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Blow to Digicel

Privy Council rules against mobile provider in case against OUR

Friday, January 22, 2010    

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THE United Kingdom Privy Council yesterday threw out mobile provider Digicel's appeal against an appellate court ruling in 2007 that the then minister of industry, commerce and technology had no authority to issue a Ministerial Direction in relation to the regulation of the telecommunications market in Jamaica.

The ruling also concluded that the Office of Utilities Regulation (OUR) acted properly in issuing a Determination Notice in relation to the Ministerial Direction and upheld the Jamaican Appeal Court's ruling that the OUR had no obligation to comply with the Direction.

"This decision serves as an important precedent for independent regulation and the protection of the public interest in Jamaica and the region," the OUR said in response to yesterday's ruling.

Telecoms giant LIME (formerly Cable & Wireless Jamaica) also hailed the ruling which, it said, resulted in LIME being able to keep the $340-million Digicel had to pay for termination rates in respect of incoming international calls.

On April 9, 2002 the then minister -- Phillip Paulwell -- in response to a complaint from Digicel, instructed the OUR to refrain from interfering with the pricing policies of Digicel.

At the time, Digicel had been charging Cable & Wireless (C&W) an interconnectivity fee of $12 per minute each time C&W customers called into Digicel's network. The OUR had established a ceiling of $8 per minute for the industry, and instructed Digicel to price its service accordingly.

However, the OUR argued that the minister had no power to issue the directive and on May 22, 2002 issued a Determination Notice, some aspects of which Digicel and the minister considered contravened the Ministerial Direction.

"Judicial review was sought on whether the Direction of the minister was within his powers and if it was not, was the OUR still obliged to comply with it unless and until it was set aside by a court," the OUR said in a news release yesterday.

Review was also sought on whether the Determination contravened the terms of the Ministerial Direction and whether the Determination was within the powers of the OUR and lawfully made.

In 2003, Digicel took the case to the Supreme Court and won. However, the OUR appealed the ruling and the appellate court ruled unanimously in favour of the OUR, citing among other things that the Direction was outside the minister's powers and invalid and that the OUR was under no obligation to comply with the Direction.

But Digicel appealed that ruling and took the matter to the Privy Council, Jamaica's final court of appeal, which, after hearing arguments on November 17 and 19 last year, upheld the ruling of the Court of Appeal.

Yesterday, LIME, in a press release, quoted its Country Manager Geoff Houston as saying he was very pleased with the decision as it "strongly supports the independence of the regulator".

"LIME always believed that Digicel's case was baseless and was just another clear demonstration of their litigious nature as once again, they tried to use the courts to circumvent what are generally accepted norms in the telecommunications industry worldwide," Houston said.

The company said it intervened in the litigation because of its belief that the independence of the regulator is critical for the future of the Jamaican telecoms industry.

"LIME also maintains that it was vital for fair competition and consumer protection that the regulator was able to step in and regulate the rates that the regulated fixed network paid to the unregulated mobile network for call termination," LIME said, adding that the ruling is a clear indication that -- at its highest levels -- the justice system also recognises these facts.

Arguing that the real winners in this case are the Jamaican customers, Houston also said that LIME will continue to fight for the rights of the customer and for a level playing field in the telecoms sector in Jamaica.

"We certainly hope that the ruling will also provide the platform for the regulator to now appropriately address other aspects of mobile regulation in a manner that will create a more level playing field for the industry, especially as it relates to the issue of high cross network call charges," Houston added.

Last September, LIME filed a $3.8-billion suit against Digicel, claiming that the Irish-owned company breached a fixed-to-mobile rates contract that resulted in LIME being overcharged since 2003.

That matter has not yet been settled and Digicel, which has dismissed LIME's claim, has vowed to mount a vigorous defence.

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