The three fiber-optic licence applicants are making promises ranging from steep cuts in Internet rates to greater employment and tax generation as they bid for the two licences on offer.

One of the bidders, Trans-Caribbean Cable Company (TCCC) is promising steep cuts in Internet rates in its bid document submitted to the Office of Utilities Regulation, and which has been reviewed by the Business Observer.

At the same time, Digicel Jamaica Ltd offers high government taxes and employment, while and FibraLink offers to pump the most investment in the project.

The government has placed the lines for tender in the hope that the competition would drive down prices. Currently, most telecommunication firms carry their Internet and data traffic on the single line which is controlled by Cable & Wireless Jamaica.
In its bid document

. TCCC says that Internet rates can be cut up to 90 per cent "conservatively" to Internet service providers, which in turn will mean lower rates to consumers. TCCC says that it can offer great rates because no single company will own the cable.

TCCC is a consortium of 30 companies, each holding cable space for resale. TCCC says that the competition on the
TCCC cable will lower rates.

"We can predict that IP (Internet) rates in 2006 will drop to less than $1,000 per Mbps (Mega bits per second) per month for current rates of approximately $7,000 to $9,000 per Mpbs. This is a decrease of between 85 to 90 per cent. This is a conservative estimate and the rates could drop more," said TCCC in its application.

TCCC says it will offer an initial 10 giga bits per second of capacity, 75 per cent of which will be held for resale by the 30 telecoms. The cable will cost some US$32 million to install. Under its plan, the cable would be laid down from Jamaica to the Dominican Republic to Puerto Rico and into Miami, USA.

. Digicel says that it can offer government some US$7.5 million over 15 years in the form of taxes, national insurance and licence fees, if it is awarded one of the licences. It also says that it will employ 20 persons directly to manage the fiber-optic ring and many others indirectly.

Additionally, it anticipates that it will spend US$33 million over three years and US$45 million over 15 years to sustain the cable.

Of that US$33 million the "total cash required to roll out the sub-network is US$26 million" said Digicel in its application.
Digicel says it has loan commitments from Citibank and RBTT Bank.

"Debt rates are assumed at a margin of five per cent above the LIBOR of three per cent," it said, adding that 50 per cent will be financed with equity.

Interestingly, as part of its proposal, it submitted separate official letters of recommendation from 50 Jamaican companies, including the Private Sector Organisation of Jamaica, the Jamaica Manufacturers' Association, the United States Embassy, the Jamaica Defence Force, media houses (including the Jamaica Observer), bakeries, shopping malls, and other telecommunication firms. Under Digicel's plan, the cable would run from Jamaica to the Dominican Republic, linking into Florida.

. FibraLink (a group of Merit Communications and Bahamas-based Caribbean Crossing) promises US$45 million in investment. The founding members will invest half of the capital through equity, with the remainder from senior bank debt of $22.5 million. National Commercial Bank of Jamaica and Fidelity Merchant Bank have agreed to fund the project.

Additionally, FibraLink says that it expects to "generate annual revenues of US$14 million within five years of the services date, which is September 05".

It added: "The investment forecast to be cash flow positive by 2006 and positive contribution to net income by 2007."
FibraLink's cable would run from Jamaica to the Bahamas into Florida.

The OUR has contracted the services of two American consultants' help in its assessment of the bids to be concluded at yearend.

The OUR says it wants not just to lift the level of technical competency in the evaluation, but to engender confidence and transparency in the process.

The OUR said that two other companies that had earlier expressed interest in securing licences did not apply - New World Network, and Sun Ltd (the latter not to be confused with Sun Microsystems).

Interestingly, Digicel Jamaica has interests in two of the three groups. First representing itself and second within the TCCC, which is a consortium of 30 telecoms.

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