The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CABLE Bahamas is pushing industry regulators to complete their review of pay-TV services after it suffered the greatest year-over-year subscriber drop of 11 percent for 2021.

The BISX-listed communications provider and its Aliv mobile affiliate, in their second and last response to the Utilities Regulation and Competition Authority’s (URCA) mobile market assessment, argued that a similar exercise on fixed-services products will show increased competition from Netflix, other streaming and over-the-top services are “the driving force” behind the growing erosion of their subscriber base.

“We note BTC’s (the Bahamas Telecommunications Company’s) comments about the fixed line market, and consider that these comments apply with even greater force to the pay TV market, which has changed beyond all recognition from the market which existed the last time that URCA reviewed dominance in this market in 2014,” Cable Bahamas/Aliv said.

“Since then, global new entrants and mobile and fixed broadband technologies have completely changed the scope and market dynamics of the television/content market, and Cable Bahamas knows from its daily experience that it is now very competitive.”

The duo added: “Cable Bahamas looks forward to engaging with URCA on its review of the fixed services market, including pay TV, which is due to be completed by trimester three of 2022, according to URCA’s recently-published Annual Plan 2022. In preparation for this market review, Cable Bahamas urges URCA to finalise its review of URCA’s position on OTT services, scheduled to be completed by trimester three of 2022.

“Cable Bahamas believes such a survey will identify substitution by OTT services as the driving force behind the observed decline in traditional linear TV services. Indeed, URCA’s comments in its Annual Report 2021 on the pay TV services market review on subscriber numbers on the continuing trend of decline ‘despite competition’ in the market since 2016, and with 2020-2021 statistics seeing the largest decline at 11 percent year-over-year to-date, is most worthy of note.”

Aliv received some backing from BTC, which in its own response to the mobile market review, said: “Aliv takes issue with one specific aspect of URCA’s mobile market definition, namely the exclusion of OTT call and messaging services. Indeed, much of Aliv’s response is dedicated to providing reasons why OTT call and messaging services should, in fact, be included in the mobile market definition.

“In response, BTC agrees that there are many good reasons that OTT call and messaging services could be included in the mobile market definition, including those offered by Aliv in its response. That said, BTC also recognises that the inclusion or exclusion of OTT call and messaging services in the mobile market definition would have no effect on the conclusions reached by URCA.”

URCA, in its final mobile market determination, which eased a number of regulatory requirements previously imposed on BTC when it was still a monopoly, said while there was some evidence that OTT messaging acted as a substitute for text messaging, there was insufficient evidence to suggest consumers would switch from bundled plans to data only ones.

“URCA accepts that the declining usage trends in SMS suggest there may have been some substitution from mobile messaging to OTT messaging services, whilst the increasing usage trends in mobile calling are likely to be the result of mobile services being relatively inexpensive and convenient,” the regulator said.

“BTC and ALIV provide large or unlimited allowances of domestic calling minutes and messages within their mobile bundles, which means that the marginal cost to the consumer of making an additional call or sending SMS is often zero. In this regard, there would be no financial benefit for an end-customer to switch to making an OTT call or send a OTT message as long they are is still within their monthly call or messaging allowance,” URCA continued.

“This means that any switching would apply primarily to marginal calls or text messages that are not part of a mobile bundle. The survey referenced by Aliv also shows that 17 percent of respondents would do nothing, 22 percent would make fewer mobile calls, and 21 percent would switch to another mobile plan in case of demand-side [substitution] in mobile access and call services.

“The corresponding values for mobile messaging are 19 percent, 13 percent and 6 percent, respectively. Clearly, a non-trivial number of customers (60 percent of respondents) have not indicated any desire to move to mobile data only plans and would still subscribe to bundles with calls, messages and data.”

Concluding its analysis, URCA said: “The evidence before URCA does not support Aliv’s view that sufficient number of Bahamians would move from smartphone bundles to mobile data only plans (in order to use OTTs) to make a price increase in smartphone bundles non-viable.

“URCA reiterates that the increasing availability and usage of OTTs have not resulted in any decline in mobile connections in The Bahamas. In line with international experience, Bahamians have not given up their mobile phone service entirely for OTT services as they still require a mobile connection and mobile data to be able to access and use OTT services from any location.”