{"id":159922,"date":"2021-08-13T06:00:00","date_gmt":"2021-08-13T11:00:00","guid":{"rendered":"https:\/\/www.ict-pulse.com\/?p=159922"},"modified":"2021-08-12T19:37:05","modified_gmt":"2021-08-13T00:37:05","slug":"should-caribbean-countries-actively-try-to-increase-the-number-of-providers-in-their-telecoms-markets","status":"publish","type":"post","link":"https:\/\/ict-pulse.com\/2021\/08\/should-caribbean-countries-actively-try-to-increase-the-number-of-providers-in-their-telecoms-markets\/","title":{"rendered":"Should Caribbean countries actively try to increase the number of providers in their telecoms markets?"},"content":{"rendered":"\n

Many Caribbean countries have been stuck in duopolies for over a decade, and to varying degrees, seem eager to have new players in markets to make them more dynamic and competitive, to increase the choice available to consumers, and to drive down prices.<\/em><\/p>\n\n\n\n

<\/p>\n\n\n\n

Although the specifics might differ, the general experience is more or less the same. Starting in the early 2000s, when Caribbean countries, particularly in the English-speaking Caribbean, sought to move away from the monopoly arrangements they had for their telecoms sectors, to a more open and competitive environment, there was interest, particularly for the then underdeveloped and more cost-effective to deploy mobile\/cellular segment. Many were able to license more than two new entrants, but over time, mergers and acquisitions occurred, which has resulted in most countries having just two main players, which own and operate much of the infrastructure in-country.<\/p>\n\n\n\n

