ON JANUARY 24, 2004, the OUR took the decision to increase the minimum settlement rates at US$0.08 for terminating on land lines and US$0.17 for mobile phones. In addition, the companies are now all required under the regime to file monthly reports on traffic volumes and prices which, it says, will allow it to monitor the market performance and to intervene as and when appropriate.

"We believe the decision by the OUR negatively impacted the industry," said Steve Twomey of Reliant Enterprise, a member of the JCTA. In an exclusive interview with Wednesday Business, he said, "We are trying to get the judicial tribunal, which is an independent body appointed by Minister Paulwell, to hear what we believe are mistakes made by the OUR."

The OUR granted Cable & Wireless Jamaica (C&WJ) the right to double their rates or for Reliant to terminate calls on their network, Mr. Twomey said. "There is a process that the OUR has to follow in terms of quantitative documents and so forth. The OUR did not follow the process and simply allowed C&WJ to double rates."

DECISION-MAKING DRAWS IRE

The de facto head of the JCTA, David Goldson, added: "We are having fundamental problems with the way the OUR is making decisions that affects a relatively new industry. It is making determinations out of the blue with no explanation given."

There are determinations that should be made, such as that regarding indirect access, which will allow consumers the choice from their home phone to determine who they want as their long distance carrier, Mr. Goldson said. "The OUR was supposed to make a ruling in that area from November of last year and are yet to do so. As investors in the Jamaican telecoms industry it makes it difficult to plan when you don't know what the parameters are. And if you do know, you don't know if the OUR or the Fair Trading Commission (FTC) will change the rules on you. All we are asking for is transparency."

Mr. Twomey said that if the OUR fails to address the issue of rates fairly, the consumer will lose choice.

At the end of January of this year the Director General of the OUR, J. Paul Morgan, ventured a rationale for its decision which spoke to C&WJ's loss of revenues over some 18 months.

"We issued a decision varying the price cap arrangement for C&WJ rates," Mr. Morgan said. This decision was delayed for nearly 18 months due to court actions brought by Digicel to prevent the imposition of an access deficit charge (ADC). The ADC arises from the fact that we have not hitherto allowed the full costs claimed by C&WJ for the line rentals and installation ­ this being subsidised in part by international revenues."

The ADC is designed to provide a level of subsidy for the line rental, Mr. Morgan said. "As a consequence of the then ongoing court action we were unable to take a decision at the time."

The settlement rates plummeted to a point that provided little or no room for the imposition of the ADC, Mr. Morgan said. "Consequently we took a decision to remove the constraint on local prices in the price cap. As a result, C&WJ will have to make their own decision as to how they recover the cost of local services."

C&W LOSING OUT

Cable & Wireless will have missed out on potential revenues for almost 18 months, as a consequence of the delays due to the court action, Mr. Morgan said. "I anticipate, therefore, that you will see some increases in local rates."

Mr. Twomey made it clear that as a former monopoly in a deregulated environment, it is only fair that C&WJ has to re-balance its rates.

"Before you can effectively build a network, you need to raise funds and as ISPs operating in Jamaica we have spent millions of dollars trying to do so," Mr. Twomey said. "But if you are in an environment that is inconsistent in terms of how the industry is regulated, then why should we continue to put our hands in our pocket to build an infrastructure, that by the way would help the Internet. What you have to understand is that some of us would provide the means of local access to the ISPs so someone can dial locally."

Mr. Morgan said he was disappointed with the approach of many new entrants into the Internet Service Provider (ISP) market. He said, "In the good trading mentality that seems to have developed in Jamaica, they are really just margin gatherers. They all see a 'block of minutes' that have traditionally been landed in Jamaica by C&WJ and the business plan is to trade on some of those minutes. For the OUR, we would wish to see new entrants looking seriously at building out the local network."

Mr. Twomey said that according to data provided by JAMPRO, 95,000 households in Jamaica use the Internet. There are more that have access through companies and Internet cafés, but that figure has remained the same for the last five years.

"Here you have a market that hasn't grown in five years, and C&WJ is allowed to raise its rates to the ISPs by 100 per cent," Mr. Twomey said. "If the market is not growing, how can your costs go up?"

http://www.jamaica-gleaner.com/gleaner/20040324/business/business3.html