Holness defends reversing two-network decision in Digicel/Claro deal

Saturday, January 14, 2012

OPPOSITION Leader Andrew Holness has stoutly defended his decision to reverse the two-network requirement for the proposed Digicel/Claro merger last year.

Then Prime Minister Bruce Golding, in approving the merger in August, insisted that Digicel must continue operating two separate networks. However, this arrangement was changed by his successor, Holness, in the weeks leading up to the December 29 general election, but was not made public until Thursday when the Office of Utilities Regulation (OUR) summoned Digicel to a meeting to explain the arrangement. That meeting was held yesterday.

On Thursday, Digicel revealed that with the removal of the requirement it would be shutting down Claro in just over a month.

Yesterday, the OUR said it will be further examining what, if any, consumer protection can be afforded to customers of Claro following the announcement.

Yesterday, Holness told journalists that Digicel had appealed Golding's decision and that he inherited that appeal.

According to Holness, there was no secret involved in his decision as he consulted widely with other service providers in the industry as well as the various agencies that regulate the industry.

"And though it was a ministerial decision I also consulted with Cabinet and the (then) Opposition as well because a commitment was given that we would consult on these matters," Holness told a press conference at the Jamaica Labour Party Belmont Road headquarters.

He said the response from the then Opposition was that the previous decision was not one they thought best.

Holness said his review of the matter took into consideration that the deal between Digicel and Claro, if not completed, could have resulted in a virtual pull-out of one of the operators and this would leave the country in a worse position in terms of jobs and the competitive nature of the telecoms environment.

He said he also examined the issue of competitiveness and the emerging trend towards a dominant service provider.

"Digicel was the dominant service provider and we were very careful in changing the decision to ensure the decision did not make them even more dominant in the market, and therefore Digicel had to agree to a reduction in the inter-connection rate," Holness explained.

Admitting that they should have made the matter public then, Holness said that ahead of the elections, the then Government tabled in Parliament new legislation that would empower the regulator to set rates.

"So we got two benefits from the decision because the first is that Digicel agreed to carry down their rate, which is a benefit to consumers, and we also tabled in Parliament legislation to strengthen the regulator so you can improve service provision and manage pricing in a better way," he said.

Holness said the present Government assumed the decision was made in favour of the public and must now give instructions to the various agencies since he did not have a chance to do it.

"I made a decision but did not get to effect the decision, so the Government must now say to the OUR set the terms on which the merger will happen," Holness said.

He said he wanted the country to know the decision was made for its benefit.

"The... presentation made to us in the appeal by Digicel is that it was uneconomical and unprofitable, and so I made a decision that I thought was in the best interest of the consuming public," he said, adding that the regulator now needs to be strong.

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Holness defends reversing two-network decision in Digicel/Claro deal