Cable and Wireless (C&W) and Merit Communications have staked out opposite positions on a proposal by the regulator that C&W be mandated to allow other telecoms to connect to its existing lines.

C&W, which has an islandwide land line system built up over decades, says that such a move would cut the return on the investment in this infrastructure, and would discourage further innovation and investments in land-line technology by companies.
But one firm, Merit Communications, whose parent, FibraLink, is now laying down fibre-optic lines in Jamaica, suggested that C&W's position on the issue was counter to Jamaica's national goals.

The fibre-optic lines will give Merit a slice of the high-speed, broadband end of Jamaica's Internet services market.
The positions were outlined as part of a consultation process initiated in January by the Office of Utilities Regulation (OUR) in a move towards making C&W land-based lines open to connection from competitors - a process called local loop unbundling (LLU).

The regulator believes that the unbundling will help to quickly broaden the number of players in the broadband and fixed lines business, and sought the views of industry players. It has promised a ruling by April 14.

The regulator fast-tracked the consultations with members of the industry, because it said it wanted to ensure the expeditious rolling out of broadband access across Jamaica.
But C&W, Jamaica's only significant owner of land lines, said in its objection that this infrastructure earned most of its revenue by the services it provided, not from renting the lines - as would be the case if the unbundling was pursued.

Moreover, C&W argued that there was a danger that new entrants could ignore areas that were more costly to provide service and concentrate only on high-return customers.

"By allowing service providers to cherry pick - that is, service providers can choose to serve only the most profitable customers, which are usually businesses and high-end residential, and the most profitable areas - C&W will be unable to generate the same margins which would have contributed to development in underserved areas."

C&W also argues that the unbundling was "known to create disincentives for the roll-out of the fixed network and the provision of innovative services".
Added the telecom services provider: "Unless the right incentive framework is created for the continued roll-out of the fixed network, the goal of providing 40 per cent of Jamaicans with access to the Internet in five years will be in jeopardy."

C&W said it was currently executing plans to install multi-service access nodes (MSAN) at cross-connect facilities, but that these plans "would have to be revisited should LLU be mandated for such advanced facilities".

In making its case for the LLU, Merit pointed to arguments made by C&W plc in the UK when that country was contemplating the same process for its market. C&W plc is not the dominant player in that market and supported by the move towards unbundling.

"Cable & Wireless is uniquely positioned to take advantage of LLU in the UK given the reach of its national network, the second largest in the country," noted the parent company in its September 2004 review.

"LLU enables Cable & Wireless to establish full ownership of its customers as their sole telecommunications provider reducing reliance on the incumbent," it said.
The incumbent referred to is British Telecoms, the leader in the UK market.

Added C&W plc: "LLU allows us to establish a strong presence in the access network and to unlock the value of our fixed network.
Over time this will translate to stronger margins.

"Growth rates in broadband have exceeded 100 per cent per annum in many European countries including the UK, and continue to accelerate. This reflects a change in our market place, which is rapidly taking place now. We will exploit this opportunity on a phased basis to ensure that our investment is tightly geared to customer-driven take-up."

Merit said that "LLU for C&W will have a positive impact on the development of competition in the Jamaican telecommunications sector," and that C&W, should be expressly prohibited from requiring ISPS to require Internet access ports," and that "policy and regulation on LLU must clearly exclude non-dominant network operators and new entrants from LLU requirements".

But C&W argued that it did not see itself as the incumbent, due to the lack of a clear definition of the market.
"Merit is in error in presuming that C&W is dominant in a yet unspecified market," said C&W. "C&WJ is not aware of a market defined as 'wholesale local access'. The OUR will have to initiate the necessary proceedings to have such a market defined.

"The arguments put forward by Merit to preclude new entrants from unbundling their access network are the same arguments that are relevant for C&WJ as well."

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