NewCo warns URCA of ‘significant risk of market failure’ over pricing regulations

29 Jul 2016

Bahamian telecoms watchdog the Utilities Regulation and Competition Authority (URCA) has published responses to its proposed revision of retail pricing rules for mobile services, which would see the regulator move from an ex-ante system – where URCA implements measures to prevent potential abuse of market dominance – to an ex-post regime, under which URCA would react to anti-competitive behaviour. URCA’s proposed amendment would relax regulations for retail pricing for non price-capped services, so that operators with significant market power (SMP) would only be required to notify URCA of changes to services, rather than submitting requests for approval. If an operator with SMP is required to provide wholesale services, it will be obliged to submit bi-annual margin squeeze tests. URCA noted that the purpose of the amendment is to ensure a level playing field following the introduction of competition in the mobile market.

For its part, incumbent Bahamas Telecommunication Company (BTC) approved the proposal, but criticised the regulator’s decision to retain some ex-ante measures, such as those relating to changes in non-price terms and conditions of services or the introduction of, or price changes for, multi-play bundles including mobile services. New licensee NewCo, however, criticised the decision, warning that there is a ‘significant risk of market failure’ if the amendment is implementing without URCA conducting a formal review of the mobile market. NewCo highlighted a number of issues with the change, most importantly, the risk of anti-competitive behaviour from BTC in the form of a ‘club effect’. BTC, NewCo argues, is in a perfect position to apply discriminatory off-net/on-net pricing, ring-fencing its subscriber base and limiting NewCo’s capacity to grow. Further, NewCo pointed out that the retail pricing rules are tied to billing protocols, and that the removal of ex-ante controls whilst a receiving party pays (RPP) structure is in place would also strengthen BTC’s position, by allowing it to introduce anti-competitive pricing on inbound mobile airtime.

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