The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cable Bahamas executive yesterday suggested its application for a 27 per cent increase in basic cable TV prices would have been approved “in any other jurisdiction”, indicating the company had not given up on efforts to persuade regulators to reverse their rejection.

Barry Williams, the BISX-listed communications provider’s senior vice-president of finance, told Tribune Business the company was “not crying over spilt milk”, but was now operating outside the Utilities Regulation and Competition Authority’s (URCA) own rules.

Based on Cable Bahamas’ 70,000 residential, and 10,000 commercial, basic cable TV subscribers, Tribune Business has calculated that the failure to obtain URCA’s approval for monthly increases of $8 and $3.50, respectively, has cost the company and its shareholders $8.34 million in annual revenues.

The URCA verdict was seen as a victory for hard-pressed Bahamian consumers, many still grappling with unemployment and reduced incomes stemming from the recession, but it has left Cable Bahamas in non-compliance with regulatory requirements that it not provide services below cost.

Speaking on the February 2013 rejection of its price increase application, and the impact on Cable Bahamas’ projected financial performance, Mr Williams said: “To be very upfront with you, we had an expectation that it was [the URCA decision] was going to be positive.

“I know we had made a good case in terms of the supporting information provided. In any other jurisdiction, the justification for the rate increase was there.”

URCA, he added, acknowledged that Cable Bahamas had made the economic case for a basic cable TV rate increase, but ultimately rejected the application through tying it to another issue - the company’s Universal Service Obligation (USO).

URCA’s grounds for refusing the price increase were that Cable Bahamas had failed to fully comply with its USO commitment under the Communications Act.

Under the USO obligations, URCA said Cable Bahamas was supposed to provide ‘affordable basic television services to all’ in the Bahamas.

While it is providing over-the-air TV services in some Family Islands free of charge, URCA said “more than 70 per cent of the population” in the Bahamas - islands including New Providence, Grand Bahama, Andros, Eleuthera and Exuma included - did not have access to such a service.

Mr Williams reiterated the company’s position, adding: “URCA was considering other aspects, and gave that in their reasoning for not going ahead with it.

“They [URCA] said the evidence supported it; they just had some other things that should not have come up in the discussions. This thing should have been dealt with in another way.”

Asked about the impact the URCA ruling would have on Cable Bahamas’ 2013 financial performance, Mr Williams told Tribune Business: “Did it put us off? It did.

“To what extent? We’re not crying over spilt milk. We’re a pretty solid company, and will adjust where we need to. “

And he added: “We’re going to still try and persuade the regulator this is something that is needed. This is something that needs to happen.”

Cable Bahamas’ position has consistently been that the two issues - a Basic Television Service (BTS) to meet its USO obligations on one hand, and an increase in the monthly price of its SuperBasic service on the other - were completely separate, and should not be connected or bound together.

And the company has also argued that URCA’s decision was anti-competitive - going against one of the regulator’s central philosophies and reasons for being.

This is because Cable Bahamas, by earning less than the stipulated 10.86 per cent minimum return on mean capital employed (RoMCE) in its SuperBasic product, is in a position to use it as a ‘loss leader’, and undercut/squeeze potential rivals out of the market via predatory pricing.

Mr Williams alluded to this yesterday, saying “it doesn’t make a lot of sense” for rules and guidelines to be set but not followed.

Yet he emphasised: “We’re not a rollover and play dead company. One way or another we’re going to be successful. That’s the way we think.

“We don’t think about non-achievement. We’re achievers. We find a way to go out and make it happen.”