The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators have ordered a ‘middle ground’ compromise on how long NewCo2015 can use the Bahamas Telecommunications Company’s (BTC) network to deliver its own mobile services, stipulating a 24-month time period.

The Utilities Regulation and Competition Authority’s (URCA) final determination on NewCo’s ability to ‘roam’ via BTC’s existing infrastructure provides a shorter timeframe than Cable Bahamas wanted, but longer than BTC desired.

The BISX-listed communications provider wanted NewCo 2015 to be able to deliver services via its rival’s network for 36 months, or three years, while BTC wanted half that timeframe - a period of just 18 months.

URCA, though, explained that it selected the two-year duration because this coincided with when NewCo is obliged to complete the Bahamas-wide roll-out of its own network infrastructure, thereby achieving nationwide coverage.

The regulator ordered that NewCo’s BTC network ‘roaming’ should start “no later than the date” when the second mobile operator launches its services to the Bahamian public.

Given that NewCo, in which Cable Bahamas has a 48.25 per cent equity stake, is mandated to launch in New Providence and Grand Bahama by end-September/beginning of October 2016, the National Roaming Agreement with BTC must be in place by then.

NewCo2015’s mobile network must cover 99 per cent of New Providence’s population, and 80 per cent of Grand Bahama’s, within three months of its June 30 licence award from URCA.

The regulator, in its ‘roaming’ determination, said that even if NewCo2015 met this target, around 20 per cent of the Bahamas’ population - some 70,292 persons - would still be unable to access its network and services.

Hence the justification for allowing NewCo2015 to ‘piggyback’ on BTC’s network, despite the latter’s protests, with URCA arguing that the “substantial benefits” to consumers from being able to enjoy the benefits of mobile competition outweigh any impact to the incumbent.

Turning to how long ‘national roaming’ should last, URCA acknowledged the “differing views” of BTC and Cable Bahamas on the issue.

“URCA does not consider it would be in the public interest to discontinue the proposed obligation after 18 months,” it said in responding to BTC’s demands. “This is because, NewCo is not expected to have completed its cellular mobile network build-out to all island groups within 18 months from the issuance date of its licences.”

Having shot down BTC’s request, URCA then did the same with Cable Bahamas. “Similarly, URCA finds that the 36-month timeframe contemplated by Cable Bahamas is unnecessary and excessive,” it concluded.

“Rather, URCA proposes that the duration for this obligation should be linked clearly to the 24-month roll-out timeframe to which NewCo has committed in its ISL (individual spectrum licence).

“Indeed, URCA notes that Cable Bahamas made no attempt in its submissions to justify its proposal to extend the national roaming obligation for a further 12 months beyond this period.

“Because NewCo is expected to have completed its network build-out within 24 months from the issuance date of its licences, URCA considers that the obligation imposed on BTC should end concurrently with NewCo’s roll-out obligations; that is, no more than 24 months from the issuance date of NewCo’s licences.”

This means NewCo’s service delivery via BTC’s network should cease by June 30, 2018, although URCA agreed that should the former’s roll-out “be delayed through matters beyond its control”, it could apply for an extension.

URCA acknowledged that the initial 36-month timeframe it was providing was linked to the roll-out schedule contained in the bid documents for the second mobile license, and it had not accounted for the shorter timeframe promised by Cable Bahamas and NewCo.

URCA also dismissed BTC’s opposition to the inclusion of Long-Term Evolution (LTE) technology in the ‘roaming’ obligation, the incumbent having sought to limit this to ‘basic’ mobile capabilities.

“That is, the services to be offered under a national roaming agreement would enable a NewCo roaming subscriber to make and receive calls, send and receive messages, and access ‘[basic’ Internet services only,” URCA said, translating BTC’s wishes.

“BTC opined that there is no justifiable reason why high-speed LTE data access should be part of the obligation, especially if it would be required to upgrade its LTE network capacity to handle temporary demand for the service.”

In response, the regulator said it “struggles to understand the position” taken by BTC in relation to LTE data access for NewCo’s subscribers.

