The dawn of liberalisation
It’s tough running a monopoly: you need a thick skin. The pay is good, of course, but after a while the slings and arrows of public discontent start to prick. At the Islands’ Christmas pantomime last December, the buxom yet moustachioed villain, Cinderella’s stepmother, had a sketch where she made a call to the local monopoly telecoms provider. There was an automated response. It promised that an agent would be on the line soon. Then it promised that again. And again. And again. The crowd roared its delight. No one loves a monopoly, no matter how efficient, and this particular monopoly was 106 years old.
Fortunately, relief was at hand. The Turks & Caicos Islands (TCI) Government had enacted a new Telecommunications Ordinance designed to liberalise the local market place. The first new provider, Digicel, launched operations on 7th July 2006. The effect of competition has been immediate. Cellular rates are a fraction of what they were eighteen months ago. The automated attendant no longer works overtime. Telecoms flyers adorn every streetlamp. The cellular phone penetration rate (already high) has skyrocketed, though this may be partly because calls between the two networks can be expensive (almost as expensive as the old monopoly rates), and many customers have decided that it’s cheaper to carry two phones rather than to interconnect.
The Telecommunications Ordinance 2004
The legislation that put all of this in place is the Telecommunications Ordinance 2004. (Though passed in 2004, the bureaucratic hurdles associated with liberalisation were such that it took until mid-2006 before the first new licensee, Digicel, could launch). The ordinance follows the broad outlines of comparable legislation in other countries and territories in the region: no wheels have been reinvented.
A Telecommunications Commission has been established whose functions include the regulation of telecommunications in the Islands having regard to the principle of "technological neutrality", the maintenance of competition in the telecommunications industry, the promotion of the interests of consumers and the establishment of quality standards. In tandem with the Commission, the position of the Director General of Telecommunications (a ministerial appointment) has been established New licensing requirements have been introduced. It is an offence to establish, own or operate a telecommunications network without a carrier licence or to provide public telecommunication services without a service provider licence. Regulators like to control: the definition of "telecommunications network" is so broad that harmless activities like the use of walkie-talkies beyond the confines of a single household would apparently require a licence. Nevertheless, the likelihood of the regulators ordering dawn raids on unsuspecting walkie-talkie users seems somewhat remote.
Subject to the overriding ability of the minister concerned to make an exemption in any given case, applicants for licences must be owned or controlled by belongers of the Islands (effectively TCI nationals). Licences are granted subject to such conditions as the Commission deems to be appropriate, including conditions to prevent anti-competitive behaviour such as cross-subsidisation.
The Commission may determine that a licensee is dominant and that determination entitles the Commission to include, in that licensee’s licence, conditions regulating its operations, its rates, the publication of its rates and regarding the provision of international services. A little peculiarly, under the Interconnection Regulations passed pursuant to the Ordinance (and in apparent contravention of the provisions of the Ordinance itself regarding dominance), all licensees of mobile networks are presumed to be dominant in the market for wholesale mobile voice termination services over their own network.
No licence can be transferred without Commission consent. Licences are automatically renewable for a period equivalent to the initial licence, unless the licensee has failed to comply materially with the terms of his licence, the terms of the Ordinance or a lawful direction of the Commission, or if the Commission has determined that it is not in the public interest to renew the licence and has given not less than three years notice before the expiration of the licence that it will not be renewed.
The Ordinance contains interconnection provisions which require that where a licence is dominant, the licensee shall provide interconnection in a timely manner to another licensee who requests the interconnection. The Commission may on its own motion or at the request of any interested party instruct licensees involved in an interconnection dispute to refer that dispute to the Commission: the Commission is then entitled to take such measures it deems fit to resolve that dispute. The costs of interconnection are to be borne equally by the licensee who is requesting interconnection and the provider of the interconnection.
The Ordinance also provides for a numbering regime.
Rates, except where regulated by the Commission, are to be determined in accordance with market conditions. The Commission is entitled to establish rates regulation regimes where (i) there is only one licensee operating a network or providing a telecommunications service, (ii) where one or more licensee has been determined to have a dominant position, (iii) where a sole or dominant licensee operating a telecommunication system or network or providing such a service cross-subsidises another telecoms service provided by the same licensee or (iv) where the Commission is satisfied that there is evidence of anti-competitive pricing or other acts of unfair competition.
Unlike some of our fellow British territories in the region, most of which have only one centre of population, TCI has six inhabited islands and, on account of its tourism and construction boom, a growing number of inhabited cays, all spread across 80 miles of ocean. This makes the principle of universal service a more important (and potentially problematic) issue than is the case in other British Caribbean territories. The Commission is empowered to determine the telecommunication services in respect of which the requirement of universal service shall apply, in accordance with the telecommunication policies established by the government, taking into account the needs of the public, affordability of the service and advances in technology. Both current cellular incumbents boast in their advertising that they cover every inhabited corner of the islands from the southern tip of Salt Cay to the northern end of West Caicos and all points in between. Whether this is yet true is unknown (or at least untested by this correspondent).
Part IV of the Ordinance deals with the regulation and monitoring of spectrum and the granting of spectrum licences. Part V deals with technical regulations and allows the Commission to prescribe standards (i) for customer premises equipment, radiocommunications apparatus, submarine cables and telecommunications network and services to protect their integrity; (ii) for public health reasons, (iii) to ensure interoperability and (iv) to prevent interference. A compliance and enforcement regime is also introduced, offences established and penalties set, and a plethora of subsidiary regulations dealing with frequency management, frequency licensing, numbering, interconnection, pricing and public access have been introduced.
The Christmas panto will never be the same again.
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