Rime of the ancient operator: GT&T looking to remove fixed line albatross with price hike

1 Sep 2014

Fixed line incumbent Guyana Telephone and Telegraph Company (GT&T) has appeared before the Public Utilities Commission (PUC) to justify a proposed series of price hikes to its fixed line services. Kaietur News Online writes that GT&T applied to the regulator for permission to introduce the new rates in July this year, and has already had one hearing with the watchdog. GT&T contends that it is operating at a loss and needs to implement the changes in order to survive, but the commission has so far been reluctant to green-light the plan, disputing GT&T’s claims and challenging its business plan. The operator has requested permission to implement fourfold increases on charges for installing fixed lines from GYD500 to GYD2,000 (USD2.5 to USD10) for residential subscribers and from GYD1,500 to GYD6,000 for business customers, whilst monthly line rental costs would be doubled to GYD1,000 for private users and GYD3,000 for enterprise subscribers. A representative from the company added that even the higher rates were still much lower than prices for mobile services. The official went on to say that GT&T was aware that many subscribers would reject the price hike and cancel their subscriptions, but said the move was necessary, nevertheless. Stressing the company’s financial troubles, another GT&T spokesman, Gene Evelyn, told the PUC that its current rates were not able to cover the cost of providing a fixed line service, saying that it was ‘like an albatross around [the company’s] neck.’

Also speaking at the hearing, consumer rights advocate Leonard Craig fiercely criticised the company, pointing out that GT&T ‘has a history of not delivering to the Guyanese people’, citing the operator’s minimal investment and lack of innovation. Craig lambasted the incumbent, laying the blame for any financial difficulties on ‘boardroom ineptitude’, giving as an example the provider’s E1 digital subscriber line service: ‘GT&T has always had the capacity to deliver this service but waits until it is approaching obsolescence before introducing this as a service to Guyana.’ According to Mr. Craig, GT&T has been deliberately misleading in its calculations in an effort to overstate the cost of providing fixed line services. Further, the activist explained that the incumbent should have a surplus on every call, due to the fact that customers are billed by the minute, whilst interconnection fees are charged on a per-second basis.

Already sceptical of GT&T’s position – having noted that the company’s financial statements for 2011 seemingly negate its claims of financial difficulties – PUC chairman Prem Prasaud told the incumbent that its request would be rejected if it was proved that the company’s parent was extracting its guaranteed 15% return. As noted by TeleGeography’s GlobalComms Database, under the terms of the privatisation of GT&T, the new parent company Atlantic Tele-Network (ATN) agreed to provide public telecoms services in exchange for a guaranteed minimum rate of return of 15% per annum on capital dedicated to public use. The pact, signed back in 1991, has been the subject of long-standing acrimony and litigation between the government and ATN/GT&T.

The PUC did not reach a decision and will submit further queries to the operator in two weeks. GT&T said it would respond to the questions within a week of receiving them and added that it would also reply to Mr. Craig’s concerns.

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