A discussion of the recently launched consultation in the British Virgin Islands to ultimately introduce quality of service obligations for fixed broadband Internet.

In our latest ICT/tech news roundup published earlier this week, there was an article from the British Virgin Islands (BVI) titled, “Broadband complaints prompt TRC action”. The article reported that the BVI Telecommunications Regulator Commission (TRC) had received several consumer complaints about the fixed Internet broadband service provided by the incumbent, LIME, and was considering regulatory action against the firm:

The TRC is considering regulatory obligations such as quality of service obligations, which may result in penalties for failing to deliver a certain bandwidth speed as contracted between the supplier and the consumer and for delays in service delivery,

(Source: BVI News)

In order to better shape its position, the TRC has launched a public consultation, which ends 5 March, analysing the BVI’s broadband Internet market. Though the main consultation paper is over 30 pages long, its seeks to determine whether or not LIME BVI is dominant in the market for

  • fixed retail broadband, i.e. the services it offers to end users
  • fixed wholesale broadband access, i.e. the access and/or services it offers to other Internet Service Providers in the BVI market.

Should the above determination be confirmed, based on the outcome of the consultation, the TRC will move to impose obligations on LIME, especially with regard to quality of service for fixed broadband Internet, along with penalties should it fail to deliver on those obligations.

A new approach in the region

This initiative by the TRC is something to watch, as very few Caribbean regulators, if any, have pursued it before, and if they have, there has not yet been a truly successful outcome. In most countries, unlike the BVI, there is more than one fixed broadband Internet provider, suggesting that consumers have choice in that segment, and there is some semblance of competition. As a result, regulators tend to take an arms length position on actively regulating the provision of Internet service, preferring to let market forces prevail.

More importantly, however, the literature on international best practice specific to regulating the Internet has, to date, been relatively limited, unlike that for the fixed-line telephone and mobile/cellular markets. Hence regional regulators might not have full knowledge of what Internet regulation entails and hence not be in a position to competently regulate it.

Has the horse for Internet regulation already left the stable?

However, while Caribbean regulators might currently be relying on market forces to drive improvements in the delivery of Internet services in their respective countries, there might still be scope for them to regulate that market. Unlike the BVI, which is seeking to introduce measures against one entity through a determination of dominance, other countries could opt instead to introduce obligations as part of their licensing conditions, or through a mechanism that would ensure that those obligations are equitably applied to all providers delivering the same service.

Having said this, it is important to emphasise that depending on the service quality obligations that are imposed, it could have implications for the pricing of Internet service. For example, residential customers for fixed broadband usually share bandwidth with multiple subscribers, which affects the transmission speeds that can be realised. If there is heavy traffic on the network, the actual upload and download speeds can be significantly lower than the advertised maximum for the Internet plans that had been purchased. Should, for example, a regulator tries to stipulate that the actual transmission speeds be within ‘x%’ of the maximum stated for a particular plan, it requires the providers to significantly and continually increase the capacity of their networks, for which considerable costs would most likely be incurred. To recover those costs, the price for services might need to increase, and be increased on a regular basis, as the demand for bandwidth grows.

Final thoughts…

For the most part, the TRC has adapted the principles and rationale that typically are employed for fixed-line telephony, and it would be for respondents to the consultation to support or disagree with the position it has proposed. However, should it be successful in being able to issue a determination of dominance for LIME in the BVI, the quality of service obligations the TRC might wish to impose would require careful consideration, to ensure that the workable balance between the costs a provider might need to incur and it getting a reasonable return on its investment, is achieved.

 

Image credit: Andrew Scott (flickr)

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