Time To Revisit Caribbean Telecom Regulations

tabletsincaribbeanschoolsOutmoded Policy Hindering Development, Hurting Consumers

The move by two major Caribbean mobile providers to block access to popular Internet-based telephony services continues to capture regional attention. Their action has provoked the ire of consumers, caught the attention of Internet advocates and forced the engagement of national regulators. But perhaps most significantly, it has put a spotlight on the outmoded regulations that govern the actions of telecommunications providers in the Caribbean.

On social networks, call-in programs and traditional media, consumers and advocates for an open Internet are struggling to understand why governments and regulators are not moving more swiftly and decisively in defense of their interests. The outcry against the blocking of hugely popular Voice over IP (VoIP) services is certainly understandable. Internet-based telephony apps such as Viber, Line, Skype and others play a major role in connecting and empowering people and businesses. The social and economic value they provide may be difficult to quantify but is impossible to ignore.

Important Considerations
The current debate points to complex issues much larger than specific mobile providers blocking specific applications today. The unilateral actions taken by Digicel and Lime and the responses it triggered from regulators, raise several important questions:

-How effective is current telecom legislation to supporting development and market growth in local economies?
-How empowered are regulators to define and defend rights of consumers and to protect local and regional markets in a rapidly mutating telecoms landscape?
-How can local regulators and local governments effectively police the actions of regional service providers?
-What are the most appropriate levers to stimulate true competition in local telecom markets?

Telecom Liberalization Revisited
The current imbroglio also forces a re-examination of the foundations of Caribbean telecommunications liberalization. The global telecom industry’s transition to new models for profit-making is being triggered by competitive forces that do not fully apply to Caribbean markets.

Can legislation and policy drafted in a pre-Internet, pre-IP-networks era really provide an effective basis for policing the behavior of service providers in a converged, Internet-enabled market?
Can legislation and policy designed to break a monopoly, adequately provide the protections and economic framework for stimulating the levels if infrastructure build out, market growth and service innovation necessary to build knowledge-based economies?

The answers can be found in the relatively slow pace of mobile broadband deployment throughout the region; the exorbitant costs of intra-regional and international voice and data roaming; and the market-distorting travesty that is interconnect agreements between providers.

Safeguards for the Capitalist Instinct
Where there are insufficient competitive pressures and inadequate regulatory oversight, history proves that the capitalist instinct is to minimize costs and maximize shareholder value (aka profits), even if it is at the expense of consumer interests. In the telecom sector this may manifest in inflated prices for services, holding on to obsolete equipment well past the depreciation write-off date, deploying used equipment from other regions, resisting or frustrating efforts to introduce legislative changes, or promoting and pricing dated technology as cutting edge, knowing that most consumers will be none the wiser and most regulators will be unable or unwilling to prevent it.

Tactics like these can be found in markets throughout the region. And tactics like these create lucrative profit margins for the region’s service providers. However, tactics like these also inhibit market growth, disadvantage consumers and impede wider economic development.

This is why, despite high mobile penetration rates across the Caribbean, high profit margins for telecom operators, and the high demand for telecom services, the region’s telecom markets are stagnating.
This apparent paradox raises even more questions:

What capacity do local regulators have to verify reported revenue and operating costs data supplied by providers?
Are there any tangible plans by regulators to regularly perform and report publicly on independent assessment of the traffic across Service providers’ networks?

What are call termination rates into Caribbean countries, and inter-connection charges between providers within countries? How do those figures compare to international averages?

Traffic Termination Charges Key
A recent OECD report on International Traffic Termination examined one aspect of why some consumers are losing out: the termination charges imposed on calls coming into a country. The report finds empirical evidence that imposing mandatory higher charges for the completion (termination) of international inbound traffic suppresses demand. Moreover, governments that impose higher termination charges do not see their revenues increase proportionately.

The report sates, “There is an inconsistency, therefore, in any policy approach that recognises the benefits of markets for domestic communication services but restricts competition at the international level.” The report’s findings point to the urgency of the need for Caribbean telecommunications reform. We may be well past the monopoly telecom markets that once defined the region. However, we are yet escaped the threat of monopoly-like practices that artificially suppress demand, limit consumer choice and stifle market growth.

Bigger than Net Neutrality
It is instructive that very little detail has been provided in public domain about the nature of current arrangements between local telecom providers and their international counterparts, or the nature of the redress being sought. Those who argue that the blocking of “unlicensed” Internet-based telephony providers is not about net neutrality are correct. It is about much more than net neutrality. Any company content to hide behind outdated policy as a defense for anticompetitive behavior is being disingenuous.

The recent action of telecom providers in the Caribbean does little to instill confidence that they reflexively act in the best interest of national or regional development. Instead, it is now clear that providers are more than willing to hide behind legislation that they know to be outmoded, in order to defend practices that they know to be inconsistent with international trends. To argue for the letter of the law when it is patently in violation of the spirit of the law is an insult to the intelligence of the consumers and an affront to the interests of society.

History provides a clear warning to all governments and consumers—if service providers are left unchecked, their drive for profits will take precedence over their adherence to principle. For-profit companies, particularly in sectors critical to national development, simply cannot ignore their moral obligation to the societies in which they do business. Likewise, regulators cannot ignore their obligation to protect the interests of consumers and the integrity of the marketplace.

Bevil Wooding is an Internet Strategist with Packet Clearing House and the Executive Director of BrightPath Foundation, an international technology education non-profit organization. Reach him on Twitter @bevilwooding or on facebook.com/bevilwooding or contact via email at technologymatters@brightpathfoundation.org.