The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Utilities Appeal Tribunal (UAT) will hear Cable Bahamas’ protest against the rejection of its request for a 27 per cent increase in the price of its basic (PRIME) pay-TV package over a three-day period in October.

The BISX-listed communications provider is appealing on the grounds that the Utilities Regulation & Competition Authority (URCA) incorrectly linked its decision to the company’s failure to comply with its Universal Service Obligations (USOs) under the Communications Act.

Tribune Business was informed that October 14, 15 and 16 have been set for the substantive hearing following a UAT meeting headed by attorney Cathleen Hassan yesterday, where attorneys for URCA and Cable Bahamas sought to work out pre-trial issues.

The BISX-listed communications provider is being represented by attorney Ferron Bethell from Harry B Sands, Lobosky & Co, with attorney Diane Stewart from McKinney, Bancroft & Hughes representing the regulator. Both sides are expected to call expert witnesses, both local and from abroad.

URCA had rejected Cable Bahamas’ application for a rate increase back in February 2013. The BISX-listed company has long maintained that URCA’s decision to deny it a price increase that it applied for in December 2011 was not fair.

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

But URCA linked the decision not to grant the price increase to Cable Bahamas’ failure to comply with its Universal Service Obligations (USOs) 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.

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.