DIGICEL Jamaica will today chop its international call rate by 12 per cent, making the rate, at $17.75 per minute, the cheapest available to Jamaicans.

The reduction signalled an intensification in the competition for customer patronage and loyalty between the two leading phone service providers, with the other — Cable & Wireless (C&W) — having just effectively reduced its rate.

Digicel’s reduction, announced yesterday, was its second in a month, having previously shaved 30 per cent or $8 off the cost, bringing down its international rate to $20 per minute.

That previous reduction was apparently in response to the rate restructure undertaken by C&W on November 1, when a flat rate of $18 per minute was introduced for calls to any overseas destination. It translated into an average reduction of 26 per cent per minute for overseas calls. Simultaneously, C&W jacked up local call rates by 66 per cent.

However, today’s reduction by Digicel, was motivated by a subtler, yet more urgent marketing imperative. For, Cable and Wireless, by announcing that it would move towards a system of per-second billing, took the steam from the marketing campaign of Digicel, which, having already billed its customers for each second of call, was able to boast that its rate was de facto cheaper than that of C&W’s.

Cable & Wireless has, since the introduction of cellular phones a decade ago, charged its customers in indiscreet blocks — of one minute. It meant for example, that a 10-second call would be billed as a minute-long call.

Digicel therefore was able to assert in its marketing campaign, that even though its rate, at $20 per minute, was nominally above that of C&W’s, the fact that it charged per second, meant that on average, its rate effectively remained below that of C&W’s.

That argument was nullified with C&W’s surprise weekend announcement that it too would begin billing its customers for each second of talk time.

Yesterday, Errol Miller, head of communications at C&W, said the new pricing regime came about after one of his company’s periodic reviews.

“We are always reviewing our pricing structures in order to come to pricing decisions which are beneficial to our customers,” Miller told the Observer.

But the head of Digicel, Seamus Lynch, questioned the motivation behind his competitor’s move.

“I would suggest that C&W not fool the Jamaican people,” snapped Lynch. “Why has it taken 18 months to reduce rates and issue in per second billing? Digicel has always been providing competition in the market and is always seeking the best for its customer.”

But the regulator for telephone companies — the Office of Utilities Regulation (OUR) — welcomed C&W’s per second billing system, arguing that competition had done for the market, what the agency had for years tried unsuccessfully to achieve through fiat.

“Since 2001, the OUR has been asking Cable and Wireless to issue in per second billing,” Courtney Jackson, the agency’s deputy director said. “We were glad that they have finally heeded our suggestions”.

Digicel’s Lynch too attributed the new rate structure to competition, pointing to the fact that C&W continued to bill its land-based customers — where it still enjoyed a monopoly — by the minute.

“Why has not C&W issued per second billing on its land lines? I would suggest because there is still a monopoly,” he said.

Jackson said yesterday that he hoped the other cellular operator — Centennial — “will follow suit” in changing from per minute billing to per second.

“We felt that it was only fair that customers be charged for the fraction of minutes used and not pay for unused minutes,” said Jackson.

Lynch argued that the new prices showed how “consumers can benefit from competition” and suggested that Jamaicans begin phasing out their land lines and opt for cellular service.

But Digicel is now locked in a court battle with the utilities regulator over its refusal to reduce the interconnectivity fees it charges its competitors, to within the band specified by the OUR.

Digicel has defied the ruling of the OUR, arguing that the agency had no business in price-setting, that price determination should be purely a market function. Cable and Wireless and Centennial have both set their rates within the guideline of the OUR.

The next major wave in the competition for telephone customers is expected to come next March, when the last element of Cable & Wireless’ monopoly is removed. Then, telephone service providers will not have to route international calls through C&W’s system, and will also be able to provide land-based service.

In preparation for full liberalisation, Digicel is spending US$12 million to upgrade its facilities and to establish an earth station to link itself to the rest of the world.