Whilst many Caribbean countries aspire to have three or more telecoms network operators, similar to politics and having two main political parties, most countries cannot get beyond having two carriers. Can Caribbean countries move from telecoms duopolies?
Over a week ago, news reports started to emerge in Jamaica that a “mobile spectrum licence” had been awarded to Symbiote Investments Ltd, the first fully Jamaican-owned telecom company (Source: Jamaica Observer). Symbiote Investments Ltd, which intends to do business under the name, Caricel, is reported to have paid USD 20.8 million for a radio frequency spectrum licence through which it intends to deliver mobile broadband service using LTE (Long Term Evolution) technology (Source: TeleGeography).
The Minister for Science, Energy and Technology in Jamaica, Dr Andrew Wheatley, welcomed the prospect of a third mobile/cellular operator in the market, “as the increased choice will empower the consumer and force greater innovation from the sector” (Source Jamaica Observer). However, in Jamaica, as has occurred in several Caribbean countries, at various points in recent history, there have been three or more mobile/cellular operators, but invariably, they eventually dwindle down to two.
Currently, and across the Caribbean, most countries tend to have two main mobile/cellular carriers: typically, Flow and Digicel. There are exceptions, for example, the Bahamas, which still has one carrier (but a licence for a second carrier was recently issued), and Aruba, Antigua and Barbuda, and Grenada that each have three. However, that third mobile/cellular carrier, when it exists, usually has a considerably smaller market share than the other two players in the market, and more importantly, the sense of competition tends to be between the two main players.
Can a third (or fourth) player be successful?
Ideally, having three or more network carriers in a specific market, with somewhat equal market share, is desired. The majority of Caribbean countries are plagued with, among other things; relatively small populations sizes; high penetration of mobile/cellular service and maturing markets; and well established duopolies, all of which tend to limit the greenfield opportunities that now exist. Additionally, there are several carrier-controlled issues that can have an impact on their presence in a particular market and on how competition develops, which include, but are not limited to:
- the business model adopted by the firm
- the resources (e.g. funding and expertise) available to implement the business model and strategies adopted
- the amount of risk the firm, and its backers are prepared to accommodate, and
- the return on investment anticipated.
Ultimately, achieving profitable and sustainable success can be challenging under most circumstances. However, the situation gets even more complicated when shareholder and country expectations are also taken into account.
A third (or even fourth) player in a telecoms market might be able to create a profitable business if it focusses on niche segments or select customers. However, that approach may be unpalatable in many Caribbean countries, as regulators and politicians tend to push for providers that will serve the entire country, especially the underserved rural areas, or those with difficult terrain and sparse populations. However, worldwide, and especially in developed countries, having multiple niche carriers, especially in population dense areas, but few national carriers is often the norm, and a way to have rigorous competition in the areas that can truly sustain it.
Can a firm survive and not be multi-play?
Referring back to the recent development in Jamaica, Symbiote Investments Ltd was awarded two telecoms licences: a domestic mobile carrier licence and a domestic mobile service provider licence (Source: Office of Utilities Regulation). Essentially, those two licences permit the licensee to establish and operate its own mobile/cellular network and provide mobile/cellular services in Jamaica. However, the larger telecoms firms in the region have been moving strategically towards multi-play – fixed, mobile/cellular, Internet, and even cable/subscriber TV in some instances. In this day and age, can a new player, such as Caricel, truly survive if it is not prepared to also move into the multi-play space?
In an increasingly multi-play environment, the single-service player may appear somewhat handicapped, as the multi-play competitors can leverage their existing infrastructure: to increase the value-add of their entire operation; to bundle a variety of services; and (potentially) to offer more competitive rates. However as indicated above, the success of a single service provider will, to a considerable degree depend on the business model and strategies it intends to implement, the resources it has at it disposal, and perhaps most crucially, how it defines success.
Image credits: Jeffry (flickr)