With total industry sales pushing $50 billion last year, the cess is expected to generate up to $3 billion annually if Commerce, Science and Technology Minister Phillip Paulwell agrees to the Office of Utilities Regulation's (OUR) suggested figure of five per cent. The minister has the discretion to lower the sum.

"The Office of Utilities Regulation recommended that we start the cess immediately, but it has to go through Cabinet first. We hope for a September implementation if Cabinet approves it," Paulwell told the Observer.

"This five per cent per annum cess would completely finance the implementation of broadband technology, to the tune of J$2.5-3 billion each year, an important infrastructure for e-Jamaica," he added. "What we are seeking to do is to make broadband available across Jamaica, even in areas where it was supposed to be uneconomical to get the companies to invest in."

Telecoms companies that want to offer service in areas that are not densely populated, he said, would be able to access the fund created by their annual contributions generated by the cess.

"The government will say, 'well we have a fund and you can make a bid on the fund so that you can get some money to provide the thing at a subsidised rate to these areas'. So all the companies would be allowed to bid back for that money. That's the essence behind the universal service obligation," Paulwell explained.

But the proposed cess has not found favour with the island's two major telecommunications companies, Cable and Wireless Ja & Digicel.

C&WJ's director of public relations Errol Miller questioned the legality of the OUR's recommendation to the minister.

"There are legal requirements that have not yet been fulfilled by either the OUR or the minister and so the announcement is premature," he said. He refused to expand on the legal issues, but warned that the cess would hurt consumers. "As it is, consumers of telecommunications services have already been subjected to an additional five per cent in General Consumption Tax on some services and this additional five per cent cess will drastically increase the cost of both mobile and fixed telecommunications services," Miller said.

Digicel CEO David Hall argued that five per cent was too high, and not in line with global industry figures that were less than one per cent.

"Five percent seems extremely high and out of sync with the worldwide average of 0.25 per cent to 0.50 per cent," he said. But according to OUR Director-General J Paul Morgan, the 2000 Telecommunications Act allows for the five per cent cess.

"The law provides for up to five per cent cess per annum, over a three-year period, so our proposal is within the context of the law," he argued. "Plus, the implementation of a five per cent cess is completely dependent on the minister. But if we are to achieve broadband technology, we have to aggressively seek it and the five per cent cess is an example of this."

With broadband technology, the minister explained, access to the internet would be quicker, cheaper and more efficient. "You would not only be able to download information via the internet, you can do things like video streaming, you can do so many other different things using broadband technology," he said.

And while the proposed cess was not necessarily in the best interest of the telecoms companies, he said, it was in the country's best interest.

"(The cess) is probably not in their best interest, but certainly it is in the country's interest that we ensure that there is universal service. It is just like any other utility where you have to subside those uneconomical areas to ensure that they have access," he said. But industry players have also questioned the practicality of a September implementation date.

"September sounds too soon for the implementation, since I have not yet seen any detailed framework or plan for broadband implementation, which would require massive work, which apparently has not yet started," said Digicel's Hall.

http://www.jamaicaobserver.com/news/html/20040705T100000-0500_62242_OBS_TELECOMS_CESS_TO_RAISE___B_A_YR.asp