A recently conducted study by regional ICT ministers has indicated that the merger of Cable and Wireless Communication (CWC) and Flow may trigger a return to a monopolistic telecommunications industry across the Caribbean.

Contrary to claims by telecoms giant CWC that the merger will allow its company to step up to the number two position in the region, principal consultant of Trinidad-based Prescod Association and Company, Kwesi Prescod, says the merger of CWC and Columbus Communications Inc, otherwise known as Flow, has resulted in a “one-man-calling-the-shots” industry.

“So where are we? There is the consolidation of domestic, sub-regional and international network into two companies: CWC and Digicel. The trend threatens the process of market commercialisation and if there is not strong regulatory oversight of the monopoly effect, we turn back to the 90s,” Prescod stated. He was speaking at a symposium on the impact of ICTs on growth, opportunity and service delivery in the Caribbean at the University of the West Indies, Mona on Tuesday.

Prescod, previously executive officer for policy, planning and market economics at the Telecommunications Authority of Trinidad and Tobago, says if the Government does not impose strong regulatory oversight of the industry, Jamaica — along with the rest of the Caribbean — may end up seeing increased cost of services and declines in innovation.

Combined, CWC and Flow operate in 42 Latin American and Caribbean countries carrying voice and data traffic for customers and other telecoms operators — with overlapping operations in six of those markets, including Jamaica.

“For the past 15 years we have been trying to lower CWC’s monopoly in the Caribbean, and we have grown in the number of competitions and commercialisation of the industry which has resulted in reduced costs and improved performance,” Prescod stated.

“But since 2010, we have seen Flow acquiring all the small cable operators across the region, and then recently CWC and Flow came to an agreement to co-market the sub-sea network infrastructure, later resulting in the merger of the two companies,” he added.

The merger means that CWC now has the greater market share in the industry, resulting in a stand-alone effect across the region; and instead of increased competition, the industry is now dominated by two telecommunications operators, according to Prescod.

“Clearly we have one guy calling the shots, and everyone else lying around,” he stated. “Digicel’s Loop service is the most recent of a number of short storage capacity service marketing and it encourages us to add greater content and I applaud them for that, but it is being run by an Irish man called Digicel.”

Last November, Eastern Caribbean Telecommunications Regulatory Authority (ECTEL) announced its concerns about the merger citing that it could potentially result in a negative impact on competition by reducing choice for consumers of both services and service providers. The regulatory authority added that the increased monopolisation could erode the gains made by liberalisation and that the merger raises significant issues in terms of potential breaches of licences by both CWC and Columbus and must be investigated thoroughly. Its assesment was strongly backed by Digicel.

However, CWC promised that once the merger was approved, LIME and Flow customers could look forward to a full range of exciting new products, with unmatched quality of networks and download speeds, savings on their current prices, and an improvement in overall service levels.

Prescod’s presentation indicated that the sub-sea fibre network infrastructure was dominated by red lines — not for Digicel — but what the market looks like now that CWC and Flow have merged their operations.

— Karena Bennett