09 Nov 2019 Reflections on the telecommunications liberalisation agenda in the Caribbean
In May 2020, the small states of the Eastern Caribbean – Commonwealth of Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines – will observe the 20th anniversary of the enactment of legislation to liberalise the telecommunications sector. Those countries made it legal for other companies to provide telecommunication services in a competitive environment and set up the institutions to manage the competition. For about 100 years prior to 2000, the British company, Cable and Wireless, had exclusively provided telecommunications services through a monopoly which was protected by legislation.
Between 1998 and 2013, other Caribbean jurisdictions enacted legislation to open their markets and would, therefore, be celebrating as well. The relevant legislation for liberalisation was enacted in Jamaica in 2000, leading to the creation of the Office of Utilities Regulation (OUR). Trinidad and Tobago’s government established the Telecommunications Authority of Trinidad and Tobago (TATT) in 2004 following the passing of the Telecommunications Act in 2001. In 2001 in Barbados the Fair Trading Act was passed, thus creating the Fair Trading Commission, which inter alia, would determine rates and standards of services for telecommunications. The government of Suriname provisionally established the Telecommunications Authority of Suriname (TAS) in 1998. Telecommunications liberalisation was introduced in the Bahamas in 2009 following the passage of the Communications Act (2009) and the regulator’s mandate was extended under the Utilities Regulation and Competition Act of 2015, leading to the creation of the Utilities Regulation and Competition Authority (URCA). In Belize the Public Utilities Commission is the independent regulator for telecommunications, with its powers outlined in the Telecommunications Act of 2002. Regulatory bodies were established in the Turks and Caicos Islands in 2004; in the British Virgin Islands in 2006; Bermuda in 2013. The independent regulator was established in Guyana in 2018.
Telecommunications liberalisation was introduced as the central pillar in the reform of the sector in the Caribbean. When the World Bank supported that reform, it envisioned that liberalisation would lead to stimulated macroeconomic growth, increased investment and employment and the decrease in prices for services. The key components of the liberalisation agenda focused on the universality of services to all populations i.e. availability, access, affordability and the provision of choice to the consumer and establishing the environment for the introduction of new technologies and services. This approach would be policed by purpose built new institutions. It is generally believed that competition would result in the efficient allocation of the resources for the production and distribution of telecommunications and electronic communications services.
The liberalisation of the sector ushered in the convergence of technologies making it possible to deliver many services – voice telephony, data and “broadcasting” using the same infrastructure and service provider. The widespread usage and application of digital communications today illustrates the achievement of one key goal of liberalisation – the introduction of new technologies.
Another major outcome was the creation of a regulatory space in the English-speaking Caribbean. In a population of about seven million, a group of small separate markets, there are more than 10 regulators. While most of the institutions serve a single state or country, the regulatory authority in the Eastern Caribbean (ECTEL) is unique in many ways. It is a multi-island arrangement where five sovereign states agreed to have a single regulatory system. The regulator was set up to be self-financing and has been operating successfully as a financially sustainable institution for the past two decades. The fees levied on providers in the sector funds a regional advisory body and five national regulatory implementation agencies. The establishment of those regulators highlight the importance that governments have placed on the sector as a key factor in social and economic development.
The telecommunications sector, as a subset of electronic communications, which include broadcasting and information services, provided the technologies for the exchange of information. The basic level of social communications increased by data on voice calling in the early period of liberalisation. While people are perhaps talking more to each other today, they use the Internet (voice over IP for telephony) instead of the telephone networks, hence the data published by the providers will show a decrease in calling minutes.
There have been several achievements in the sector in the Caribbean region over the past 20 years, the primary being the rapid expansion of voice telephone and basic Internet services to the populations. In the case of ECTEL, some of the core indicators of the past five years, however, are already highlighting some reversals. The data are presented below.
Liberalisation of the sector has led to more people speaking to each other more often at the social level. There has been the rise of what can be described as citizen journalism, where social media information is broadcast extensively, and in some cases used by established media houses as sources of information for news packages. During the past five years, service providers in the ECTEL member states have reported reductions in local and international calling minutes on their networks.
The liberalisation has not spawned many local electronic communications companies in the manner envisioned by some leaders. Very few countries can boast of any significant homegrown company owning infrastructure and providing services. Where some local companies were awarded licences during the early years of liberalisation, many have ceased operations due to initial problems of interconnection with larger providers. Others have not survived the competition and some have been absorbed by multinational companies.
The availability of number portability can be viewed as another achievement of liberalisation. Number portability (porting) permits customers to move from one provider to another at no cost and yet retain their subscriber numbers.
Table 1: Key telecommunications service indicators in the ECTEL Member States
- Mobile services include voice and messaging. Souce: ECTEL
Freedom to move was limited at the very early stage in the liberalisation due to price differentiation between services on the same network and across networks. A consumer of company A, wishing to call a family member who is a subscriber of company B, would pay more for a call than if the family member were using the same network – ‘on-net calling’. In the Caribbean, this situation has resulted in individuals maintaining subscriptions to two different companies to take advantage of the lower prices of on-net calls. Number portability, therefore, is unlikely to have a large uptake. Companies retain customers through a combination of incentives and ‘locking in’ arrangements. Countries (jurisdictions), including the Bahamas, Jamaica, Trinidad and Tobago and the astern Caribbean countries (ECTEL) have passed legislation that permits subscribers enjoy number portability.