“URCA is not aware of any technical constraints that would make it infeasible for BTC to provide LTE data access to a NewCo roaming subscriber,” URCA said.

“This is because BTC currently provides LTE data services to its own retail customers and visitors to the Bahamas roaming on its network.

“BTC states that it will incur additional costs by having to add LTE capacity to its network to cope with the demand from national roamers. If BTC does incur any such costs, and these can be directly attributed to the national roaming obligation, then it will be able to recover those costs.”

URCA said Cable Bahamas had pointed out that customers did not “pay a premium price” for BTC’s LTE product, with the BISX-listed provider arguing that customers “should receive the same service and experience” regardless of who their operator was.

“Limiting national roaming to ‘basic services’ would provide BTC with an unnecessary competitive advantage,” was the other thrust of Cable Bahamas’ argument.

BTC had also attacked the whole notion that it was necessary to provide ‘national roaming’ services to NewCo2015, criticising URCA for failing to conduct a cost/benefit analysis on the issue.

“It was BTC’s assertion that the arguments put forward by URCA do not justify the imposition of a national roaming obligation on the company,” the regulator recalled.

BTC had argued that the more remote geographic areas, which is where NewCo2015 will need ‘roaming’ capability, were its “highest cost serving areas”, meaning that it would incur “significant costs” to meet its new rival’s demand.

It also suggested that URCA had failed to account for how many people would “have no alternative choice” beyond BTC, and the possibility that people could purchase SIM cards and subscribe to both providers - BTC and NewCo2015.

“At commercial launch, NewCo must have established a cellular mobile network (including infrastructure) that covers 99 per cent of New Providence’s population (including Paradise Island), and 80 per cent of Grand Bahama’s,” URCA said.

“In other words, NewCo must provide cellular mobile services to approximately 80 per cent of the entire population of the Bahamas using its own cellular mobile network and infrastructure at commercial launch.

“This means that NewCo’s cellular mobile network would be inaccessible to roughly 20 per cent (70,292) of the entire Bahamian population (351,461), but perhaps more critically, on 17 of the 19 populated island groups in respect of which the Government has determined as a matter of policy must benefit from cellular mobile competition.”

URCA continued: “Until NewCo has completed its network build-out, a significant (albeit decreasing) number of populated islands would not have an alternative choice of a cellular mobile provider beyond BTC, and the Government’s objective that the benefits of competition accrue to residents in all areas and locations in the shortest possible time would not be met.”

The timetable produced by URCA showed that by year-end 2016, some 90 per cent of the Bahamian population - 316,315 persons - would have access to NewCo’s network. And by end-February 2017, 95 per cent or 333,888 persons would be able to enjoy its services.

URCA added that the ability to access NewCo’s services throughout the Bahamas may be a key consideration for New Providence and Grand Bahama residents when choosing whether or not to subscribe to its services.

“As such, without national roaming, NewCo’s ability to compete with BTC may be compromised during its initial roll out even in areas where it has deployed its own network,” URCA said.

And, while acknowledging that owning multiple SIM cards was an option, URCA said much “uncertainty” existed as to whether this would be an effective substitute for allowing NewCo customers to temporarily ‘roam’ on BTC’s network.

The regulator also said it was not mandated by any law to conduct a cost/benefit analysis of its proposals, and said BTC was “misguided in its thinking”. It added that roaming was “the most proportionate” way to ensure competition between BTC and NewCo as the latter built out its network.

“The proposed obligation is necessary because it enables residents throughout the Bahamas to purchase services from competing cellular mobile providers during NewCo’s build-out period and to be confident that they can use that service throughout the country,” URCA said.

“Without a national roaming obligation, NewCo’s ability to compete is likely to be reduced, as consumers would be less willing to take a service from NewCo, unless it was at a discounted price to BTC’s offering (assuming consumers face a trade-off between price and service availability and coverage).

“Indeed, this could cause lasting reputational harm to NewCo, even once it has completed its network roll-out, thus dampening competition over the longer term..... Without a national roaming obligation, the benefits of competition would be severely restricted during NewCo’s build-out.”