Mixed reaction to FTC’s decision
A sad day for Barbados!
That’s how one consumer rights group described the Fair Trading Commission’s (FTC) decision to approve the Cable and Wireless and Columbus Communications Inc. merger application.
One communications analyst said the decision raised a number of questions.
In an immediate response to the ruling handed down just after 10 o’clock this morning, Director General of the Barbados Consumer Research Association, Malcolm Gibbs-Taitt, made it clear that he was not in favour of the merger, suggesting it was bad for competition.
He told Barbados TODAY once legally possible, he would be making an appeal so that the decision could be rescinded.
Almost five months after the US$3 billion merger proposition was announced, the regulatory agency said pursuant to Section 20 (5) of the Fair Competition Act CAP 326C, it had completed an analysis of the merger application of the two companies, had considered the overall efficiencies of the merger and the anti-competitive effects that it could create in the landline and broadband internet services, and had determined that the merger should be approved subject to a number of conditions.
However, Taitt said: “First of all, if the FTC decides to agree to the merger, I would regard that as a sad day for Barbados. My reason is that our legislation, as it relates to the Fair Competition Act, is very clear in making the case for there to be competition in the market place and if you merge two opposing forces, I do not see how you are helping consumers to get competition”.
“The other point is this: the Fair Trading Commission, as a regulator, operates [like] the high court of Barbados does. Because of that reason too, it means that if we are not satisfied with the findings of the Fair Trading Commission, we have the right to appeal to the Appeal Court of Barbados and further even to the CCJ [Caribbean Court of Justice] to see if we can get justice where there is none,” he said.
Communications consultant Hallam Hope told Barbados TODAY that although he welcomed the FTC’s decision because it was “a wise step”, there were still “several grey areas that required deeper analysis”.
Hope questioned why the FTC did not address issues relating to quality and standard of service since that remained “a concern for customers despite there being regulations in place”.
“The Commission could have used the opportunity to remove one-year contracts where first-time customers for some services have to sign off to taking a service for one year. LIME has such a policy, while Flow does not. The commission did not appear to seize the opportunity to address this nor the conflict of policy in this area,” said Hope.
“There is uncertainty concerning what would be the next step if a buyer is not found. What if customers of Flow and Karib Cable opt to stay with the service provider and the market remains skewed in favour of one service provider?“ Hope asked.
“In its rush to implement Local Number Portability, has consumer choice been sought? Local Number Portability can make sense but would it cost the consumer, if anything, and what are the financial implications for service providers?”
Telecommunications strategist with the Caribbean Telecommunications Union (CTU), Selby Wilson, told Barbados TODAY that while he was not entirely familiar with the legislation governing the FTC, he realized that the regulatory body was seeking to encourage competition given the conditions outlined.
“What I glean from the approval with conditions is that they [the FTC] seem to have taken all reasonable steps to have a structural shift while the merger takes place,” said Wilson.
“Fundamentally, from a regulatory point of view, I think that is technically sound reasoning. I noticed that it looked at the area where FLOW and LIME overlap and they have said ‘well they must divest of those facilities’ . . . that is, in my view, designed to minimize the effect of what they might consider to be non-competitive otherwise,” he said.
“I like the fact that they have incorporated other elements in terms of number portability and when the merged entity should be ready to accommodate number portability. It is a good move in that it will allow the market to facilitate competition if other players join the market,” said Wilson in his assessment of the decision.
Acknowledging that in some markets in the region there was one dominant telecommunications provider, Wilson said he hoped the merger would allow for more aggressive competition. And he suggested that going forward, regulators in the region should be “a little bit more vigilant” given the constant changes in the sector.
Wilson called on government-owned entities to step up their game and become more aggressive and creative if they wanted to compete effectively.
“I think one of the limitations in the region is the fact that the competition legislation is very weak; in some countries there is no competition regulation. And in all the countries, maybe with the exception of Barbados and Jamaica, the Telecommunications Acts do not cater rigidly for the dealing with competition issues, so there are inherent limitations,” said Wilson.