Business

Court backs watchdog on mobile rate cut

BY PAUL HENRY Crime/Court Desk co-ordinator henryp@jamaicaobserver.com

Friday, July 13, 2012    

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LIME shouted victory yesterday as the Supreme Court cleared the way for a rate cut on all calls to mobile phones.

The telecoms operator slashed rates by as much as two thirds a month ahead of the rate change ordered by the regulator, to be implemented Sunday.

The company is betting that an increased subscriber base and higher call times will lead to higher revenues in the long run.

But even before LIME lowered its rates, Digicel had challenged the Office of Utilities Regulation (OUR) claiming that the regulatory body had breached the principle of natural justice.

The dominant mobile phone company said the regulator did not consult with industry players before setting the price that mobile operators charge each other for receiving, or terminating, calls at $5 per minute.

But Justice Ingrid Mangatal yesterday ruled against Digicel's application for Judicial Review of the OUR's decision.

"Actions speak loudly," said Garry Sinclair, managing director of LIME Jamaica & Cayman. "We responded to the OUR's lowering of termination rates by immediately dropping our mobile prices to the lowest in Jamaican history and our people reacted very positively. Digicel responded by taking the OUR... to court."

Following its loss yesterday, Digicel stressed that its issue was not with the rate but the way in which the OUR went about the cut.

"We are disappointed with today's ruling as we maintain that the OUR ought to have adhered to the principles of natural justice and carried out some form of prior consultation on the issue before issuing its determination," said Richard Fraser, Digicel Jamaica's head of legal and regulatory affairs.

The new wholesale rate (not the final retail price to consumers) of $5 per minute for all calls made to mobile phones was set as an interim measure ahead of a cost model consultation being completed in September.

During submissions in chambers before Justice Ingrid Mangatal last month, Digicel also asked for a stay on the implementation of the rate in the event that it was successful in seeking leave for Judicial Review. That too was rejected.

"Digicel has not made out a case that it will suffer actual, likely or irreparable harm or loss," Mangatal said in her 55-page written judgment. "On the other hand, it does appear to me that Lime will likely suffer financial damage and reputational loss if a stay is granted, particularly as they have indicated that they have already relied upon the interim Determination Notice."

The OUR has the power to act to protect the public interest, she said. "Even in the event that I am wrong about Digicel's failure to prove harm or potential for irremediable harm, it is plain in any event that the injustice and potential for injustice to the public and to Digicel would be completely different in kind and entirely disproportionate.

"When weighed against each other, the scales would be tipped heavily in favour of the public interest in refusing the stay."

Fraser said: "Unfortunately, the Court did not agree with our view of the law," said Fraser. "We still harbour concerns regarding the unfettered powers granted to the regulator and intend to review matters with respect to same."

But the issue is not yet resolved, as the parties are expected back before Mangatal this morning when Digicel will apply for leave to appeal against the loss.

LIME is expected to make an application for Digicel to pay its legal costs in relation to the hearing.

LIME said yesterday that the next "important step towards a truly levelled playing field" is the implementation of number portability, which would allow mobile users to keep their current phone numbers when they move to other service providers.

The company said it would continue the fight to make this a reality.

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