The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Communications regulators appear to have accepted pleas by both the Bahamas Telecommunications Company (BTC) and Cable Bahamas to switch to a new method of supervising consumer prices in sectors where both companies have Significant Market Power (SMP).

The Utilities Regulation and Competition Authority (URCA), in its initial SMP assessment, said it was proposing to move from prescriptive rules-based price regulation to a price cap regime.

This, URCA is suggesting, will be applied to BTC’s fixed-line voice services, plus Cable Bahamas’s broadband Internet product and its cable TV services.

As URCA points out, this move meets BTC’s and Cable Bahamas’s requests for a more flexible regulatory regime, both companies having demanded a price cap regime be introduced in the past.

“BTC and Cable Bahamas have re-iterated their concerns with the current and draft revised retail price regulations (RPR), recommending a transition to a price cap regime instead,” URCA said.

“In particular, BTC stated that the RPR, which was always intended to represent an interim regime only, was not ‘fit for purpose’ since they placed significant burden on SMP operators, hindered their commercial flexibility and could delay any consumer benefits materialising from retail price reductions.

“Cable Bahamas considered the RPR framework does not represent a proportionate or efficient ex-ante SMP obligation, and that it was more suited for a monopolistic market structure. It further considered price cap regulation as a more appropriate form of regulation in the Bahamas, in line with URCA’s 2009 regulation on retail price regulation.”

Elsewhere, though, URCA said it felt the 2010 obligation imposed on Cable Bahamas to ‘untie’ its broadband Internet product from its cable TV offering was not sufficient to prevent the BISX-listed provider from engaging in “excessive pricing”.

The regulator added that there had been little change in BTC’s and Cable Bahamas’s broadband Internet prices since 2010, a situation it said contrasted with that in other countries.

“This compares to a decline in average retail prices in many other jurisdictions,” URCA said of the Bahamian market.

“For example, as part of its annual review of five European and the US communications markets, the UK communications regulator, Ofcom, found that the weighted average price of standalone broadband prices had fallen in all six countries between 2012 and 2013.”

Looking to ensure full and free competition in the Bahamian market, URCA said: “For retail broadband services there is a potential for both Cable Bahamas and BTC to extract rent from their customers by pricing excessively in the relevant markets where they have SMP.

“Whilst aiming to prevent Cable Bahamas from further manifesting its market power in the retail broadband market, the untying obligation imposed on Cable Bahamas does not prevent it from potentially engaging in any excessive pricing going forward.

“Given the limited price reductions observed for retail broadband services, URCA considers this light touch approach as inadequate going forward. Instead, taking into account the relative merits of each regulatory option, and the stakeholder feedback received on the RPR, URCA is of the preliminary view to impose a retail price cap for Cable Bahamas’s broadband services going forward.”