The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian ‘quadruple play’ provider is in negotiations with three foreign investor groups vying to invest the $7.5 million critical to completing its network build-out, a development that would create “no fewer than” 20 jobs in Nassau.

Edison Sumner, chief executive of Internet Protocol Solutions International (IPSI), said the niche communications provider’s Board would decide within the next two weeks the direction it would take, describing one group’s proposal as “extremely interesting to us”.

He revealed to Tribune Business that IPSI planned to make commercial phone and Internet services available on New Providence before summer 2013, with its TV and Video On Demand (VoD) products to follow “shortly thereafter”.

Acknowledging that IPSI, which was established in 2008, had hoped to launch its ‘quadruple play’ services to Bahamian business and residential consumers much earlier, Mr Sumner said the delay had benefited the company by enabling it to negotiate better terms with suppliers and exploit ever-evolving technology.

Already providing commercial services in Abaco, including at the Baker’s Bay Golf & Ocean Club development, IPSI is now seeking the financing to take it to the next level and complete the build-out of its physical infrastructure - particularly in the Bahamas’ largest market, New Providence.

“We’ve been entertaining a few investor groups expressing a keen interest in doing business in the Bahamas,” Mr Sumner told Tribune Business. “At this stage, this phase of the investment, we’re looking to raise $7.5 million.”

Disclosing that IPSI had a issued a private placement document, which has been in circulation for several months, Mr Sumner said three separate foreign investor groups were “looking to partner with us” and “finance the full build-out”.

“One proposal is extremely interesting to us. We’re looking closely at it right now, the Board is reviewing it and we expect to have a decision within the next week-and-a-half to two weeks,” Mr Sumner told this newspaper.

“Once we get through this round of financing, we expected to increase staffing levels exponentially in New Providence. We will employ no fewer than 20 staff in administration, technical support and other services.”

IPSI currently has a five-strong staff complement in Abaco handling network operations there. Mr Sumner explained that other services had been contracted out to keep costs down and support other Bahamian businesses, and he promised that IPSI would make scholarships available to train young Bahamians in Internet Protocol (IP) engineering if its venture ultimately proved successful.

IPSI has long held itself out as the ‘niche alternative’ to the two incumbents that dominate the Bahamian communications market, the Bahamas Telecommunications Company (BTC) and Cable Bahamas.

Its potential emergence again shows the potential benefits from the Bahamian communications market’s liberalisation, and what increased competition can do for consumers.

However, IPSI’s journey has not been without its tribulations. It attempted to raise the financing it needed via an earlier private placement launched to Bahamian investors in 2010, but did not come close to its capital target.

Still, Mr Sumner said IPSI’s shareholders and Board of Directors continued to support the company, and the $3 million it did raise enabled it to build-out its wireless IP network to what it is today.

“We expected to be to market by now, but the delay was good for us in a lot of ways,” Mr Sumner told Tribune Business. “We were able to capitalise on economies of scale, negotiate significant discounts on equipment and capital items we had to acquire, and take advantage of new technology.

“Over the years, we’ve found that our capital costs have decreased quite significantly, and we can do a bit more with a lot less. We have had to do less upgrades, as we came in with advanced technology at the outset. The delay’s been laborious, but also beneficial to us.

“Our main challenge has been securing adequate funding to push this out to market,” he added. “The technology is there, and we are pleased with the progress we have made, but the challenge as a developing stage company is to have access to capital to get it done.”

Mr Sumner said IPSI would “love to be funded by Bahamian dollars”, but had no choice but to “follow the money”. If that meant foreign investment, so be it.

IPSI has already concluded an interconnection agreement with BTC, and is now working to put this in place physically. It is also negotiating a similar arrangement with Cable Bahamas.

The company uses a wireless IP infrastructure, described by Mr Sumner as ‘fibre-through-the-air technology, which it believes will enable it to deliver services to parts of the Bahamas not touched by the fibre networks of BTC and Cable Bahamas.

The IPSI chief executive disclosed that it had already begun testing its IP TV services in New Providence, having negotiated deals with key content/programming providers.

“Once we’ve completed local testing with the frequencies we have acquired from URCA, we expect to begin some commercial deployment,” Mr Sumner said. “We already have an operating phone system, and are pleased with that.”

IPSI’s wireless phone service is not yet available in New Providence commercially, although it plans to either provide consumers with new IP phones or convert their existing analogue products.

“We’re hoping to have full phone and Interne/data services available to the public in New Providence before summer time,” Mr Sumner told Tribune Business.

TV and VoD roll-out will depend on what happens with IPSI’s financing, but he added: “We’re still here, pushing to get the TV services out there, because it is now more than ever that competition is needed.

“While we know the incumbent [BTC] is preparing to launch TV services, we think we have a better product. It will certainly give more options and choice for TV content.”

Pledging that IPSI’s services would reach the entire Bahamas, including areas currently not served by communications, Mr Sumner said: “We’re not looking to acquire the major stake in the market, although that’s our ambition over a period of time.

“We’ll be satisfied with the remnants of the market, and know that once we launch our services commercially we will have a good influx of subscribers coming to our network. They have had little choice for the last 18 years or so, and now people who want TV services will not be compelled to go to one provider.”