From monopoly to duopoly?

In recent times, Digicel and LIME, the major regional players in the telecommunications industry, have made big news with their pronouncements that they would restrict their users from utilising Voice over Internet Protocol (VOIP) services such as Viber, Skype, Vonage, etc, applications that allow calls to be made utilising data services paid for by consumers.

It has been reported that on June 30th, 2014, Digicel sent a text message to all of its Jamaican customers that stated: “Effective immediately, unlicensed number based VoIP services are blocked on the Digicel network.” We are unsure what the specific reference to “number based” VoIP services means but we invite Digicel to clarify if there is some uniqueness intended. Similar action was taken in other markets including Trinidad & Tobago and Haiti.

To distil this down to its most base level, Digicel and LIME saw these voice and messaging applications as eating into their revenue and would have none of it. In fact, Mr O’Brien made it very clear at a Rotary Club function in Kingston on June 12th. He said: “An issue unique to the telecoms industry is over-the-top applications such as WhatsApp and Skype which erode our voice and text revenues.” He forgot to add, ‘but boost the adoption of our premium data services”.

Having likely felt the sting of their customers’ backlash to the restriction, Mr O’Brien attempted to mask the situation in regulatory-like speak by saying that the service offered by the VoIP companies “amounts to blatant illegal bypass activity”. For the record, LIME is reported to be collaborating with Digicel and immediately followed Digicel’s lead. Have we moved from monopoly to duopoly?

The first problem with the action taken is that neither Digicel nor LIME are regulators. They are not empowered to regulate the industry that they are members of. That is the job of the regulators which, in Jamaica, is the Office of Utilities Regulation (OUR). In Antigua & Barbuda, we have the Telecommunications Officer.

What makes this action even stranger is that Digicel seems to promote the use of these services in its Frequently Asked Questions section of some of its websites. In response to the question: “Is it necessary for both the parties to have a 4G phone & a 4G plan to be to make and receive video calls?”, Digicel answers: “Yes, it is necessary for both the parties to have a 4G phone with video calling capability, a 4G data plan & a third party video calling application such as Skype, Viber, etc.” Sourced from http://4g.digiceltt.com/en/faqs.

The OBSERVER group has some experience in telecommunications industry and we have long preached for our government and regulators to be proactive with laws and regulations. Unfortunately, Antigua & Barbuda remains guided by a law that was passed in 1951; over 60 years ago!

To put this into perspective, the first commercial computer, the Ferranti Mark 1, was delivered to the University of Manchester in February 1951. It had some 4,050 vacuum tubes that it used for processing. In June that same year the UNIVAC I was delivered to the US Census Bureau, at a cost of more than US $1.5 million. It weighed 29,000 pounds, utilised over 125 kW of power and had 5,200 vacuum tubes. Your smartphone has vastly more computing power than those first computers.

There are few industries that move with the speed of the telecommunications sector and even more so, the mobile telecommunications sector. The industry moves so fast that it is near impossible for laws to keep up.

It is an not an issue that was lost on the new minister in charge of telecommunications, Honourable Melford Nicholas. In a recent interview he stated: “what can be achieved via technology … sometimes the legislation and the regulations have to catch up with it”. To be fair to his predecessor, former senator Dr Edmond Mansoor, he, too, was keenly aware of the issues and attempted many times to update the legislation. The furthest that he reached in that uphill battle was to get a first reading of a new telecommunications act in 2007 but it was quickly withdrawn and went no further.

That said, the ball is in Minister Nicholas’ court and he has already identified the key question: “what do we do in terms of those service providers who do not have facilities … physical facilities, who do not have licences within markets but can actually reach customers?” To answer this question we advise the good minister to first decide whether we, as a country, will embrace technology or whether we will seek to satisfy the profit margins of big businesses as we have done in the past.

Just to make our point, consider a natural extension to Digicel and LIME’s argument in the context of the minister’s question: “what do we do in terms of Netflix, CNN, ABC, NBC, etc, who do not have facilities … physical facilities, who do not have licences within markets but can actually reach customers?” Or insert any online retailer that now boasts direct shipping to Antigua & Barbuda. The scope of the question now transcends telecommunications and requires people who can think big.

The minister is a smart man and he has good experience in the telecoms industry. He knows the importance and potential of telecommunication in the hands of the masses. His assessment that the blocked service providers “have found a way to exploit the technology that is available” is absolutely correct and we live in hope that, one day, an aspiring Antiguan or Barbudan will also exploit the Internet and the limited resources available to him or her to create the next “big thing”.

We see no reason why a bright mind in our small, twin island state cannot create the next spectacular ‘over the top application’ that will grow to a multi-billion dollar deal.

Plus, in the simplest terms, consumers pay Digicel and LIME to use the Internet. Using Viber, Skype, etc, is not free. We are on a slippery slope when we look to return to the days of allowing service providers to self-regulate based on profit margins. Fair warning.

By the way, we were shocked to hear the minister pronounce that similar actions may have already been taken “to some degree here as well but maybe not yet discernable by the public” and we are investigating.

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