ON THE RIGHT: A fair deal for the consumer
THE LATEST DECISION on regulated rates is out. The Fair Trading Commission (FTC), which regulates some telecommunication rates among other matters recently announced its decision on rate adjustments for the period April 1, 2016 to March 31, 2019.
As an intervenor who has attempted to understand the issues and has actually engaged the Commission on this Price Cap Plan matter since inception more than a decade ago, I think the new rates determination appears to be a fair deal for the consumer. It links rate increases, if at all, to cost of living as defined by the Retail Price Index (RPI) once again but this time more thought in addressing the residential and business consumer’s interests appears to have been given.
While Cable & Wireless (Barbados) might have expected more, my thinking is that it also serves this company’s interests as research shows a reduction in the number of operating telephone lines. This, despite any rigorous competition from Digicel. This decline of 12 960 fixed lines and pay phones between 2013 and 2014 should be of concern to telecommunication companies as it reflects a reduction in customers, which means less revenue from landline services and fewer taxes for Government.
My hunch is that for the first time consumers have taken a decision to reduce their costs and in some cases simply maintain a cellular phone as their means of communication. This should not be good news for retired persons who might find it more realistic to stay in touch with friends and family via a landline or plain old telephone service with a flat rate form of payment, compared with a cellular phone where per minute costs might discourage its use for lengthy calls.
I am inclined to predict a continuing decline in the number of landline services, not because it is a trend internationally but because of financial reality. I think there is social and economic value in people continuing to communicate via this medium and the need for rates to be affordable. We all might have one or even two cell phones but many of us still prefer to use the home phone for social or business purposes. Life is not only about broadband and WhatsApp.
The FTC decision constrains C&W Barbados to increasing rates or in some cases requiring no decrease on the basis of the cost of living as measured by the RPI). Why would a company not increase rates to gain maximum revenue?
The Fair Trading Commission did not quite buy the argument that C&W was facing serious competition from Digicel in fixed line service. I am still hopeful Digicel will find the business opportunity to grow its landline and broadband services to the home but the financial environment is challenging.
For its part, C&W Barbados continues to roll out the very latest technology available globally. Barbadians might not protest by taking to the streets as the late consumer activist Roosevelt King would have liked.
But they do with their pockets as the current standstill in the renewable energy sector demonstrates. We are still gripped by a harsh economic climate where penny pinching reflects a new normal in spending and investment.
Hallam Hope is the principal of Caritel, which participated in the Price Cap Plan consultations.