Here’s an important matter that I hardly touched on at all last year. My bad. News last November of a proposed merger between LIME (the fancy name for our former monopoly telecoms provider Cable & Wireless) and Columbus Communications Jamaica Limited (Flow, the cable, phone and internet provider) created tremors in the business sector (particularly LIME’s major rival, Digicel) – and indeed, among consumers.
Well, yesterday (January 15, 2015) Technology Minister Phillip Paulwell approved the US$3 billion takeover of Flow as well as Columbus Networks Jamaica Limited (CNJL) by Cable & Wireless Communications plc. The Minister consulted with the Office of Utilities Regulation and the Attorney General and concluded that the Telecommunications Act did not actually authorise him to impose any conditions related to the merger. In other words, as Minister Paulwell said on radio, he “had no choice” but to give the green light.
However, Minister Paulwell emphasized that he was able to use his clout as Minister to obtain some commitments from LIME/C&W as the merger goes ahead. Perhaps a key one is that LIME and Flow are to work towards achieving number portability by May 31, 2015. This is something that the Minister has talked about for years; we all suspected it might never happen. There are other commitments that he has sought to obtain, and I have reproduced these at the end of this article (there does not seem to be a link to this statement; I hope it is complete). Minister Paulwell has, he says, gone to great lengths to make sure consumers’ rights are protected.
Digicel has objected to the merger, noting that above all, the move will reduce competition – not only in the Jamaican market but in Trinidad and Tobago, Barbados, St Lucia, St Vincent and the Grenadines, and Grenada. Minister Paulwell has more or less conceded this, but says that fair competition legislation does not regulate mergers and acquisitions. He says he would like to see amendments to the laws and these are close to the drafting stage. His aim is to have a new telecoms regime with a single regulator. Industry and Commerce Minister Anthony Hylton is also looking at amending fair trading laws to address mergers in general.
Digicel says that, in effect, the merger creates a monopoly. C&W is buying its main competitor (Columbus) for off island capacity (submarine cable), fixed line telephones and fixed broadband services. Columbus is also the only other entity with an all-island cable TV license. Since Digicel broke C&W’s mobile phone monopoly, rates have fallen considerably, but there will now only be competition in the mobile phone market, says Digicel.
LIME, however, believes the merger is a brilliant move for the future of telecommunications in the region. “Convergence is the future of media,” LIME believes. It contends that it has been proactive and forward-thinking, investing heavily in fiber-optic; and that Digicel could have done the same, but had other priorities. Its infrastructure is solid, says LIME. And Digicel still dominates the mobile telephone market in the Caribbean. Moreover, LIME has pointed out, Digicel did itself make a lower bid for Columbus, which was rejected. As some in the media have suggested, was Digicel’s objection more “sour grapes” than anything else?
Be that as it may, will the merger lead to greater benefits for us, the consumers? The jury is still out on that, despite the claims and counter-claims. I, for one, dread the thought of another C&W monopoly; I remember only too well, when we first arrived in Jamaica in the eighties, sitting in Cable & Wireless offices for hours, begging for a telephone landline! Customers were treated with contempt. Not everyone remembers those days; I have not forgotten. Yet LIME/Flow contends the consumer will benefit from cost savings through a single platform offering everything. But there is no doubt that in this new scenario, consumers must be vigilant – and demanding.
One point of interest: Minister Paulwell commented on radio that he would encourage another player to enter the Jamaican telecoms market. He believes this may happen sooner, rather than later.
We shall see.
Minister of Science Technology Energy and Mining today, (January 15) approved the transfer of control of Columbus Communications Jamaica Limited (FLOW) and Columbus Networks Jamaica Limited (CNJL) from their parent company Columbus International Inc. to Cable and Wireless Communications Plc.
Cable and Wireless Communication Plc (CWC) by way of letter dated November 6, 2014 and Columbus November 7, 2014, formally advised the Minister of its agreement to acquire all the shares of Columbus International Inc. and concurrently requested Ministerial approval to transfer the control of Columbus Communications Jamaica Limited (FLOW) and Columbus Networks Jamaica Limited (CNJL) from their parent company Columbus International Inc. to CWC.
CWC is the parent company of Cable and Wireless Jamaica Limited (LIME) which has fixed and mobile carrier and service provider licences to own and operate networks and provides telecommunications services into, out of and throughout Jamaica.
The authority and actions of the Minister in relation to the assignment or transfer of control of licences is provided for in section 17 (2) and (3) of the Act.
In order to be satisfied as the Minister with responsibility for Telecommunications, advice was sought from the Office of Utilities Regulation. Further, in arriving at his decision note was taken of previous advice received from the Attorney General in relation to the Digicel Claro merger that the Telecommunications Act did not expressly authorise him to impose conditions in relation to the transaction.
“Nonetheless, taking into consideration the various concerns and views expressed publicly regarding the possible implications of the transaction, and as such certain assurances were sought and received including: existing termination rates agreed as a part of existing interconnection agreements will remain in effect until a new fixed termination rate is established by the OUR; CWC will be required to observe and comply with any limitations and or requirements of the licences whose control are being transferred to CWC. ; should there be a rationalization of the networks and /or the provision of different service packages offered by Flow and LIME, customers should have the option to keep their existing package or transfer to a more favourable one; customers opting to terminate their contracts should be allowed to do so without penalties; CWC should provide access to International bandwidth on a non-discriminatory basis noting that effective competition in this market segment necessitates that smaller operators have access to concessionary terms to enable competitive resale of services; all efforts and resources will be provided to ensure that the operations of LIME and Flow are ready to enable the implementation of number portability on by May 31, 2015; and in regards to Infrastructure or Facilities Sharing CWC should ensure that other Licensees are provided with non-discriminatory access to tangibles (including ducts, poles and landing stations) which could act as a competitive bottleneck prior to the development of rules governing infrastructure sharing.
“With respect to access to International Bandwidth through their subsea joint venture, CNL-CWC Networks, Inc. (“JVCO”) CWC has indicated that the proposed CWC/Columbus merger has a zero net impact on JVCO or the subsea systems in Jamaica, which were already effectively operating together since the closing of the JVCO transaction in June 2013. JVCO nevertheless has sought to address the concerns by offering to continue to operate the subsea network business independently of the other business lines of CWC/Columbus as it has to date in providing all carrier and service provider customers with the requisite contractual assurances of confidentiality and that its information will not be used for unlawful activities such as price fixing and other anticompetitive behaviour”, the Minister emphasized.
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