The government is now reviewing the results of a closely-guarded study done to assess the viability of the Internet market in Jamaica. The study was undertaken as a response to formal complaints lodged by companies that offer Internet services, that they could not make a profit in the current environment.

The 50-page report has just been handed in to the technology ministry, the ministry having commissioned it three months ago.

The study was led by Otis Fisher, an information technology specialist, and Mark McDonald, one of the principals of Knutsford Telecoms.

Yesterday Fisher spoke in broad terms about the study and the report, telling the Observer that it "deals with the status of the ISPs (Internet service providers) market".
He however declined to discuss the content.

"The report has been handed in but I cannot comment on the details yet," he said.

The report incorporates comments and financial information from ISPs. Fisher promised more details after the technology ministry had an opportunity to review the document and discuss the content with the relevant players.

But already one player has begun pointing fingers - at the dominant player in the market - for the failure of others to make profit.

"The ISPs as a group are having difficulties growing their business and making profit and the reason is dominantly because of the pricing from Cable & Wireless (C&W)," said Herman McDonald, chief marketing officer at ISP provider InfoChannel.

At present, companies that offer Internet services almost always have to go through Cable & Wireless' (C&W's) network to connect their customers in Jamaica to the rest of the world. However, these ISPs must also compete against C&W in offering the service to customers. C&W is the largest telecommunication firm in Jamaica. It is also a full-tier telecom.

McDonald said it was difficult for firms to have a positive operating margin under such market conditions.

"Profits are tough in this business and the difference between wholesale price and retail price, that spread is insufficient," he said. "If we go low on price we will have no money to promote the service, if we go high on the price we will lose competitive edge."

Even the OUR - the government agency which regulates the telecoms industry - claimed last year July that C&W was charging its competitors too much for rental of its fibre-optics gateway. The regulator said that rental by Internet service providers between Jamaica and Florida was then US$16,000 per month, one of the highest in the world, and compared with US$5,000 to US$7,000 per month charged between Colombia and Florida.

Less than two months ago, C&W slashed its retail high-speed Internet rates by as much as one-third. But some of the wholesale rates were also slashed. The move was criticised by at least one provider as potentially cutting its customer base.

However, C&W's monopoly over the Internet external gateway will soon come to an end as several firms are competing for two licences now on offer for the laying of fibre-optic lines leading out of Jamaica.

Technology minister Philip Paulwell has consistently maintained that competition in the fibre-optic line end of the telecoms business will help to drive down Internet prices, thus making it more accessible to ordinary Jamaicans.

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