Nearly three years after the Office of the Utilities Regulation (OUR) first put forward its determination on mobile dominance in Jamaica, the regulator last week made its final decision that will ultimately form the framework by which the three cellular operators - Digicel, Cable and Wireless Jamaica (C&WJ) and MiPhone - will be regulated and that will, eventually, require them to set termination prices based on cost.

In the determination, all three mobile providers are classified as dominant on their own individual networks because calls coming into their networks from outside networks have no choice but to terminate on their system.

"Each mobile carrier is dominant in relation to the voice call termination service it offers," said the OUR in its determination. "If this remains unchecked, a profit maximising monopolist (in this case, the mobile operator) is expected to maintain high prices or increase its price in excess of cost, over time."

The OUR continued by noting that "under the calling party pays (CPP) regime, the effect in the mobile voice call wholesale and retail markets is that, mobile network operators have no incentive to lower the price of calls to their mobile networks from other networks (fixed or mobile)".
Callers to mobile subscribers must terminate those calls on the particular network that the called party subscribes to, resulting in effective competition.

"This means that each mobile operator's pricing of termination services is unconstrained by effective competition or potential effective competition," said the OUR.
The decision, made effective May 1, came after close to three years of deliberation on a request made by Digicel for the OUR to reconsider its determination made in late 2004.

The Irish-owned telecom filed the application for reconsideration (AFR) in September 2004, making five amendments up to November 2, 2004. Digicel's main point of contention centred on defining the market, which Jamaica's largest mobile provider said in a response to the original determination was "blurred".

Digicel said that the OUR ignored "other possibilities such as the prospect of a level of users owning more than one phone or that they can receive most of their calls at home or at work where it might be possible to receive calls on a fixed line instead".

The Our dismissed Digicel's claim in that instance, noting that "only an estimated 11 per cent of mobile subscribers subscribe to two or more networks". Only one per cent subscribes to all three.

Moreover, the very need for multiple handset ownership could be cited as evidence of market distortion," said the OUR in its response to Digicel's claim. "This would be similar to requiring motorists to own four cars to access gasoline from Esso, Texaco, Shell and Total."

At the time the regulator even measured the cost of owning two handsets against the total annual spend on telecommunications by households in the lowest income quintile. The estimate placed the cost of two of the cheapest handsets at 35-53 per cent of the poorest household's yearly expenditure on telephone services.

In its decision last week, the OUR said that "in general, the Office rejects the application", providing clarification on specific issues in a 142-page document made public last week.

David Hall last week expressed disappointment with the decision, in response to questions posed by the Business Observer.

"The outcome of the OUR decision was disappointing and the basis of the decision is of concern," said Hall. "It's an extensive document which we currently are analysing in detail and will give further comment in due course."

C&WJ, through its chief legal officer, Camille Facey, told the Business Observer that the firm's 'Anyone' plan, in which calls from C&WJ phones to outside networks are charged the same rate as networks calls, was its response to "an undue economic burden on the Jamaican consumer as well as the inconvenience of having to carry more than one phone".

"C&WJ views the OUR's decision as in keeping with international practice and in the best interest of the Jamaican consumer," said Facey in her written remarks to the Business Observer. "As such, we will seek to comply with the Office's decision."

Now that the determination will be enforced, all mobile carriers will be required, among other things, to "move towards the incorporation of charges that are cost-oriented and guided by the principles as set out in section 33 of the Act".

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