Business

LIME defends OUR rate cut

BY PAUL ALLEN Business reporter allenp@jamaicaobserver.com

Wednesday, June 20, 2012    

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LIME Jamaica will defend its interests at every turn, the telecommunications firm said, in light of recent developments that could spell huge losses for the company.

The warning comes days after its rival, Digicel, filed documents to have the Supreme Court review the authority of regulators, the Office of Utilities Regulation (OUR), to set the rate at which calls can be terminated.

The statement by LIME's head of legal and regulatory, Rochelle Cameron, in response to Jamaica Observer queries about reports that the company could team up with the OUR to mount a defence against Digicel.

Digicel called the termination rates "unconstitutional and contrary to the common law right of natural justice" as the OUR has denied it the rights to "due process and procedural fairness" in making the determinations.

"The unfettered powers granted to the regulator are of extreme concern given that they effectively install the OUR as judge, jury and executioner," Richard Fraser, Digicel's head of Legal and Regulatory Affairs, said yesterday.

The lower termination rates, which allowed LIME to roll out the new mobile charges, were legally set, argued Grace Silvera, LIME's regional vice-president for marketing and communications.

LIME reduced call charges on its network from $8 to $2.99 cents per minutes for prepaid customers last week, with post-paid ones being charged $1.99.

Calls from LIME to its competitor are now $6.99, cheaper than the $8.99 Digicel charges for calls on its own network.

After the OUR announced the interim mobile termination rate on June 5, LIME's share price moved from 15 cents a share to 18 cents.

When LIME announced its new call rates on June 14, the price jumped as high as 23 cents on Monday, before falling to 22 cents at the end of trading on the Jamaica Stock Exchange yesterday.

Even as some speculate that LIME's rates are unprofitable, the company, in a release on Monday, insisted that it had done its homework and could make a profit at the new prices.

However, that has not ended all mutterings as one industry source said it would be interesting to see if LIME's charges remain the same if Digicel is successful in delaying its compliance with the new termination rates.

Already, LIME has applied the rates a month ahead of the scheduled July 15 date and will have to absorb those costs, the source said.

When asked what implications a possible delay in instituting the termination rates would have on LIME, Silvera said the rates were determined fairly and that her company is standing by what was said in its release, adding that it would be "premature" for her to comment further.

In that release, LIME said it is disturbed by news that Digicel is challenging the ruling made by the OUR two weeks ago.

"We are shocked to hear that this is the response from Digicel to our historic rates," said managing director, Garry Sinclair. "We see this as not just a suit against the OUR, but also against consumers and the people of Jamaica, which is seeking to deprive the Jamaican customers of the benefit of lower mobile prices."

Digicel said it's supportive of "constructive change" in the sector but insisted that the OUR must do so through consultations.

Previously, the termination rate, which dictates how much one company pays the other when a customer calls that network, was $9 but was dropped to $5 on June 4 by the OUR.

The rate will remain in place until the completion of further checks which will determine the rates over the long term, the OUR said in a release earlier this month.

Parliament recently granted the OUR, which regulates the operations of utility companies, the power to set termination rates by an amendment to the Telecommunications Act.

Digicel and the OUR will return to court tomorrow to make further arguments.

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