Business

Flow now has half of fixed broadband market

Friday, June 06, 2014    

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TELECOMS provider FLOW gained nearly half of the broadband internet market from main rival LIME, according to the regulator, the Office of Utilities Regulation (OUR).

But LIME still remains the market leader, although the shift in broadband users towards FLOW (and other economic and legal developments) resulted in the OUR describing that market as competitive.

"Notably, while LIME currently holds 92 per cent of the market share for the fixed line voice service, it only accounts for 52 per cent of broadband subscriptions," said the OUR in its just released determination on the entitled Price Cap Plan for Cable & Wireless Jamaica [trades as LIME]. "Flow with 48 per cent accounts for the rest of those subscriptions, and has the capacity to meet a large portion of existing demand."

The potential islandwide demand comprises some 853,660 dwellings. The OUR believes that telecommunications providers can meet this demand.

"In this regard, the OUR has concluded that LIME's competitors in aggregate have the capacity to meet a large portion of total demand, thereby satisfying the second condition for effective competition," stated the OUR.

Specifically, "Flow currently passes 310,000 homes, (as at December 2013)", or just over 36 per cent of total dwellings from which fixed-line service could be demanded. LIME passes 467,000 homes or nearly 55 per cent of total dwellings; while Digicel's Wimax service to corporate entities totalled 832 at the close of 2013.

"It is therefore clear that Flow has the capacity to meet a large portion of total market demand, since the margin of difference between LIME and Flow's capacity is meagre," said the OUR determination. "Furthermore, Flow has the capacity to meet total demand since the number of homes it passes exceeds the total subscriber base for fixed line services which stood at 253,140 at December 2013."

Columbus Communications, the parent company of FLOW, is privately held with operations in 42 Caribbean and Latin countries with US$1.5 billion in total assets.

It entered the market less than a decade ago with the ability to offer Internet, cable and voice services totally independent of LIME. Hitherto most competitors would effectively rent space on LIME's fibre-optic network and resell to customers.

"Through its fully protected, ringed submarine fiber-optic network spanning more than 42,300 km and its 38,000 km terrestrial fibre and coaxial network, Columbus provides advanced telecom services to a diverse residential and corporate client base of well over 650,000 customers," said Columbus on its website.

Additionally the OUR described as redundant the price cap regime which relates to the maximum rate at which LIME (a former monopoly) can charge its customers for fixedline service.

"The OUR has therefore concluded that a composite of developments (legal, economic and technological) have converged to make the existing price cap regime redundant," stated the OUR.

The determination was against the background of developments in the telecommunications sector, legislative changes with the new amendment to the Telecommunications Act and "the fact that a review of the Price Cap Plan should actually have been done

in 2005".

An extension of the current regime was granted by the Office in 2005 on the basis that LIME's rates had remained below the cap, which was taken at the time as an indication that there was no need for new price cap constraints, stated the OUR.

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