Effective management of the Telecom Sector
The liberalisation of the telecommunications sector on October 5 2020 was one of the first decisive moves by the current administration albeit a fortunate gift delivered by its predecessor’s protracted negotiations with GTT.
It was inevitable that with fast changing technology the 30-year monopoly that had been a lucrative deal for Atlantic Tele-Network would be brought to an end.
It was also the culmination of a more cooperative period for the company which from the second year of the 1990 agreement had disputed its taxes, and, as small competitors, such as CTL and CelStar, attempted to enter the mobile market found themselves suffocated by prohibitively high interconnection costs. It took the arrival of the much larger and highly aggressive Caribbean company Digicel to bring some competition to the market although not without some cutting of corners - the use of the Suriname Telesur link for international connections (which successive governments ignored) and a more recent squatting on frequencies.
It’s a hard nosed and high stakes business as can be seen by recent entrant E-Networks which originally got authorisation to bring a submarine cable from Barbados at an estimated cost of some US$25M on the basis it was just for its television network. That meant when liberalisation did in fact happen it had a flying start and has since been rolling out internet services across the country. A subsequent cable across the Essequibo River means it will hold a strong market position in Regions 2 and 3.
However E-Networks’ revenues are perhaps a tenth of their two main competitors’ and until Digicel builds out its own cable which might take another couple of years consumers may not see prices for mobile and data go down significantly anytime soon which should be a primary goal of the liberalisation process along with reliable and universal service. The sector remains for now a de facto duopoly and one that over the years has seen the two appearing to march in step on matters of mutual interest.
However it is not necessarily the lack of competition that has held back the sector but the lack of cooperation among the companies and in that regard the authorities should be examining areas of scarcity and encouraging more sharing and collaboration. This might include number portability (if you want to switch from one operator to another you can keep your existing number) since at some point soon numbers
beginning with the digit “6” will run out. Infrastructure sharing is also vital. This can be as simple as being able to run cables on GPL poles, agreements for which the regulations allow, or the sharing of the very costly submarine cables and even facilitating smaller operators to take portions of fibre networks. By effectively pooling infrastructure there can be considerable savings passed on to the consumer. Sadly “coopetition” - the act of cooperation between competing companies is not a concept Guyanese business culture fully appreciates.
Another area of scarcity is bandwidth and as the recent issue with Digicel demonstrates this is an indication that frequencies for mobile data from 600hz to 1Ghz are maxing out and that may become a highly contentious issue. The monitoring and orderly management of frequencies is essential for the country, and for the operators who need certainty in what is a highly capital intensive business. The transparent establishment of a plan on how the bandwidth will be managed in the next five years is vital also keeping in mind the increasing needs of large corporate users.
The Prime Minister recently spoke of a Universal Services and Access Plan which will first map unserved areas. It is true that there is spotty to nonexistent coverage in certain remote or rural areas of the country partly because the operators have been understandably reluctant to build out infrastructure that might serve only 200 users for the same cost to provide service to 5000 in a well populated area. In fact the costs can run higher given the remote locations and the difficulties of providing power to towers. The government needs
to rectify this by insisting the companies’ licences are for the whole country and not just the lucrative parts. It would appear the government may also be looking at some form of subsidy. Whatever the route, in the 21st century equal access to the internet is as important for rural and hinterland communities as access to electricity or healthcare, especially in the age of Covid and remote school learning. Another issue is the quality of service and this is probably the biggest consumer complaint. More needs to be done to address slow or intermittent service by all operators especially as data is such an integral part of doing business.
Finally, the government must operate even handedly and be seen to do so including the apportioning of bandwidth. It must not act as a gatekeeper or look to shape policy that favours any particular operator. Intelligent and authoritative management that both accommodates and regulates the industry while encouraging competition and cooperation among investors is key to long-term development. That comes first from creating a level playing field on which all can compete and invest with more certainty. In fact that could apply to all sectors. Any other way is a deterrent to investment and opens opportunities for corruption.