URCA shrugs off ‘legitimate fears’ on free local calls

13 Jan 2011

Tribune Business reports that the Bahamas Telecommunications Company (BTC) will be allowed to continue providing free local calls while charging rival operators cost-based interconnection fees. Unveiling its final decision on BTC’s Reference Access and Interconnection Offer (RAIO), the Utilities Regulation & Competition Authority (URCA), in a move likely to outrage rivals Cable Bahamas and Systems Resource Group (SRG), said it believed other operators could compete in the fixed telephony voice market despite BTC’s ability to offer free same-island calls. The regulator acknowledged however that its ruling appears to contravene ‘legitimate competition concerns".

Both SRG, which trades as IndiGo Networks, and Cable Bahamas had warned in their responses to the BTC RAIO consultation that allowing BTC to marry its free local calls regime with charging cost-based interconnection rates on rival carriers would destroy the prospects for sustainable competition in the Bahamian landline telecommunications market. This, they argued, was because such a situation meant there was no way rival operators could replicate, or compete with, BTC’s free same-island calls.

In its decision, URCA noted Cable Bahamas’ point that, for ‘a reasonably efficient operator’ to compete with BTC’s fixed line offering to residential customers, the latter’s interconnection rates had to be ‘cost oriented’, while the cost of ‘free local calls’ had to be covered by monthly access fees. The cableco also urged URCA to confirm that BTC’s ‘retail pricing is not predatory or below cost’, and that retail offers could be replicated by rival carriers on the basis of the proposed RAIO offer. Cable Bahamas further stated that in the event that BTC’s monthly access charge is not compensatory, URCA must require BTC to rebalance its tariffs, as this is necessary for sustainable competition.

In response, the regulator said that while cost-orientation was a requirement of BTC’s licence and the Communications Act, it was still awaiting the company’s 2009 accounting separation results to determine whether it was providing cost-based interconnection services. URCA added that tariff rebalancing, which both BTC and itself knew was needed, had to take place before it could be determined whether the latter was offering services to residential customers below cost. And the regulator was also unable to determine whether BTC’s fixed, landline pricing could be replicated by rivals.

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