Digicel responds to reports of FTC lawsuit
Dear Editor,
Following the recent articles published by your paper on 28 December 2011 and 4 January 2012 concerning a court claim apparently filed by the FTC opposing Digicel’s acquisition of Claro Jamaica, I feel it is incumbent on me to respond on behalf of Digicel.
Specifically, I wish to shed some light on a number of facts which appear to have escaped the attention of your good paper and the FTC.
Firstly, neither Digicel nor Claro have been served with any legal proceedings by the FTC, though we understand, based on your reports, that its claim was filed at Court in early December 2011. It is a curious fact that the FTC — having issued proceedings to challenge Digicel’s acquisition of Claro — has to date failed to serve these on either Digicel or Claro… particularly in light of the fact that the existence of this transaction is a matter known to the FTC since March 2011.
Perhaps this is indicative that they are rethinking matters and have realised that they do not have a case to bring, especially considering the fact that Digicel’s acquisition of Claro was completed and took effect from 30 November 2011. Further, Digicel questions the FTC’s blatant attempt to try to squeeze merger regulation through the back door, when it has admitted on numerous occasions that it has no power or statutory authority concerning the regulation of mergers and acquisitions.
Secondly, your reports indicate that the FTC has issued its claim in order to safeguard the welfare of Jamaican consumers because it believes that Digicel’s acquisition of Claro will result in “higher prices and a slowdown in technological advancements” and that “the transaction would derail technological development within the industry because Digicel would have less incentive to innovate”.
Nothing could be further from the truth and we strenuously refute any contention by the FTC or otherwise that consumer welfare will be negatively impacted as a result of the acquisition. In fact, to the contrary, consumers will stand to gain significant benefits as a direct result of our acquisition of Claro. In particular, Jamaican consumers will benefit from:
1. Lower rates — up to 20 per cent reduction in Digicel cross network retail rates, as announced by Digicel on 4th January;
2. Increased investment — Digicel investing up to a further US$30 million (on top of our existing investment of over US$1 billion) into Jamaica and Digicel’s network with the integration of Claro’s network and spectrum;
3. Increased technological innovation — with the upcoming launch of a best in class, state-of-the-art HSPA+ mobile network, providing consumers with islandwide 4G mobile services on their handsets, this will enhance broadband penetration in Jamaica as Digicel delivers coverage to over 80 per cent of the population; and
4. Enhanced product and service offerings — through the introduction of 4G mobile services which will offer consumers faster data speed connectivity, up to five times faster than legacy 3G services and Digicel’s intention to bring complimentary wireless Internet to schools and post offices in remote areas of the island.
It’s vital to point out that, without the acquisition of Claro and the resulting ability it gives Digicel to utilise the 850 MHz spectrum, the launch of our islandwide 4G Mobile network quite simply would not have happened.
Indeed, Digicel’s acquisition is a critical factor that enables this technological innovation and major extension of broadband coverage in Jamaica.
We remain steadfast in our view (and the facts support this) that, as a direct result of Digicel’s acquisition of Claro, Jamaica and its consumers will continue to benefit by way of enhanced telecommunications services and an extension of the wide range of competitive products, services and value offers which have cemented Digicel as the telecommunications provider of choice in Jamaica.
It is therefore misguided for the FTC to convince itself otherwise, as the facts and our conduct speak volumes to the commitment Digicel has in relation to enhancing consumer choices in Jamaican telecommunications. We would encourage the FTC to pay closer attention to the market around it before condemning a transaction that provides significant benefits to Jamaican consumers.
Richard Fraser
Head of Legal and Regulatory Affairs
Digicel Jamaica
