The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas fears its SuperBasic TV package could be “cannibalised” by obligations requiring it to provide a basic television service to unserved areas throughout the Bahamas, warning it could suffer “revenue” loss from consumers switching to the latter.

Responding to the Utilities Regulation & Competition Authority’s (URCA) consultation on Universal Service Obligations (USO), the BISX-listed communications provider also expressed concern about the decision to impose the same USO requirement on two different operators - itself and the Bahamas Telecommunications Company (BTC) - in the case of Internet services.

Outlining its concerns over the proposed USO obligations, which require operators with Significant Market Power (SMP) - BTC and Cable Bahamas- to provide certain services to areas that are underserved/unserved, even though it may not be financially viable to do so, Cable Bahamas also hit out over how the Communications Act was brought into force.

It argued that “the most onerous transitional USO obligations were inserted into the Communications Bill at the 11th hour, and without public consultation or notice to Cable Bahamas, even though they specifically and directly affected” itself.

Suggesting that this had resulted in different Communications Act provisions conflicting with each other, Cable Bahamas added: 
“Despite the lack of any precedent for a ‘Basic Television Service’ USO, the proposal to impose a sweeping and wholly disproportionate transitional obligation on Cable Bahamas could likely cannibalise Cable Bahamas’ SuperBasic package in areas where it currently offers PayTV.”

Arguing that “there is no international precedent” for television services to be included in USO obligations, Cable Bahamas argued that the provision of national broadcasting services was typically the responsibility of public service broadcasting, and the likes of ZNS.

It added that in accordance with a Memorandum of Understanding (MoU) it had signed with BTC in 2008, “considerable financial resources” had already been spent on rolling out Basic Television Services - an initiative that has ensured 99 per cent of the Bahamas is now covered.

“The objective of the MoU was to extend Basic Television Services to remote and sparsely populated areas (principally on smaller Family Islands) not covered by Cable Bahamas’ pay television services,” the company said.

“As a result of these efforts, there has been substantially increased access to television services in a number of areas in the Bahamas. Moreover, Cable Bahamas has provided this service free of charge – in part because the economics of billing and collection are unviable in such areas.”

The BISX-listed communications provider, though, said it was concerned that URCA had expanded its definition of Basic Television Services from a six-channel package to a ‘minimum’ of six channels.

“The policy driver behind the Basic Television Services was to reach previously unserved areas. It was not the objective of the Basic Television Services USO to require Cable Bahamas to provide the basic six channel service in areas where consumers already have access to PayTV services,” Cable Bahamas said.

“Cable Bahamas makes this point because URCA (at page 14 of the consultation document) indicates that the SuperBasic package meets the USO requirements for a Basic Television Service.

“However, the SuperBasic package should not be confused with universal service, and the prices that Cable Bahamas charges for the SuperBasic package should be subject to a cost-based pricing analysis, and not an ‘affordability’ principle, assuming this principle applies to Basic Television Services under the transitional USO provisions at all.”

Should a Basic Television Services USO be implemented, Cable Bahamas said it would suffer a revenue loss as customers substituted the SuperBasic package for the former.

“If the television USO package were to be made available to existing Cable Bahamas subscribers, it could attract two types of customers – those with no cable television package, and those with existing Cable Bahamas cable television packages,” the company warned.

“For every existing Cable Bahamas customer that migrates to the new Basic Television Services USO, Cable Bahamas would lose revenues equivalent to the difference in the prices of the existing cable television services purchased by migrating customers and the approved price for the Basic Television Services USO.

“The larger the scale of the migration, the larger the revenue loss. Absent measures to limit any such migration, the mandated new service could have a very significant revenue reduction impact on Cable Bahamas’ existing commercial cable television services, which would have to be taken in account when determining the funding requirement for any such mandated Basic Television Services USO.

“Were URCA to insist on implementing a Basic Television Services USO package, then it should also consider restricting eligibility for the service only to designated needy households, based on a similar principle as that requiring BTC to make available a discounted residential monthly telephone subscription only to qualifying senior citizens.”