The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamas Telecommunications Company (BTC) is offering niche Internet Service Providers (ISP) a 21 percent discount to what it charges its own retail customers for using its network infrastructure.

The discount represents BTC’s opening offer under the Utilities Competition and Regulation Authority’s (URCA) consultation on the pricing and commercial terms itself and Cable Bahamas must offer to small, niche ISP players who want to use their networks to offer wholesale Internet services to their own customers.

BTC’s BISX-listed rival has also unveiled its own offer, based on the megabits per second desired by smaller ISPs, and the two proposals are now to be subjected to market scrutiny as to whether they truly provide competitive access to providers who otherwise fear being squeezed out by pricing and practices that have already been criticised for being anti-competitive.

Unveiling the BTC and Cable Bahamas offers, URCA said that the former planned to levy both non-recurring and recurring charges on niche ISPs wanting to use its network to provide wholesale broadband Direct Internet Access (DIA) for their own clients. “The monthly recurring charges (MRC) are based on the retail minus approach, representing a 21 percent discount on the monthly price of BTC’s retail DIA product,” URCA said.

“The non-recurring charges (NRC) for all wholesale DIA products include installation and equipment charges, and are determined on a case-by-case basis.”

Cable Bahamas, too, is offering a structure involving recurring and non-recurring charges. “The monthly recurring charges (MRC) are based on Cable Bahamas’ costing analysis of wholesale DIA services.

“The non-recurring charges (NRC) for all wholesale DIA products include installation charges. They are determined on a case-by-case basis (based on a field survey).”

Comparisons between the two offers are difficult based on the information made available by URCA, as BTC’s figures are based an ‘all-in’ price that includes installation and equipment costs whereas Cable Bahamas only breaks out the monthly recurring charge.

For niche ISPs seeking a speed of 500 Mbps, BTC’s all-in cost is $18,466 per months while Cable Bahamas’ recurring monthly cost is $11,853. For one GigaByte per second (Gbps), BTC’s all-in monthly cost is just under $37,000, while for Cable Bahamas it is $23,514.

However, the latter’s figures do not include installation and equipment costs, making comparisons somewhat meaningless.

According to URCA, BTC said a regional benchmarking exercise using comparisons with DIA charges levied by its Cable & Wireless Communications (CWC) parent in jurisdictions such as Jamaica and the Cayman Islands “confirm [its] proposed WDIA charges would be below those observed across the region.....”

However, depending on the responses received to BTC and Cable Bahamas’ offers from niche ISPs, URCA said the two Bahamian telecommunications giants will then have to justify the pricing - and terms and conditions - they are offering in a second round of consultation. URCA has moved to regulate the wholesale DIA market after finding that both Cable Bahamas and BTC have what it refers to as “significant market power” in this segment.

Left unchecked and to their own devices, the fear is that the duo could use the dominance created by their national network infrastructure and stronger balance sheets to squeeze out weaker rivals via anti-competitive practices.

Such a development could harm the interests of Bahamian business and individual consumers, especially since Internet access at competitive prices has become vital in the modern economy even before COVID-19.

And concerns have already been expressed to URCA by niche ISPs about the pricing and commercial terms offered by BTC and Cable Bahamas.

Feedback provided to the Bahamian communications sector regulator last year said wholesale direct Internet access rates charged by the duo are “in excess of 150 times” greater than comparable US prices and squeezing out competition.

Theofanis Cochinamogulos, chief executive of Wicom Bahamas, in a May 27, 2020, letter to sector regulators argued that there was “little rationale for these elevated costs” from Cable Bahamas and the Bahamas Telecommunications Company (BTC).

Arguing that these prices had not reduced for ten to 15 years, Mr Cochinamogulos called on the Utilities Regulation and Competition Authority (URCA) to set a fixed rate “at no more than ten times’ the cost” so that niche Internet Service Providers (ISPs) such as himself can compete in the resell market with their larger rivals.

“As a small start-up ISP, monthly recurring costs dictate the success and failure of the business month-to-month,” he wrote.

“Because of that fact, early on we sought out DIA pricing locally, regionally and internationally.

That research led us to confirm that the cost of purchasing DIA between New York and Japan, some 5,600 miles away, is less costly by 10 times in comparison to purchasing DIA for resale in the Bahamas.

“Furthermore, the cost of purchasing DIA from the Network Access Point of the Americas (NAPS) in Miami varies between $0.22 per Mbps (megabits per second) for a 10,000 Mbps (10 Gigabit) and $0.30 per Mbps for a 1000 Mbps (1Gigabit) link.

“Currently, Cable Bahamas and BTC’s DIA internet rates stand at a whopping $52 per Mbps and $48.50 per Mbps, which is in excess of 150 times the cost provided to us from providers at the NAPS and other Data Centre Interconnect Facilities in Florida.

With these facts in mind, there is little rationale for these elevated costs even when subsea fibre operations, and maintenance are considered.”