Business

2013: A year for data

Business Year In Review

Camilo Thame Business Co-ordinator thamec@jamaicaobserver.com

Wednesday, January 09, 2013    

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GROWING demand for broadband data services is expected to drive the telecommunications sector this year.

From delivering higher speed Internet offerings to streaming subscriber television services to mobile phones, firms are preparing to benefit from previous investments in the technology.

"In 2012 we saw increases in data traffic, and the growth in data usage will continue exponentially as a result of the shift in consumer behaviour towards real-time applications," said Michele English, president and COO of Columbus Communications Jamaica, which operates as Flow. "Consumers will use the applications and services that are increasingly available, and content that requires higher bandwidth via streaming and file sharing."

Streaming media and file sharing is accounting for more than 60 per cent of the average consumer's data usage, she said.

LIME Jamaica's CEO Garry Sinclair figures that expanding to the 700 megahertz (MHz) spectrum for transmission will lead to even faster broadand Internet service.

"(This) represents perhaps the greatest area for growth in the sector, driven by robust demand for data services, on-the-go, by a more demanding consumer base that is shifting from being just a talk and text community," he said. "We also have to expand Internet penetration, because not enough Jamaicans enjoy access to the very technology that is becoming even more pivotal to people's educational and entrepreneurial success."

Columbus, through its business solutions division, also expects to see more take-up by small and medium-sized businesses of cloud-based information technology services.

Cloud services took off in Jamaica in early 2011, when local telecommunications firms sought to enable local businesses to avoid costly investment in IT infrastructure, such as servers and software licences, by using the resources managed by the telecoms instead of buying expensive computing equipment and software.

Now, Sinclair is anticipating regulatory announcements in the near future that will lead to "even lower mobile termination rates, the introduction of number portability and the use of 700 MHz" (See related story on page 17B).

Last July, the Office of Utilities Regulations imposed an mobile termination rate of $5 a minute.

For Flow, it cut the cost of calls to mobile phones from its digital landline customers by 30 per cent, while LIME and then Digicel cut mobile call rates by as much as two-thirds.

As a consequence, the consumer price index fell by 0.3 per cent in July.

On the other hand, the Government introduced a tax of 40 cents per minute on all calls, on top of the existing 25 per cent General Consumption Tax (GCT).

"We expect that the Government will exercise some restraint on imposing any further taxes on consumers of telecommunications services," said Sinclair.

But the biggest challenge to telecommunications firms, perhaps, remains in the theft of infrastructure for sale to the srap metal export industry.

"Besides losing over $300 million to theft and vandalism of our cables and outside plants since 2000, LIME has been deprived of millions in loss of revenue from service interruptions as a direct result of the thefts," said Sinclair.

The LIME CEO expects that new regulations for the scrap metal industry will result in a reduction in theft. A big part of Columbus's business in Jamaica is subscriber television.

English said that the company is challenged by higher programming fees for the channels, rising utilities costs, the devaluation of the Jamaican dollar against the US, and the provision of cable service by informal or illegal operators within our service areas.

Nevertheless, Flow expanded the number of HD channels available on its network, its Video OnDemand services, and claims to be the only operator to offer 3D TV to local screens.

The company's investment in the build-out of its network to enable delivery of triple play broadband-based services, with the expansion of the fibre optic network in May Pen, Old Harbour and Spanish Town, added 11,000 more homes and businesses to its network last year.

"We also look forward to more Jamaicans leveraging our broadband technology to identify and exploit opportunities for virtual employment," added English. "With 100Mbps to the home, our infrastructure enables entrepreneurially minded Jamaicans to take advantage of the income-earning opportunities provided by trends such as e-lancing, crowd-sourcing and micro-work."

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