The Caribbean’s changing telecoms landscape
A quick review of key developments and milestones in telecommunications in the Caribbean since 2000.
In our most recent ICT/tech news roundup, published on 6 April, and as has been the case for the past several weeks, there were a number of articles on the purchase of Columbus International Limited, which owns the brand Flow, by Cable and Wireless Communications plc (CWC), which operates LIME in the region. In the main territories, Barbados, Jamaica and Trinidad and Tobago, regulatory approval, with conditions, has been given for the purchase, and to varying degrees, the speculation on and objections to the current state of affairs are now heightened. However, in all of the news that was collated, it would be easy to overlook an article from Saint Vincent and the Grenadines that highlighted that mobile telecoms provider, Digicel, has been operating in that country for the past 12 years.
Without a doubt, the Caribbean telecoms landscape in the 1990s would be completely unrecognisable from what it is now. Fifteen years ago, virtually all countries would have had an incumbent monopoly, which was either privately, or government owned, or a combination of the two. Service would have been expensive, with limited infrastructure to reach consumers, expensive and time consuming to access, and offering limited choice, among other things. In addition to being deleterious to the local market – where essentially telecoms was considered a luxury service for which premium prices could be charged – it also made Caribbean countries uncompetitive to foreign investors. Hence improving competitiveness became a critical impetus for the sector reform that was undertaken across the region.
Liberalisation, regulation, competition
In virtually all Caribbean countries, competition started in the mobile/cellular space, which was more cost effective to deploy than fixed-line networks, but also was likely to be more profitable to new entrants. The region attracted a number of well-known players, such as AT&T and Orange, that wanted to expand their footprint across the Americas, but there were also some smaller entities and startups, such as Digicel, that threw their hat into the ring.
Prior to getting licensed in Jamaica in 2000, Digicel as we know it, did not exist. It offered low-cost mobile/cellular service, and in most markets it launched offering extensive coverage resulting in it being able to access consumers that then existing incumbents had not yet reached. Hence as at 2015, Digicel has operations in 31 countries worldwide, 24 of which are in Caribbean region (see Figure 1).
Though the initial focus and excitement of market liberalisation was on mobile/cellular services, by the mid-2000s, the Internet began to emerge as a critical platform with the potential to eclipse the technologies that had gone before. Hence another wave of telecoms players started to enter the Caribbean. This time, the focus was on the Internet, and on the deploying both terrestrial and submarine cables networks, which increased considerably the bandwidth available to carry a broad range of services into the future.
Continuing the evolution: mergers, acquisitions, consolidation
Over the past 15 years and in addition to experiencing many of the benefits of competition – lower prices, wider choice, etc. – the players and dynamics of the telecoms market in the region has been changing. Following the first wave of licensing after sector liberalisation that occurred in many Caribbean countries in the early 2000s, by mid-decade, mergers and acquisitions began to occur. One of the largest at the time was that between Cingular Wireless, formerly AT&T Wireless Service, and Digicel.
In 2005, Digicel purchased Cingular Wireless’s Caribbean operation, which essentially doubled the number of countries in which Digicel had a presence:
This purchase will expand Digicel’s network to Bermuda, Anguilla, St. Kitts and Nevis, Antigua and Barbuda, and Dominica in addition to its existing nine markets of operation which include the most recent addition of Haiti. The acquisition will also strengthen Digicel’s market share in The Cayman Islands, Grenada, St. Lucia, Barbados and St. Vincent & the Grenadines, where Cingular’s customer base will transition to Digicel.
Over the past five years, the mergers, acquisitions and consolidation among telecoms firms in the region seemed to have become more frequent. Some which readily come to mind are those between:
- Claro and Digicel – a swap between the two firms of Claro Jamaica for Digicel Honduras and El Salvador (2011)
- Digicel and the Loret Group – for submarine cable systems in the Eastern Caribbean (2013)
- LIME and Dekal Wireless – the former purchasing the latter’s wireless Internet operation (2014), and
- CWC and Columbus International (2014).
The next frontier
Whilst we are yet to experience exactly how telecoms markets in individual Caribbean countries and in the region as a whole are affected by the sale of Columbus International to CWC, we are likely to see increased regulatory oversight to ensure that consumers and the markets in the affected countries are not unduly disadvantaged by the sale. Though there were objections and concerns about the sale, essentially the regulators have had to approve it. Hence, there is a sense that going forward that they will be more attentive and proactive to avoid being perceived as being flat-footed, should such another far-reaching incident occur.
Further, the remaining players are likely to place greater emphasis on managing costs and increasing efficiencies to become even more competitive and agile, whilst Flow/LIME re-organise themselves. The current focus on the Internet and data services offers the region a wealth of opportunities and considerable scope for growth. It will thus be interesting to see the path the Flow/LIME behemoth will chart into the future.
Image credit: Tom Fahy (flickr)