I welcome the Cable and Wireless acquisition of Flow

WIGNALL’S WORLD

MARK WIGNALL

Saturday, November 22, 2014

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HAVING been a subscriber to Flow’s triple play service for many years, at the very moment I read that the Cable and Wireless (CWC) had bought Columbus Communications, known to us in Jamaica as Flow, I envisioned rates going down because of increased competition from the dominant player in the region, Digicel.

As expected, the acquisition has not gone down well with Digicel. This I couldn’t quite figure out until it dawned on me that Digicel was no longer just the mobile player that many in Jamaica know it as.


Over the last 10 years, it has been on a hunt as mobile market penetration peaked and, in the last year alone, acquired five cable companies in the region. A few years ago when Digicel acquired Claro’s mobile operation in Jamaica, if my memory serves me correctly, LIME did not squeal at a time when Digicel was truly in a position to call itself the ‘bigger, better’ network.


n recent times, LIME has been increasing its market share of the mobile market, but it has many more miles to go to truly give Digicel a real run for its money.


With LIME’s parent company, CWC, merging with Flow, the proverbial playing field will become less of a hill and gully with more of a tendency to levelling out.


With an increasing percentage of the mobile phone population becoming hooked on mobile Internet and other data services, the prospect of faster connection speeds, plus the big grab of using cellphones to watch what would normally be viewed at home is the obvious benefit that the LIME/Flow merger will bring.


With Digicel fuming at the acquisition, it is useful to note that, in 2013, after the OUR had made its decision on fixed termination rate, Barry O’Brien, the managing director of Digicel, said: "We are going to do to the landline business what we did to the mobile business when we launched back in 2000. Digicel has no intention of laying down a copper network. We are going to use wireless technology."


In terms of its foray into cable TV, and the acquisition of Telstar, the Digicel boss also said: "While Telstar only operated here in Kingston and St Andrew, we plan to have a massive roll-out in terms of nationwide service, both in the existing (TV) infrastructure and in other areas.’


One can therefore get a background as to why Digicel has complained about the LIME/Flow merger. It seems that the levelling out of the playing field is not to Digicel’s liking. I must confess that as I have grown used to and hooked on my iPhone, I am watching less TV content at home.


For this reason LIME has to recognise that Flow’s customers will be expecting what the merger has been touting as a solid promise: Even faster broadband and a much-enhanced TV experience.


One area where Flow customers will be expecting an upgrade is the fixed-line phone when JPS trips out, as it has been doing almost on a daily basis, for up to an hour at times.


The LIME fixed-line phone is powered by the voltage that comes through the phone line. Not so with Flow. Once a power cut hits, the phone service and the broadband ceases. I have been told by senior Flow personnel that that is an area which will be focused on as the upgrade rolls out.


Quite apart from the fact that Jamaica and the Caribbean can use any good news, especially in terms of business activity, the LIME/Flow merger must force Digicel on to its ‘back foot’ if it wants to play straight down the wicket.


Complaining that CWC overpaid for Columbus is, I suppose, just a knee-jerk response on the part of Digicel, but it also indicates that the dominant mobile player in the region is ruing not having snatched the opportunity to acquire Columbus/Flow.


 


A much-improved telecoms network, a better TV offering, fast broadband speeds, the ability to watch home TV on one’s mobile have been promised by this merger.


What is there about it that is not to like? The wheels of regulation spin slowly and I expect that it will be some months yet before the regulators give the deal the necessary stamp of approval.


In 2005, Digicel acquired 11 wireless operations across the Caribbean from Cingular, with resultant consolidation in five markets. In 2007, it acquired U Mobile in Guyana.


In 2011 through 2012 it acquired Nextar, a regional IT player, Voila in Haiti, Claro in Jamaica. In 2013 to 2014 it bought up five cable companies and acquired GCN submarine capabilities and TC content.


Plan or coincidence? As far as I see it, the noise being generated over the LIME/Flow merger is just that — noise. I am certain that the regulators too will recognise it for what it is.



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