The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Utilities Regulation and Competition Authority (URCA) yesterday determined that communications operators should be paid $4 for every fixed-line customer they lose to rivals, effectively finding a ‘middle ground’ between Cable Bahamas and the Bahamas Telecommunications Company (BTC).

In their submissions to URCA on how number portability costs should be allocated, Cable Bahamas had argued that there should be “zero charges between the operators” when it comes to porting fees.

Yet its chief BTC rival had proposed a series of tariffs, with $4 paid by the operator gaining a fixed-line customer if the switch was unsuccessful.

The incumbent, which dominates the Bahamian fixed-line market, also called for the recipient operator to pay its competitor losing a customer (the donor) some $14 for a successful single port, and $30 for a bulk port.

URCA’s determination thus comes at the bottom end of BTC’s demands, and towards the higher end of what Cable Bahamas wanted, in a seeming bid to find an equilibrium between the two.

Given the automated number portability system that will be operated in the Bahamas come next month, the communications regulator set the porting fee at $4, describing this as “a reasonable compromise between the two proposals”.

Noting that BTC had offered an automated porting approach, URCA added: “As such, BTC’s ongoing incremental porting operating costs should be minimal. Typically, in an automated porting environment, the only incremental costs that automated operators incur are the management and occasional intervention when their automated porting systems fail, or there is a need to manually intervene to progress or resolve problems with individual porting transactions.

“For this reason, URCA is surprised at the size of the porting recovery costs that BTC has reported, since this is inconsistent with BTC’s automated porting systems and the experience observed with automated operators elsewhere.”

Cable Bahamas, in contrast, had proposed a manual porting system. This, URCA said, meant its costs would be higher when one of its customers went the other way and switched to BTC.

Yet it was BTC that was proposing a higher cost recovery charge despite using an automated system, something that URCA described as “contradictory”.

Cable Bahamas, too, had argued that it should bear no more than 18-20 per cent of ‘common industry costs’ when it came to number portability, basing this on its own market share and BTC’s dominance.

URCA, though, dismissed this assertion as “vague” because no evidence was presented by the BISX-listed operator to support it.

Yet with most number portability-induced consumer traffic likely to be heading from BTC to Cable Bahamas, it is likely that the latter will be incurring the bulk of the porting fees.

“According to Cable Bahamas, BTC will most often be the donor operator upon the introduction of number portability because BTC currently holds the majority of the fixed voice market, and Cable Bahamas feels this situation is likely to prevail for at least another two to three years,” URCA said.

“Cable Bahamas stressed that the transitional charging arrangements should take full account of the highly asymmetrical situation at this stage of market opening, and recognise the negative impact that an excessive porting charge, along with the associated administrative cost burden, can have on recipient operators.”

URCA, though, was not swayed.

Number portability is vital to fostering competition and choice in the Bahamian communications market, as it will allow consumers to keep their existing numbers when switching to another operator - something they will be able to do from September 3, 2013, for fixed-line services only.

This will be especially valuable to Bahamian businesses, who no longer will have to spend time and money on informing customers of phone number changes.

Reiterating this yesterday, URCA said: “Number portability is a key issue in the introduction of network competition. There is clear evidence that customers are reluctant to change network operators if this means that they have to change their phone number.

“The absence of number portability, therefore, gives incumbent network operators [BTC]a significant competitive edge. Portability between operators promotes full competition in the market.

“As well as substantial direct benefits (customers do not have to incur costs of changing stationery; fewer wrong numbers are dialled), portability provides very significant indirect benefits, assisting greatly in the creation of genuine competition for all categories of customers, driving down prices, encouraging innovation and raising quality.”

URCA added that it wanted number portability to become “part of the standard service offered by all licensees to all subscribers”.