<\/p>\n\n\n\n

International best practice did not work in the region<\/h2>\n\n\n\n
Based on the telecoms environments that existed in developed countries, which was considered best practice, many Caribbean countries established licensing structures that were two-tiered. Essentially, licensing structured comprised: (i) for the handful of carriers that owned the infrastructure and provided services on a wholesale basis to other telecoms companies, and they may also deliver retail services to end-users, and (ii) for the relatively numerous virtual network operators (VNOs) that did not own infrastructure, but bought network access and services from carriers, in order to deliver retail services to end-users.<\/p>\n\n\n\n
A market comprising a few carriers and multiple VNOs, was favoured, and was considered win-win. It maximised use of the existing infrastructure \u2013 for which the carriers would be paid \u2013 whilst also fostering (robust) competition in the retail services segment.<\/p>\n\n\n\n
Based on core economic principles, fully competitive markets are the goal: the optimal state for any market. Regulation becomes important as a means to mimic competitive forces, which might currently be absent. However, a fully competitive market is one that operates efficiently, and with minimal regulatory intervention. Among other things, competition tends to:<\/p>\n\n\n\n
drive down prices \u2013 bringing them closer to cost<\/li>
encourage companies to be innovate; and<\/li>
offer consumers a choice in products and services.<\/li><\/ul>\n\n\n\n
Unfortunately, the carrier-VNO model did not work as well in the Caribbean region. Currently, and in most countries, there would be the main carriers, typically two of them, and very few to none VNOs.<\/p>\n\n\n\n
There would be several reasons, of varying complexity, as to why the carrier-VNO model was not as effective in the region, but the following would most likely be key factors:<\/p>\n\n\n\n
Many of the markets were too small to support multiple VNOs.<\/li>
The regulatory rules for the wholesale arrangements offered by carriers to prospective VNOs were underdeveloped.<\/li>
The rules for regulating carriers that also delivered retail services might have been underdeveloped, and effectively undermined existing and prospective VNOs.<\/li><\/ul>\n\n\n\n
<\/p>\n\n\n\n
A new look at competition<\/h2>\n\n\n\n
Over the past few years, the telecoms sectors in many Caribbean countries seemed to have been in stasis. The carriers have been lightly jostling among themselves, typically in a duopoly environment. However, with 5G on the horizon, the availability of radio frequency bands for the delivery of new services, and countries being ever more aware of the importance of high-speed and affordable internet service that is universally available, a few of them seem to be prepared to court potential new players to their markets.<\/p>\n\n\n\n
One of the first countries out of the gate has been Jamaica, which has been issuing licences to new entities to provide wireless broadband services. Most recently, the country issued a licence to Rock Mobile to provide services using the 700 MHz band, and with obligations to provide 95% population coverage within two years. If all goes well for Rock Mobile, and by 2023, Jamaica will have three national carriers \u2013 Rock Mobile, Flow and Digicel \u2013 which it would be hoped will allow the countries to experience the benefits of a more competitive space.<\/p>\n\n\n\n
<\/p>\n\n\n\n
Have we not heard this story before?<\/h2>\n\n\n\n
It is important to highlight that over a decade ago, Jamaica had three national carriers: Digicel; Flow; and Claro. However, Digicel acquired Claro in 2011<\/a>, for which there was considerable debate<\/a>, with even the local competition regulator, the Fair Trading Commission, filing \u00a0a lawsuit to try to stop the merger<\/a>. However, the sale was successful, although it irrevocably changed the competitive dynamics of the Jamaican telecoms sector.<\/p>\n\n\n\n
Currently, Rock Mobile is still in the process of deploying its network, and so is unlikely to become a serious contender nationally until at least 2022. However, at this juncture, what is to say that it will not be acquired in the not-too-distant future?<\/p>\n\n\n\n
Although the future cannot be predicted with 100% certainty, some concerns are worthy of consideration. First, Jamaica\u2019s policy and regulatory framework has remained unchanged since the Telecommunications Act was promulgated in 1999 \u2013 that is over 20 years ago! Although there have been plans to pass new legislation to update the current frameworks, it has not been tabled in Parliament, and may not yet have been drafted.<\/p>\n\n\n\n
Second, and perhaps more importantly following from the previous point, the rules that allowed the merger and acquisition of Claro by Digicel, are likely to still exist. So although commercial entities may need to have the latitude to manoeuvre and operate optimally, the impact and implications when one of three carriers disappears from a market is significant.<\/p>\n\n\n\n
Finally, the head start that both Flow and Digicel have in the market cannot be underestimated. Two decades ago, when the focus was on the fixed-line telephony network, and to a lesser degree, the mobile\/cellular network, comprehensive rules had been developed to manage the unfair advantage the incumbent would have had. However, with the current playing field being internet networks and services, the regulatory rules for competition in that market are still underdeveloped, which it could be argued, places new entrants at a disadvantage, as there are few-to-no systems in place to \u2018level that playing field\u2019.<\/p>\n\n\n\n
<\/p>\n\n\n\n
So should Caribbean countries actively pursue competition?<\/h2>\n\n\n\n
Although the last two sections highlighted Jamaica\u2019s experience and some of the likely challenges in licensing new entrants for its telecoms market, as noted earlier, other Caribbean countries have had similar experiences. For example, many Eastern Caribbean countries have also experienced the loss of players due to mergers and acquisitions, and their markets have been quite static for several years.<\/p>\n\n\n\n
Having said this, there is a sense that countries are appreciating the longstanding inertia of their telecoms markets, and the deleterious impact on their continued economic and social development. More importantly, and at this juncture, cognisant of the limitations of the current carriers, the countries seem open to new actors entering markets to not only change the current dynamics, but also to offer newer and different options to consumers.<\/p>\n\n\n\n
However, similar to Jamaica, many Caribbean countries are still operating under (relatively) archaic policy and regulatory frameworks. Hence, the concerns outlined for Jamaica, with respect to Rock Mobile, are relevant. Further, market size, the maturity of the market, and the availability of green fields opportunities, also need to be considered. Additionally, and noting the focus on carriers (not VNOs) \u2013 which are the norm in the region \u2013 countries may need to considered whether new carriers will be able to realise a reasonable return on their investment without specific and additional inducements to make it worth their while.<\/p>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n\n\n\n
Image credit: Gratisography (Pexels<\/em>)<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Many Caribbean countries have been stuck in duopolies for over a decade, and to varying degrees, seem eager to have new players in markets to make them more dynamic and competitive, to increase the choice available to consumers, and to drive down prices. <\/p>\n","protected":false},"author":2,"featured_media":159924,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[11],"tags":[291,53,333,48,281,334,12],"class_list":["post-159922","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ict-tech","tag-broadband","tag-competition","tag-fixed-broadband","tag-infrastructure","tag-internet","tag-mobile-broadband","tag-regulation","et-has-post-format-content","et_post_format-et-post-format-standard"],"jetpack_publicize_connections":[],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/ict-pulse.com\/wp-content\/uploads\/2021\/08\/Competition-arm-wrestling-money-win-lose-Gratisography-Pexels.jpg?fit=1024%2C682&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p2iE1G-FBo","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts\/159922","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/comments?post=159922"}],"version-history":[{"count":4,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts\/159922\/revisions"}],"predecessor-version":[{"id":159927,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts\/159922\/revisions\/159927"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/media\/159924"}],"wp:attachment":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/media?parent=159922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/categories?post=159922"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/tags?post=159922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}