Last year , the OUR mandated that phone companies charge a maximum of $7.80 per minute for calls terminated into their network, but Digicel, citing competitive market forces, has defied the cap and has been charging Cable & Wireless up to $12 per minute each time it has to terminate a call into Digicel's network.

Courtney Jackson

"If we prevail, the damages should include restitution to the customers," says Courtney Jackson, the OUR's deputy director general whose has portfolio responsibility for telephony. "They must not take it frivolously."

Digicel and the OUR are now arguing the case before the Supreme Court.

Yesterday, Digicel's chief operating officer, Seamus Lynch, insisted that his company remained defiant in challenging through the courts, the authority of the OUR in setting price caps in what he believes is fundamentally a competitive market .

"We are arguing that the OUR should not regulate a free market," he told the Business Observer. "We are challenging the powers of the OUR. They are acting outside of the (Telecommunications ) Act. They are going against ministerial directive. The market must set the rate, not the regulator."

At present, Cable and Wireless charges $7 per minute each time a Digicel customer makes a call into its network - a price that is within the limit established by the OUR. On the other hand, Digicel charges rates of $10, $11 and $12 per minute depending on whether it is weekend, off-peak or peak-time.

It means therefore, that C&W only earns $2 per minute from the $14 per minute or so it charges its customers for making calls to a Digicel customer. On the other hand, Digicel can earn up to $7 per minute for calls its customers make to a C&W phone user.

Jackson suggested on Monday that Digicel's pricing policy was distorting the market - helping to create artificial price differentiation that was having the unintended impact of creating surprises on customers' bills - they being unaware that they had made high-cost calls. He argued that cellular providers should seek revenues from customer incentive, not the imposition of fees.

"The providers should get revenue by the incentive they provide to their own customers, not by imposing fees to those who call into them," said Jackson in responding to questions posed by this newspaper.

Jackson acknowledged that the other cellular provider, Centennial, had indicated its intention to increase the termination fee it charges its competitors from $7 to $9, next month - a development which Lynch pointed to as proof that the current cap set by the OUR was sub-optimal.

"The trend indicates that the operators are beginning to understand the true cost of providing the service," argued Lynch. "They are now rebalancing in line with the fees that we charge."

Lynch claimed that the present fee structure was initially endorsed by the OUR, and that the supervisory agency was now "backtracking".

His argument is that Cable and Wireless has been cross subsidising its cellular operation with vast profits from its international calls, effectively disguising the much higher real cost of cellular service operation. C&W has consistently rejected this charge.

What is apparent however, is that Cable and Wireless is now making net pay-out of possibly hundreds of millions of dollars per year to Digicel, for call termination charges. The imbalance reflects in part, the difference in the fee structure of both companies. The huge revenue outflow has had a negative impact on C&W's bottom line.

http://www.jamaicaobserver.com/magazines/Business/html/20020917T210000-0500_32172_OBS_DIGICEL_WOULD_HAVE_TO_REFUND_LAND_CUSTOMERS_IF_IT_LOSES_CASE.asp