
Competition and the telecoms industry
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Monday, June 05, 2006
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Competition, it is said, leads to greater efficiencies and ultimately to better prices and service for consumers.
Nowhere is this adage more true than in our telecommunications industry. Since the government deregulated the cellular portion of the industry some five years ago, the country has witnessed a marketing war involving the long-standing and firmly entrenched Cable and Wireless and new entrants Digicel and Miphone.
Almost everyday on the airwaves, or on the pages of our dailies, there are new plans to woo customers one way or the other. Customers have benefited from these marketing strategies in a significant manner, mainly from lower prices and the availability of better technology.
No longer do we hear passionate calls being made on government or the sole land phone provider for telephone lines to be installed in various distant and rural communities. Everyone, it seems, now owns a cellular phone and can communicate easily with friends and relatives, given the many cellular phone sites now in existence.
Millions of dollars, dare we say billions, have been spent by Jamaicans to buy cellular phones and the attendant accessories of cases, faces, credit and chargers among others, to make up what has essentially evolved into a potent fashion trend especially among the nation's teenagers.
Indeed, the word 'credit' has been redefined since the 'cellie revolution' from its original meaning of borrowing money from the bank or 'trusting' from the local grocer to how many minutes of call time is available on one's cellular phone. Such has been the potency of the cellular transformation in Jamaica.
Now the market is about to embrace a new entrant, Flow, which is part-owned by Michael Lee Chin and interests from Barbados. Flow is expected to provide via fibre optic cables, the services of high definition cable television, Internet and fixed lines.
This is the first major challenge to the monopoly of fixed line provision by Cable and Wireless, who has responded by offering customers innovative ways of using their land telephone service.
Also, as the main suppliers of Internet services in the island, C&W, we suspect, in order to meet head-on the potential challenge of the new player in the marketplace, has within the last six months or so slashed its Internet rates. Another case of customers, we believe, benefiting from the forces of competition. And maybe, just maybe, the head honcho of C&W will now entertain the thought of removing what we think is the onerous rental charge affixed to customers' bills every month.
The advent of the new player in the telecommunications industry will almost surely affect the continued survival of cable operators, especially in the major towns. The prospect of a competitor providing a high definition service at prices comparative or better than those now available for an analog service as Flow claims, might just be too tempting for a voracious Jamaican market.
Many cable operators who in the past, we believe, have been somewhat insensitive to the needs of their customers with obtrusive rules and regulations like, for example, the monthly rental fee for 'boxes' after an initial sum has been paid, will now have to seek innovative ways to respond to the new challenges. We wish them well in their search.
But whatever the situation, we are in for some very interesting times in the telecommunications industry and we must admit that we are excited at the prospects.
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