The Office of Utilities Regulations (OUR) appears poised to mandate that Cable & Wireless allow other telecoms to connect to its existing lines, a decision that the regulator believes will help to quickly broaden the number of players in the broadband and fixed lines business.

The OUR will formally make its ruling by mid-April, a fundamental decision that could either lower, or significantly raise the capital barrier to entry to this end of the telecoms market.

But the language used by the OUR in its consultative documents on the issue leaves little doubt that it was tending towards making it mandatory that C&W's existing lines and infrastructure be made available for connection by those seeking to enter the industry.

Such a decision would allow the upstarts to avoid the costly investment that would essentially duplicate the infrastructure that C&W already spent several years and billions in capital, to build.

The OUR started its consultation process on local loop unbundling (LLU) of C&W in January, and says a decision will be announced on April 14. LLU is the process of making the physical link that connects a customer's premises to the telecommunications service provider, available for lease to other telecoms.

The regulator has already fast-tracked the consultations with members of the industry, because it says, it wants to ensure the expeditious rolling out of broadband access across Jamaica.

Said the agency in its consultative documents: "To facilitate increased competition in the markets for fixed line services. Especially for broadband access and services, the OUR is of the view that it has become necessary to make rules that apply to the local loop, irrespective of whether the relevant network components are being used to provide voice or data services."

This issue, and impending decision comes against the background of the year 2000 declaration by technology minister Phillip Paulwell that 40 per cent of Jamaicans would have access to the Internet within five years.

By 2003, the objectives expanded to include the development of technology-intensive industries, which would provide highly skilled jobs for a large number of Jamaicans.
But the OUR noted that none of these objectives would be met fully through narrowband or dial up access - the technology that is most prevalent in Jamaica now.

"To accomplish these aims, a broadband access to the Internet must be assured," declared the regulator in the documents. "The delivery of broadband access and the proliferation of competition in this service will enable the provision of fast, always-on Internet access, and advanced interactive services to consumers and small businesses alike at competitive rates."

Moreover, the OUR cites the experience of countries worldwide where the ownership of the local loop gives existing operators a competitive advantage "due to the cost of replicating the facilities".

The OUR argues that The Telecoms Act recognises that the ownership of such a facility could "induce anti-competitive behaviour and therefore contemplated that one of the competitive safeguards could be that the resource should be made available to all telecommunications operators within the country".

The regulator pointed out, for example, that it had, from as far back as 2001, fielded complaints that C&W was not processing wholesale ADSL service fairly and expeditiously.

"Unbundling is likely to stimulate the provision of broadband access services which can be used to provide a range of services, such as access to an Internet connection that provides high-speed, always-on access to the World Wide Web," argued the agency. "With faster access and delivery of online services there will be greater opportunities for new and expanded business activities and therefore enhanced prospects for economic development. This is expected to provide cost-effective delivery of business data and information in education, health and other services."

However, in its response C&W questioned the "efficacy of local loop unbundling as the policy tool for achieving (its) objective" of rolling out broadband services.

"(C&W) has detailed for the OUR that the need for an enabling environment for broadband services, the adverse consequences of mandated LLU on the continued roll out of the fixed network, and the growing competition in broadband provision across technologies and service providers make LLU a questionable policy," said the telecom.

C&W cautioned the OUR to be very careful in this competitive environment, so as to avoid skewing efficient investment signals for broadband development through inappropriate regulation.

"The cost-benefit exercise for LLU is therefore critical, not just for C&WJ, but for the entire industry, including prospective new entrants, customers and the economy," noted the telecom. "Put simply, an over-reliance on unbundling of C&WJ's network will dis-incentivize further investment in our network and in alternatives - resulting in less choice and diversification for customers - and raise the cost of network investment to reach unserved areas of Jamaica."

C&W was referring to a cost-benefit analysis the OUR plans to undertake, in order to determine whether the obligation to offer LLU imposes an unfair burden on a carrier or service provider.

Ultimately, C&W believes, only through increased PC penetration and technology development will demand and take-up of broadband services grow.

"It is questionable whether LLU will provide significant additional benefits," the company said.

However, Merit, a local firm owned by Fibralink, one of two fibre-optic licensees, which has already successfully laid its underwater fibre-optic cable connecting Jamaica to the US, supports the unbundling of the network.

"Such unbundling will facilitate speedier broadband deployment and access across the country," wrote Merit in its contribution to the debate. "In particular, Merit agrees that this policy will encourage and necessitate economically efficient investment in the sector within Jamaica. Such investment will, in turn, increase competitive pressure to reduce consumer prices while providing greater choice and diversity of services."

Another new entrant, Reliant Enterprise, agrees: "In conjunction with accounting separation, we believe LLU is a key enabler of true competition within the telecommunications sector," it said. "One of the biggest issues for this review is the problem of discrimination, as regulating to prevent discrimination remains the key unsolved problem. In practice, there has been no effective regulation or mechanism in preventing C&W from favouring its own operations.

"In broadband, C&W was allowed to create a product which was prohibitively expensive and not fit-for-purpose, which meant that it was entirely unsuitable for the mass market take-up. The result is there is little competition in the broadband market.

"As in every other jurisdiction that has been deregulated, we believe C&W should be required to provide LLU services. It is clear that the failings of competition at the access layer are manifest at the wholesale and retail level. CWJ's ability to leverage its dominance from access into the backbone networks constrains the ability of operators to provide innovative wholesale services to consumers."

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