The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators have thrown criticism of their approach back at Cable Bahamas, saying they receive “numerous complaints of anti-competitive behaviour” by the two major carriers.

The Utilities Regulation and Competition Authority (URCA) said these complaints showed its current regulatory strategy was necessary, despite the BISX-listed provider warning that it impaired operator flexibility.

URCA currently adopts what is called an ‘ex-ante’ approach to regulation, in which it seeks to proactively prevent anti-competitive actions and other market distortions before they happen.

Cable Bahamas, though, in feedback on URCA’s 2016 draft annual plan, argued that such “a stringent, prescriptive” strategy only further increased the burden on an already “heavily taxed sector”.

The communications sector regulator, though, said its approach was justified by the frequent cries it received from small operators about the “barriers to entry” erected by larger players with Significant Market Power (SMP).

Although it did not name the latter, URCA could only have been referring to Cable Bahamas and the Bahamas Telecommunications Company (BTC), as these are the only companies designated as SMPs.

“Cable Bahamas commented that URCA has not recognised the nexus between a heavily taxed sector, burdened further by a stringent, prescriptive ex-ante regulatory regime which overlooks the statutory guidelines for regulation relating to the reliance on market forces as a means of achieving electronic communications objectives,” URCA said in its statement of results.

“Cable Bahamas expressed its disappointment with URCA’s onerous ex-ante regulation in light of the world trend towards full deregulation of retail services.

“Cable Bahamas commented that an ex-ante regulatory approach restricts flexibility and presents an on-going concern of operators’ inability to respond to competitive pressures.”

Hitting back, URCA said that reliance on market forces alone was unlikely to produce the competitive communications market desired by Bahamian businesses and consumers.

“The market reviews undertaken by URCA to-date do not support the wholesale removal of ex-ante regulation and, in fact, URCA notes that the market positions of SMP players in key markets have remained strong and susceptible to anti-competitive behaviour,” the regulator said.

“URCA receives numerous complaints from small operators of barriers to entry resulting from the behaviour of SMP operators, which suggests that ex-ante regulation continues to be necessary.”

URCA added that the Bahamian communications market was “fairly unique”, so regulatory approaches adopted elsewhere were not necessarily the best fit for this nation.

And with competition still developing in the Bahamas, the market was not ready to switch to ex-post (after the fact) regulation.

BTC, for its part, also picked up on the ‘anti-competitive’ theme. In particular, it expressed concern that URCA had taken more than two years to rule on its complaint about being denied access to advertise its products and services on Cable Bahamas’ TV platform.

“BTC expressed its concern with the speed at which competition complaints are addressed by URCA,” the regulator’s statement of results said.

“ BTC noted that addressing anti-competitive behaviour in a timely manner is important for fostering competition and the overall development of the sector.

“BTC stated that it is important for such matters to be addressed in a timely manner in order to mitigate loss of market share, and that monetary compensation in some instances may not be adequate.”

URCA continued: “BTC referred specifically to the complaint it lodged in 2014 regarding Cable Bahamas’ denial of BTC’s request for access to Cable Bahamas’ television platform to advertise BTC’s products that compete directly with products that Cable Bahamas offers to the public.

“BTC stated that it considers this to be a clear case of an entity with SMP abusing its position, and it noted its desire for URCA to address this matter post-haste since in its view the Bahamian public should be aware of and should be able to compare products offered by the two providers.”

URCA, while acknowledging BTC’s concerns, said it was “not unusual” for investigations into alleged anti-competitive behaviour to take several years.

“URCA maintains that significant delay to the resolution of such complaints is also attributable to the submission of incomplete information, and complainant’s failure to properly establish the required components of anti-competitive behaviour,” the regulator added.

“URCA is thereby required to ensure the accuracy and completeness of such complaints, prior to forming a view as to the merits of a complaint and taking necessary action.

“This is a time-consuming activity and URCA notes that this also impacts the timeframe within which such complaints can be addressed by URCA.”

Where BTC and Cable Bahamas were in agreement was on URCA’s budget and fees, and the costs this imposed on a sector they argued was already over-taxed.

“BTC expressed concern that approximately 20% of [URCA’s] 2014 budget may have been remitted in 2015 to the Consolidated Fund,” the regulator said.

“Having noted that it pays a substantial Communications Fee to the Government, BTC indicated its concern of indirectly paying another tax.”

As for Cable Bahamas, it expressed concern about both regulatory costs and the discretion URCA has in forming its annual budget.

Calling for greater transparency, URCA said of the BISX-listed provider: “Cable Bahamas highlighted its concern with the rising cost of regulation and the consistent increases in the annual URCA budget.

“Cable Bahamas pointed out the various fees and government taxes applicable to operations in the sector and business in the Bahamas, generally, and noted that these speak to an apparent lack of concern by policymakers on the objective of re-investing in the provision of new services and passing on lower prices to consumers.”

Cable Bahamas argued that this conflicted with key policy objectives in the Communications Act, and said “the cost of regulation for licensees in the sector must be re-examined, and significant adjustments must be made to the exorbitant cost of regulation”.

The BISX-listed provider also objected to URCA transferring a significant portion of a fine paid by BTC to “subsidise” the Government’s Consolidated Fund.

While this money went to Hurricane Joaquin relief, Cable Bahamas suggested it might have been better used to benefit communications consumers.

Agreeing to ‘take on board’ these concerns, URCA responded: “URCA is cognisant of the level of fees and taxes applicable to licensees in order to conduct business in the Bahamas, and notes Cable Bahamas’ concerns regarding the same.

“URCA is also aware of the current financial challenges facing the country and the Government’s mandate to address the national debt.”