The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Regulators have rejected Cable Bahamas’ assertion that the pay-TV market is easily accessible to new competitors, despite a survey showing 56 per cent of broadband Internet subscribers might sign up to the Bahamas Telecommunications Company’s (BTC) IPTV product.

The Utilities Regulation and Competition Authority (URCA), in its determination on significant market power (SMP) operators in the Bahamian communications market, refuted Cable Bahamas’ survey findings as evidence that “barriers to entry in the pay-TV market are low”.

The BISX-listed operator said BTC’s imminent market entrance with its IPTV (Internet Protocol) product meant competition would increase, with other countries exhibiting a “dynamic shift” towards this technology.

To support its arguments, Cable Bahamas conducted a consumer survey, which found that 19 per cent of broadband subscribers were either ‘likely’ or ‘very likely’ to switch to BTC’s IPTV. Another 37 per cent were ‘undecided’.

Rejecting Cable Bahamas’ survey, URCA noted that the remaining 44 per cent of broadband subscribers said they were either ‘unlikely’ or ‘very unlikely’ to make the switch to BTC’s IPTV.

“While it may be true that IPTV has led to dramatic changes in the market shares in the pay-TV market in other countries, BTC has not yet launched its IPTV services in the Bahamas, and URCA is not aware of any concrete plans of BTC or other licensees to launch these services in the immediate future,” the regulator added.

BTC has confirmed that its IPTV launch is scheduled for early 2015, but URCA said experience elsewhere showed the technology required several years to develop into a viable competitor to cable television.

“For example, based on the evidence provided by Cable Bahamas on the take-up of IPTV services in a range of regional markets, IPTV services had less than 15 per cent market share within two years of service launch,” URCA said.

“BTC’s cross-response also pointed out that in none of the countries included in Cable Bahamas’ evidence on the apparent rapid growth of IPTV had an IPTV provider gained a market share of more than 10 per cent two years after entry.

“Further, across a sample of six European and American countries cited by Cable Bahamas in its report from Analysys Mason, the highest reported market share of IPTV services was 30 per cent in Belgium, with all other markets reporting market shares of 20 per cent or less.”

Therefore, it appears BTC will face a long, hard slog to make considerable inroads into Cable Bahamas’ pay-TV market dominance and seize significant share for itself.

URCA confirmed as much, saying that “any new provider is likely to require several years to reach a sizeable market share”.

And, continuing its rejection of Cable Bahamas’ response on pay-TV, the regulator added: “Combining URCA’s assessment with evidence from Cable Bahamas’ own consumer survey, URCA does not find that internet streaming, IPTV or satellite TV are viable substitutes for Cable Bahamas’ pay TV offering.

“URCA does not find that the barriers to entry in the pay TV market are low. While it may be the case that a satellite provider could, in theory, enter the market going forward, this has not been the case in the Bahamas to date.

“In fact, URCA notes that the main satellite TV provider in the Bahamas in 2010 (Satellite Bahamas) no longer offers satellite TV services. In general, there has been no new entry into the pay TV market since the last review in 2009, and although BTC has announced that it will begin offering IPTV services, this has not occurred yet.

“ In light of these factors, URCA does not find it appropriate to conclude that barriers to entry are low at the time of this review.”

Determining that Cable Bahamas’ pay-TV services will be subject to price cap regulation, URCA is mandating that the company not introduce any new ‘product bundles’ until these can be replicated by competitors.