Is telecoms regulation lagging behind in the Caribbean?
Caribbean countries have made considerable strides in developing their telecoms sector. In some instances, the services available are on par with that of more developed countries. However, has the telecoms industry outpaced regulation?
In this week’s news roundup, the Vice-President (VP) of Marketing and Communications of the Bahamas Telecommunications Company (BTC), Marlon Johnson, was reported to have expressed the view that ‘the current regulatory framework governing the communications sector was no longer adequate ‘ (Source: Tribune 242). Although the regulatory framework in the Bahamas is around four years old, Mr. Johnson readily acknowledged that the local sector has evolved considerably over the last few years, and should precipitate a revisit of the existing framework:
Our contention is that the current regime is actually restricting it, because some of the rules are too prohibitive and are not facilitating growth. They were appropriate when they were crafted, but they are no longer appropriate now, so that framework needs to change. (Source: Tribune 242)
Mr. Johnson set out a number of arguments relevant to the situation in the Bahamas to support his position, which many of us might draw similar conclusions. However, should we be of a similar view with respect to whether or not telecoms regulation in the wider Caribbean has kept pace with the needs of the sector in the respective countries?
Voice versus data regulation
Traditionally telecoms regulation has focussed almost exclusively on the voice market, specifically the establishment of networks and the provision of voice services only. Typically, the networks involved were either fixed Public Switched Telecoms Networks (PSTN) also called POTS (Plain Old Telephone System), and subsequently, mobile/cellular networks. In the 35-plus years since telecoms regulation began in earnest, there is extensive literature on virtually all aspects of overseeing PSTN and mobile/cellular networks – from academic studies and best practice, to formal standards and regulatory models.
Mainstream take-up and use of the Internet commenced around 20 years ago. However, the breadth and depth of guidance to regulate that market is incredibly limited. Hence, although the Internet has become increasingly integral for both voice and data communications, appropriate (national) regulatory frameworks to govern this medium are still limited.
Competition versus regulatory intervention
Ideally, competitive markets are most desirable in telecoms, as well as in other sectors. Experts are generally of the view that “effective competition” can address key aspects of a sector, such as pricing, choice and service quality, without the need for regulatory intervention. However, regulation may be necessary when transitioning to a competitive environment, since it aims to mimic competition where it might not otherwise exist.
Having said this, does having two or more players in a particular market mean that there is effective competition and regulation is no longer needed? The short answer is no. In many countries, even in the Caribbean, there has been a growing trend for regulators to set interconnection charges for the termination of calls on mobile/cellular networks for all carriers in that market, which in turn affects consumer pricing. However, to date, Caribbean regulators have offered little or no intervention in the Internet market, which could improve, among other things, pricing, transmission speeds, and overall service quality.
Multi-play regimes and regulation
In Mr. Johnson’s arguments for revising telecoms regulation in the Bahamas, he noted that the traditional cable provider was now offering Internet and telephone services. Additionally, his company, the BTC, in addition to offering telephone, mobile/cellular and Internet services, was also planning to enter the television market.
Although conventional regulation might have no difficulty with a telecoms company offering a variety of services, historically and for the most part, they would have required their own networks, and hence would be treated separately. However, thanks to advances in technology, a number of different services can be carried over the same medium. Hence infrastructural costs can be shared across the services, and usually there would only be an incremental cost to add another service to the suite that network might already be supporting. A good example of this is a coaxial cable network, which can carry television, telephone, and broadband Internet services without the considerable expense that three separate providers might incur to provide the individual services.
Hence, when there is a common network offering multiple services, and similar to what obtain regarding Internet regulation, there is limited guidance available as to how regulation should be applied under those circumstances.
Universal Access and Universal Service
Most telecoms legislation in the region includes provisions for either Universal Access (UA) and/or Universal Service (US). As discussed in The long hard road to Universality, US typically requires certain services to be provided to individual residents in a country at specified standards. On the other hand, UA stipulates providing access to services for specific groups or interests, or within a certain distance.
Although many Caribbean countries have established the needed systems to implement UA/US, frequently the initial provisions focussed on UA/US with respect to voice services, and to a lesser extent, basic (or even dial-up) Internet service. However, across the region, thanks to the introduction of low-cost mobile/cellular service, service penetration is well over 100 subscriptions per 100 inhabitants in most countries. Hence there might be very few segments of the society who are without service, for which UA/US could meet their requirement.
On the other hand, dial-up Internet service has been phased out in most Caribbean countries, which meant that the UA/US obligations regarding the Internet have had to be adjusted. In many instances the focus has shifted to providing Internet in schools, at post offices and at Community Access Points, and to varying degrees, equipping those locations with appropriate equipment. For the most part, such projects have been rolled out across the region using the funds collected for UA/US.
In summary, there may be valid arguments on both sides with respect to whether telecoms regulation has lagged behind in the Caribbean, and whether countries would benefit from having some of the newer services regulated to the same degree as traditional voice services. The position that would “win” may be specific to the country under scrutiny and the difficulties that are being experienced. Hence, do you think telecoms industry in your country has outpaced regulation?
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