While these gains can be noted, the question remains, has the full regulatory agenda been achieved after two decades of liberalisation?
Due to the inefficiencies inherent in managing these small markets in islands where the geographical characteristics present challenges to the rapid and seamless expansion of services, the provision of high-quality service to marginal groups has been slow. Governments have sought to address this problem through the introduction of universal service programmes (USF). However, many USFs are hamstrung by weak legislation and a paradigm in which the service standards and targets continue to lag the growth and expansion of technology available to consumers. Many jurisdictions are yet to redefine basic service to include broadband access at levels which are comparable with other regions in the world.
Notwithstanding the establishment of those regulators, governments in the Caribbean have not taken a very active role in setting targets for infrastructure in the same aggressive manner as other regions of the world, including some northern European and Pacific countries. The service providers in the Caribbean all privately-owned, and in the main, those non-Caribbean multinational corporations, have dictated the pace and nature of technological expansion as well as services in the sector.
The issue of net neutrality is another unresolved issue. National political leaders have been promoting the provision for unrestricted use of the Internet by consumers. Service providers have argued that third party content providers are riding off their networks for free to get to consumers without any major investment in infrastructure or networks. There is the added concern that these third parties are not subject to the same taxes and obligations like the licenced major service providers. Formalising and legislating zero rating, where restrictions are lifted for development uses, including government services and emergencies, are among the solutions that have been posited. The issue remains unresolved in many jurisdictions, largely because the same companies or their subsidiaries are the service providers across the Caribbean region.
It is somewhat ironic that many of the countries are within sight of each other yet roaming charges apply when subscribers of the same provider move from one island or country to another. Service providers are licensed separately in each jurisdiction and, therefore, each sovereign state is a separate market. High roaming charges have caused consumers to seek creative ways to communicate while escaping those charges, invariably resulting in reduced revenues for the companies and taxes to government.
In 2016, the Caribbean telecommunications Union (CTU), which is the intergovernmental body of policy makers in the telecommunications sector, launched a project to create a single space for ICT in the Caribbean with the following goals: elimination of roaming charges; the management of spectrum resources and protocols to ensure interoperability of systems; and regionally harmonised ICT legal and regulatory systems. Above all, the CTU envisages “an ICT enabled borderless space that fosters economic, social and cultural integration for the betterment of Caribbean citizens”. For this to become a reality, from the citizens’ perspectives, roaming charges must be brought down to zero.
While the regulatory bodies have managed the competitive playing field among the service providers, the legal provisions and structures for the protection and empowerment of the consumers have been undeveloped and weak. The management of the quality of service has been primarily left to the whim of the providers, oftentimes guided by extant quality of service standards. Consumer affairs divisions of the regulators are comparatively understaffed. In the region, non-governmental protection bodies are also weak and disorganised.
On the other hand, the producers and suppliers of electronic communications services have organised themselves into various bodies for purposes of training, coordination of positions on new legislation, policies and networking. The main body CANTO organises large trade shows and many focused training programmes in the region.
Although the region can claim to have been liberalised, it is important to note that Antigua and Barbuda is yet to amend its legislation to introduce an independent regulator. One major outstanding issue is that the government continues to be actively involved in the ownership and management of a telecommunications company while it regulates the sector through a department of a Ministry. Antigua and Barbuda remains the only country in the Organisation of Eastern Caribbean States which is not part of the independent regulatory Authority, ECTEL. This situation has implications for the introduction of a roaming free regime within the jurisdiction since any policy and legislative recommendations cannot be enforced there. Since 2018, the government was in possession of draft legislation, draft regulations and recommendations on the structure for the independent regulator.
Some of the outstanding matters require radical action. However, one must remember that there were factors which pressed governments into liberalisation. Those included the weight of the decisions of the WTO on telecommunications services, the need to dismantle monopolies and the search for new economic activities to facilitate overall development. While the challenge for development remains, the gains brought about through lower prices of basic services and the introduction of new technologies have stifled the urgency to introduce new policy and therefore new legislation continues to lag the growth and expansion of services.
In the past five years the cases of anti-competitive behaviour by electronic service providers have increased. In other jurisdictions around the world regulators have been penalising ‘Big tech” companies for breaches related to security and privacy of consumer data.
As many jurisdictions in the Caribbean region prepare to celebrate 20 years of liberalisation, a few things have become clear. First, the disruptive nature of the new technology and converged services have manifested themselves in the social, political and economic life of the people. Second, the market is drifting toward duopolies and possibly monopolies in the production and distribution of services. Thirdly, consumers will continue to find creative ways to use the technologies to make challenge the status quo.
Telecommunications liberalisation has changed the landscape in the Caribbean. The pace of expansion of infrastructure may have paved the way for service expansion, but there are many factors that are blocking the road to full digital transformation of the region. Further reflections on the telecommunications and electronic communications landscapes in the Caribbean, however, would highlight the need for focused research on key areas, including access to services, investment and employment and the impact on technologies on the sociocultural and political environments.
Embert Charles is a Saint Lucian communication and media specialist who currently serves as President of WACC