A discussion on some of the changes and perspectives of the incumbent mobile/cellular provider in the Bahamas in anticipation of the opening of that market segment to competition.
As many of you would be aware, the Bahamas is in the process of liberalising its mobile/cellular market. Currently, its monopoly incumbent is the Bahamas Telecommunications Company (BTC), and the plan is for the country to be in a position to issue a second mobile/cellular licence in a few months, and possibly a third in a few years. Last week, a milestone in the licence application process was achieved. Three interested parties submitted proposals for that second licence: Cable Bahamas, Digicel and Virgin Mobile.
The next stages of selection process for a new licensee are likely to be behind closed doors, as it would comprise the evaluation of the technical and financial proposals submitted by the applicants, and thereafter, evaluation of the radio frequency spectrum proposal. However, it is interesting to see how the current market and those connected to it are adjusting to accommodate the changes that are imminent. Below, the focus is on the incumbent, the BTC.
The intention to open the Bahamas’ mobile/cellular market has been a long time in the making. It was part of the negotiations when the BTC was privatised in 2011, where it was agreed that the mobile/cellular market would closed for at least three years, up to April 2014. It therefore meant that during that time, and learning from the experiences of other incumbents, such as LIME in Jamaica, the BTC has had the opportunity to strengthen its position in that market.
Based on the news items collated in our Roundup series, and over the past three and a half years, the BTC has expanded and upgraded its network considerably, and has also thinned its staff complement. It may therefore be more difficult – not necessarily impossible – for a new entrant to get decent traction in areas where the BTC has already established a footprint.
Revenue loss imminent
A report in the local Tribune newspaper stated that the BTC “is bracing for a 20 per cent cut in income over the next four years as a result of losing its lucrative cellular monopoly”. Although losses in revenue is a distinct possibility, it can be argued that its severity will be, to an appreciable degree, dependent on the measures that the BTC itself has instituted, recognising that it is the incumbent and has had well over three years to prepare itself for competition in that segment.
However, it is also important to realise that in having new entrants, especially in a market that is not yet saturated, means that there is scope for the market to grow, which can open up a range of opportunities that would not otherwise exist. Further, with no new player selected, it would not yet be clear what strategy it intends to employ to enter the market, and correspondingly what counterstrategies (if any) the BTC might have up its sleeve.
On a separate note, in the comments for the Tribune article, BTC Faces 20% Income Cut Via Monopoly End, Bahamian consumers appeared more disgruntled by the fact that the BTC has basically neglected all of its other services, such as fixed-line telephony, in favour of the mobile/cellular segment. This posture is not unexpected, as it has been the go-to approach in the LIME/Cable & Wireless playbook across the region. However, when the dust settles, one might find that the BTC would have lost considerably more footing in all other services (than mobile/cellular), and has compromised its position for the delivery of data-driven services, which arguably is where the longer term emphasis and disruption will be occurring.
Image credit: SlugsOnTheRefrigerator / flickr