The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators have rejected Cable Bahamas’ pleas to prevent an “inordinate financial burden” being placed on other operators through the absence of long-overdue ‘tariff rebalancing’ by the Bahamas Telecommunications Company (BTC).

The BISX-listed communications provider, in its response to the Utilities Regulation and Competition Authority’s (URCA) consultation on how BTC’s net Universal Service Obligation (USO) costs should be calculated, said the latter could seek excessive funding to cover its fixed-line obligations.

Cable Bahamas argued that BTC is in a position to do this because its fixed-line voice tariffs have yet to be rebalanced, and the recently-privatised operator still does not charge for local calls.

It warned there was a “significant risk” that the fixed-line voice market would be “distorted” if BTC was able to exploit the existing tariff structure to obtain USO funding greater than its costs incurred in providing such services.

URCA, though, refused to deal with Cable Bahamas’ concerns in the BTC USO consultation, arguing that the issue was “beyond the scope” of that exercise.

It did, though, promise to “further consider” the need for tariff rebalancing by BTC in a future consultation on price cap design for its fixed-line phone services.

URCA’s results statement on BTC’s net USO cost, released on New Year’s Eve, detailed how Cable Bahamas’ has been raising concerns over BTC’s tariff rebalancing - or lack of it - for three-and-a-half years.

Referring to its submission in a June 2012 consultation, URCA said: “Cable Bahamas noted that it was seriously concerned with the absence of any discussion regarding the perceived need for BTC to rebalance its tariffs for basic fixed telephony services, prior to the consideration of need for any form of subsidy.

“Cable Bahamas contended that there is a significant risk of inefficiencies, market distortion and other negative consequences in the absence of full tariff rebalancing.”

Cable Bahamas’ 2012 submission also referred to the USO consultation document issued in March 2009 by the BTC privatisation committee, which “indicated its preference for tariff rebalancing” and for all operators to move to a cost-based tariff regime.

Almost seven years later, no progress appears to have been made when it comes to such ‘tariff rebalancing’ for BTC’s fixed-line voice services.

“In Cable Bahamas’ opinion, the means for calculating and, more importantly, the assessment of a USO funding claim, cannot be considered in isolation of tariff rebalancing,” URCA said.

“Cable Bahamas continues to be strongly opposed to the establishment of any USO financing mechanism that it believes would contribute to any claimed access deficit by BTC due to unbalanced tariffs.

“Cable Bahamas stated its opinion that in the absence of a full tariff rebalancing process, there is a significant risk that BTC could apply for inordinate USO funding for the provision of its fixed-voice telephony USO,” the regulator added.

“Cable Bahamas feels as though this would cause financial burden to the sector and distort the market, among other negative consequences. Cable Bahamas reiterated....... there is a significant risk that an inordinate financial burden could be placed on the sector”.

To remedy this, the BISX-listed communications provider proposed changing the ‘unfair financial burden’ test that will be used to calculate BTC’s so-called ‘access deficit’ and compensation for providing USO fixed-line services.

Cable Bahamas added that it was not opposed to the insertion of similar language in its own net USO cost guidelines, thereby ensuring that the two providers were competing on a ‘level playing field’.

URCA, though, has deferred taking any decision - at least for now. “URCA considers the issue of tariff rebalancing to be beyond the scope of the consultation document,” it concluded.

“However, URCA assures Cable Bahamas that URCA will give further consideration to the issue of tariff rebalancing in its forthcoming consultation paper on price cap design and implementation for BTC’s fixed telephony services.”