Two of Jamaica's mobile phone operators - Digicel and MiPhone - were surprisingly unperturbed by the government's announced decision to go ahead with the sale of a fourth cellular telephone licence in the face of the decision by US mobile phone giant Cingular Wireless to relinquish the one it inherited in Jamaica when it acquired AT&T mobile telephone business earlier this year.

"We certainly believe that there is room for growth," MiPhone's vice-president of sales and marketing, Alex Hill, said Friday. "In the data area, we are currently running high-speed network in the greater Kingston area, offering wireless as an alternative to dial-up, and we are looking to expand islandwide by next year."
Digicel's commercial director Harry Smith welcomed the new competition.

According to Digicel's commercial director, a new player in the mobile market could only be of benefit to consumers.
"A new licensee can in fact come and provide new services that are not being provided by the current operators," Smith told Sunday Finance. ". We were the first to bring competition to the sector, so we will continue to welcome competition."

Senior officials of Cable & Wireless, the other mobile phone provider, were not immediately available for comment, a spokesman in the company's corporate communications department said Friday afternoon.

Hill's concern was the price any new entrant will pay for its licence, saying that it was likely to considerably lower the value of the one for which, like Digicel, it acquired for US$45 million five years ago. Each company was provided with two 15 MHZ blocks of spectrum.

The license that the government is now about to sell is essentially the one for which AT&T Wireless paid US$6 million a year ago, planning to focus on providing roaming to its existing customers in the US when travelling in the Caribbean.

When Cingular acquired AT&T Wireless late last year, the company's outlook changed and the decision was made to sell the Caribbean operations.

In June, Digicel came to an agreement with Cingular to acquire its Caribbean assets, but did not include the Jamaican licence, which was disallowed under the agreement with the Jamaican government.
Cingular Wireless, hence, surrendered all its Jamaican spectrum and telecommunications licences "unconditionally".

The fees paid to the government, which after legal fees and spectrum regulatory fees were deducted, totalled just under US$5 million, will not be refunded.

"The surrender of the licence has provided a new opportunity to reassign spectrum allocated for the fourth licence as well as other spectrum which remain available for further investment in that sector of the telecommunications market," the technology minister, Phillip Paulwell, announced Thursday night.

Paulwell said he was confident that suitable investors would emerge from the auction to take advantage of the commercial opportunity which the spectrum allocations represented.

MiPhone's vice-president of finance and administration Maurice Martson expressed his concern that the licence would erode the value of his company's licence

"The minimum should be one that does not represent an erosion of the value that we have tied up in the licence that we bought," Marson told Sunday Finance. "We are not trying to define what that price should be, but it should not impair the value of ours...that, we would have some difficulty with."

The auction, which will be coordinated by the technology ministry, the Spectrum Management Authority and the Office of Utilities Regulations (OUR), will take place over the next 30 days.

When the government sold the licence to AT&T, Paulwell argued that it was at a time when the cost of acquiring customers and deploying a network in the 900 band was higher than for the bands occupied by other licensees.

SMA chairman Colin Campbell, in explaining the sequence of events that led to the sale of fourth licence to AT&T last year, indicated that the likely price would be considerably lower than that paid by the two initial mobile entrants.

"Anybody who comes into the market today, is virtually coming into a maturing market," Campbell said. "When Digicel came into the market, for instance, the cell user base was under 20 per cent... Now it is in the eighties."

Added Campbell: "When we went to auction in 2002 for the fourth licence, it did not meet our reserve price - US$15 million - so we had to abandon the auction process and go to negotiations."
This eventually led to the sale of the licence to AT&T Wireless in March 2004.

But the pricing issue apart, both Digicel and MiPhone officials apparently do not believe that the mobile telephone market is saturated.

According to MiPhone's Hill, his company was focused more on "quality service and not quantity of subscribers".

MiPhone, he said, was looking at roll-out data services, for which CDMA, a third generation (3G) technology has distinct advantages.

"We still believe that there are many opportunities out there, that is why we continue to roll out products and services," said Digicel's Smith.

Feeding the multitude

DANGEROUS PETS

Pepper Pot