They were all call-routing operations - firms that were floated without major capital outlay, and which were able to deliver calls originating mainly from the USA into Cable & Wireless' network, at very competitive rates.

About four of the original 14 firms that began operating in this market around March last year have been able to survive the new pricing regime imposed by the OUR.

"At this point I would say there are two to four players left," said Steve Twomey, spokesperson for the lobby group -the Jamaica Competitive Telecommunications Association (JCTA).  Twomey, the president of one of the surviving firms, Reliant Enterprises, charges that the fall-out has had a negative effect on investor confidence in the industry.

Initially, the firms were able to operate because they were allowed to make a margin of three US cents (J$1.80) per minute on each of the calls routed into Jamaica and terminated on the network of either C&W, Digicel or Centennial.

But the OUR subsequently changed the pricing structure, introducing a formula that the providers said made their operation unviable.  Moreover, they were unable, they say, to compete with the illegal bypass operators.

The OUR, which has never expressed fondness for these types of operations, calling them margin gatherers, told the Business Observer that the "situation has now stabilised".

The deputy director general of the agency, Courtney Jackson declined to acknowledge forthrightly that so many of the firms had collapsed, saying only that "it is quite possible that the firms (folded)".

More recently, the OUR reviewed its policy on the operation, removing the cap on the margins by allowing firms to negotiate their own rates.

But Twomey told the Business Observer that the restructure came too late for most of the firms.

"Up to ten of JCTA members have suspended operations due to the impact in the marketplace and inability to compete against the dominant carrier who was given an unfair advantage," complained Twomey.

Twomey's company, Reliant Enterprises had taken the OUR to court earlier this year, charging that the margin his company, and others in that end of the market, were allowed to make, essentially handed a monopoly to C&W in the international calling market.  The case was thrown out on a technicality.

The OUR blamed the problem in part on "the slow resolution of some court cases" which the agency said affected the market.  "So while we try to adjust the regulation it affected the players," said Jackson.

Twomey charged yesterday that the firms invested tens of million of Jamaican dollars to build their network, including the setting up of satellite receivers to accept calls from the US.

Typically, these firms enter into arrangements with US carriers to act as intermediaries, seamlessly transferring calls from these US phone partners onto the Jamaican phone networks without interfacing with callers.  They were in competition for the 600 million minutes of calls that terminate in Jamaica each year.

http://www.jamaicaobserver.com/magazines/Business/html/20040728T000000-0500_63564_OBS_CALL_ROUTING_FIRMS_CRUMBLING.asp