Unions bat for LIME in telecoms dispute

BY CONRAD HAMILTON Senior staff reporter hamiltonc@jamaicaobserver.com

Tuesday, February 21, 2012

TWO trade unions representing the majority of workers at telecommunications company LIME have added their voices to calls for the Government to revisit its telecommunications policy, which they say places LIME at a severe disadvantage, in the area of mobile telephony.

The unions have written to the minister with responsibility for the telecoms sector, Phillip Paulwell, requesting a meeting to discuss issues that have resulted from the Government's decision to approve the request from mobile provider Digicel to purchase the local operations of Claro.

The unions say their intervention is not only in an effort to safeguard the jobs of the workers, but also to prevent Jamaicans from being abused by a company which is preparing to take control of nearly 90 per cent of the mobile market.

"We are trying to lobby to get the minister to understand that LIME is important to Jamaica and for him to again remove the monopoly which he worked so hard on ending 15 years ago. Currently Digicel, because of the rules, has come full circle from being a new entrant, to not just the new player but a monopoly," said Garfield Harvey, third vice-president of the University and Allied Workers Union, which represents the majority of unionised workers at LIME.

"If it is that we are going to see a situation where LIME leaves the market, Claro is no more, and nobody is competing with Digicel, that saving that the consumer made over the last three to four years will go straight back into Digicel's pocket," he added.

Meanwhile, president of the National Workers Union, Vincent Morrison, says the meeting with the minister is crucial as he (Paulwell) has to ensure that the telecommunications companies are operating on a level playing field.

Since Digicel announced its planned take-over of Claro, LIME has been hopping mad, as it contends that the approval of the deal would result in Digicel becoming too dominant a player in the telecoms sector — a position LIME held before the passage of landmark legislation in 2000, which allowed other providers to enter the Jamaican telecoms market.

Since Digicel announced the deal, LIME has been calling for a review of the telecommunications policy, as it claims Digicel has ring-fenced its operations from any attempt by competitors to maintain an effective presence in the mobile market. LIME has on several occasions cited Digicel's cross-network charges as an example of such practices.

As part of its planned take-over of Claro, Digicel last year announced a reduction in the cross-network charges, but LIME maintains that the adjustment doesn't go far enough.

Digicel in its offer said it would be reducing its peak rate by $3.00 (from $17.70 to $14.70) and its off-peak rate by $2.00 (from $15.80 to 13.80) in relation to interconnection retail charges with LIME.

Since then, the Office of Utilities Regulation (OUR) has proposed a $5.00 termination rate on cross-network calls.

LIME says it supports the proposed rate, but hopes that it will be lower when a final decision is taken, however, Digicel insists that the OUR is not yet in a position to recommend a termination rate.

The OUR proposal is outlined in a brief on the contentious issue of Digicel's acquisition of Claro. According to the brief, which was seen by the Observer, one of the likely effects of the acquisition is that subscribers on other networks are likely to pay more to call the combined entity (Digicel/Claro) due to Digicel's high termination rates. Based on that assessment, the OUR recommended that Digicel implement "an interim per minute termination rate of $5.00".

The OUR argued that despite the fact that the interim rate is a per minute charge, it is expected that mobile calls will be billed on a per second basis. "This condition will prevent undue discrimination against other networks and removes an obstacle to fair competition," the OUR said.

"In principle, we would be supportive of an interim $5 termination rate as it would undoubtedly deliver some savings for consumers. But we would hope that the final determination could be even lower so consumers can reap even greater benefits," Garry Sinclair, LIME's managing director for Jamaica and the Cayman Islands told the Observer last week.

However, when the Observer sought a response from Digicel, Richard Fraser, the company's head and legal and regulatory affairs, said: "The OUR is currently undertaking a cost consultation process for the assessment of mobile termination rates for the entire industry, and as far as Digicel is aware, it would be premature for the OUR to make an assessment or recommendation on what termination rate it thinks ought to apply since they are yet to determine the type of cost model which ought to be built for this purpose. Importantly, the OUR is yet to gather the industry information and data to perform the requisite analysis."

Fraser said Digicel was aware that LIME had previously submitted that $5.00 is an appropriate mobile termination rate for the industry. However, Digicel, he said, does not share that view.

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Unions bat for LIME in telecoms dispute