that matters arising in the investigation had the potential to impact the selection process, and that it was advisable to postpone phase two of the selection process pending their full consideration and determination,” the Government said.

“In accordance with phase two under the Request for Proposals (dated 13 November 2014) and the Auction Rules, URCA concluded that Cable Bahamas committed a breach of the Auction Rules that did not warrant disqualification from the process.

“Cable Bahamas has, however, incurred a financial penalty in accordance with the Auction Rules, and Phase two of the process has resumed.”

Mobile communications is the last market segment in which the Bahamas Telecommunications Company (BTC) enjoys a monopoly, and its liberalisation has long been viewed as vital to the Bahamian economy and wider society, as it promises to introduce more choice, and better services and prices, for the Bahamian people.

Mr Bereaux confirmed to Tribune Business that an exclusively Mobile Virtual Network Operator (MVNO) was not allowed to bid on the second licence by virtue of the bidding rules.

“The RFP clearly requires, explicitly requires, that any operator - in order to pass phase one - would have to present a plan for an end-to-end mobile network, which effectively means you have to build your own network,” he explained.

While facilities sharing was allowed where it made sense, Mr Bereaux said an MVNO was “expressly prohibited” and would not have passed the bidding process’s first round.

An MVNO acts as a ‘reseller’ of another carrier’s minutes, using its infrastructure to provide services to its own clients. There had been some suggestion that Virgin Mobile was an MVNO operator but, based on Mr Bereaux’s comments, that is not the case.

The URCA executive, meanwhile, confirmed that the results of its infrastructure-sharing consultation had been published to coincide with mobile liberalisation, so that the orderly competition it was seeking could be obtained.

“We’ve said as a regulator on various occasions that cellular liberalisation is URCA’s next priority, and has been for two-three years,” Mr Bereaux said.

“A monopoly cellular market we think significantly inhibits the development of the sector.”

While BTC was initially granted a three-year mobile monopoly to early April 2014, following its majority acquisition by Cable & Wireless Communications (CWC), the liberalisation delays are likely to extend this to at least five years.

The winning bidder is unlikely to start delivering services until mid-2016 at earliest.