The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas has charged that its Bahamas Telecommunications Company (BTC) rival recovers more than “seven times’” the costs it incurs on terminating fixed-line calls to its mobile subscribers at peak hours.

The BISX-listed provider, in feedback submitted to sector regulators, argued that the “inbound airtime” charges levied by BTC on such calls were “excessive and detrimental”, and are inhibiting the fixed-line market’s development.

Responding to the Utilities Regulation and Competition Authority’s (URCA) consultation on proposed changes to the retail pricing regime, Cable Bahamas focused on how BTC dealt with calls from fixed-line phones to its mobile customers.

With the mobile subscriber paying under BTC’s ‘receiving party pays’ (RPP) protocol, Cable Bahamas said fixed-line customers were not charged for calling a mobile customer on the same island.

Long distance calls to other islands incurred an $0.18 per minute charge, while pre-paid mobile subscribers were charged a flat rate of $0.33 per minute, plus an incremental levy on a per second basis at peak hours.

“Our estimate is that effective rates are 20-25 per cent higher than the rates presented, depending on call duration,” Cable Bahamas alleged.

It added that a same-island call from a fixed-line phone to a mobile customer could incur an “effective per minute rate” of 40-41 cents per minute depending on how long the call lasted.

As for inter-island and long distance calls, Cable Bahamas said a 51 cents per minute charge was incurred (18 cents for the fixed-line client, and 33 cents for the mobile one).

“The effective overall rate per minute for such calls may be 61-64 cents per minute depending on call duration,” it added.

Cable Bahamas then employed the 4.61 cents rate it charged for terminating traffic on BTC’s mobile network, which the latter deemed necessary to cover its costs.

“If 4.61 cents is sufficient to cover any network costs, this raises the prospect that an effective peak hour rate of 40-41 cents is excessive relative to underlying costs,” the BISX-listed provider said of its commercial rival.

“Rates during off-peak and weekend are lower but still high relative to the 4.61 cent reference point.”

Using regional estimates that retail costs were equivalent to around 20 per cent of revenues, Cable Bahamas added: “This implies that BTC recovers its relevant network costs (by its own estimate) around seven times’ over on peak hour fixed to mobile calls.

“It is Cable Bahamas’ view that mobile termination costs, set on the basis of efficiently incurred costs, are substantially lower than 4.61 cents. This would, of course, increase this ratio further.”

Detailing the consequences, the BISX-listed provider added: “Cable Bahamas believes the inbound airtime charge levied by BTC to be excessive and detrimental to the development of the fixed market, because it restricts call volumes to mobile customers.

“Mobile customers are much less likely to answer calls from fixed subscribers when they are charged excessive rates, and this makes fixed-line services less attractive to customers. This is a material issue in a market where mobile penetration exceeds fixed penetration by a factor of 2.5 to 1.”

Cable Bahamas continued: “The charges are also discriminatory because they do not apply to mobile calls. These inbound airtime charges therefore affect the evolution of the fixed market in a way that is detrimental to fixed consumers, traffic between fixed and mobile customers is likely to be depressed, and fixed line penetration is likely to be reduced.”

Calling for URCA to address this issue, Cable Bahamas said the best way to resolve it was to switch to a calling party pays (CPP) regime for fixed-line to mobile calls.

“In a scenario where receiving party pays continues to apply to fixed to mobile calls, BTC’s inbound airtime charges need to be aligned with costs, and fixed to mobile calls should continue to be subject to ex-ante price controls to prevent further price increases in future,” it added.