The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Utilities Regulation & Competition Authority (URCA) has “categorically denied” that it ordered Cable Bahamas to ‘digitise’ its network and require consumer to purchase Set Top Boxes (STBs), disclosing that the company could have selected a “more cost effective” solution.

The communications sector regulator, in its results statement on the decision to deny the BISX-listed provider’s request for an $8 per month increase in its residential basic cable TV fee, said it only mandated that Cable Bahamas ‘untie’ its TV and Internet services.

Emphasising that it did not force Cable Bahamas to employ the solution it chose, URCA explained it mandated an end to the company’s “longstanding policy” that consumers wanting its Internet service only had to take its TV product, too.

The regulator feared this practice, known as ‘product tying’ or ‘bundling’, was anti-competitive and could prohibit competition from new and existing Internet Service Providers (ISPs). It also prohibited consumer choice.

URCA was responding to disquiet from numerous Bahamian consumers, who had seen their monthly bills from Cable Bahamas increase due to the need to purchase or rent STBs as a result of network digitisation.

“URCA wishes to set the record straight, and categorically denies any assertion or suggestion that it imposed an obligation on Cable Bahamas requiring the cable television operator to digitize Cable Bahamas network or mandated anything to do with renting, selling or otherwise of STBs,” the regulator said.

“Given URCA’s mandate under the new legislative, policy and regulatory regime, following extensive public engagement URCA imposed the obligation on Cable Bahamas to untie broadband packages and cable television services to all existing and new customers.”

And it further explained: “URCA advises that Cable Bahamas was allowed the flexibility to employ an appropriate technical solution to comply with the untying obligation, and Cable Bahamas alone chose digitisation.

“It was URCA’s understanding at the time that Cable Bahamas could have chosen more cost effective technical solutions that did not require digitisation of its network, but insisted that the other options would possibly expose Cable Bahamas to signal theft.

“It bears repeating that Cable Bahamas independently made a commercial decision to digitise its network, and URCA’s Final Decision did not impose any specific obligation on Cable Bahamas that would require cable television subscribers to either rent or purchase STBs.”

URCA added that Cable Bahamas had completed the untying of its Internet and cable TV services by end-December 2012, a year ahead of its regulatory deadline, allowing consumers to buy its Internet services as a standalone offering.

Elsewhere, URCA acknowledged that Cable Bahamas’ accounting separation data for 2011 still showed the company was not recovering the cost of capital invested in its Superbasic TV product.

At $30 per month, the rate which URCA yesterday held the fee at, Cable Bahamas is failing to achieve its minimum 10.86 per cent return in mean capital employed for the service.

“At $30/month Cable Bahamas remains profitable overall, but continues to earn less than 10.86 per cent on SuperBasic,” URCA said.

“ In other words, while the current price of SuperBasic television is not causing Cable Bahamas to make losses overall, under the present Retail Pricing Rules, Cable Bahamas has not recovered its cost of capital for SuperBasic television services.”

For all services, including broadband Internet, digital TV and leased circuits, Cable Bahamas earned more than its regulated cost of capital.

URCA also found no evidence to support consumer complaints that Cable Bahamas was levying ‘hidden fees’ on them, or that its reconnection fees were too high compared to industry and international benchmarks.