By Leonardo Blair, Staff ReporterCABLE AND Wireless Jamaica (C&WJ) has warned that the country could lose an additional US$1.3 (J$78 million) monthly due to small players in the telecoms industry driving down settlement rates paid by U.S. interests.
Settlement rates are the per-minute fees paid by foreign carriers to licensed Jamaican international carriers for terminating calls originating overseas.
Top executives of C&WJ who gathered Wednesday at a Gleaner Editors' Forum at the company's North Street offices, downtown Kingston, expressed concern over the rates which have been tumbling rapidly over the last six years. Settlement rates have fallen from a high of US$0. 62.5 cents in 1997 to US$0.19 cents in 2001. This was largely due to the unilateral action of the Federal Communications Commission, the communications regulator in the United States.
Since full liberalisation of the telecoms industry in March, 2003, some of the new players, according to C&WJ officials, have decided to offer foreign companies settlement rates as low as US$0.3 and half cents, forcing down the earnings of the big investors like themselves. At the beginning of March last year, the rates were as high as $0.14 cents.
The entry of 17 international licensees since full liberalisation, has fuelled a current annualised national loss in revenue of US$21.6 million.
In January, the Office of Utilities Regulation (OUR), on the advice of Technology Minister, Phillip Paulwell, intervened and established a margin of 3.1 cents between the minimum international settlement rates and maximum termination rates a cost to foreign companies for terminating international calls on local networks.
LEGAL OPPOSITION
This was met with legal opposition from the small telecoms players, one of whom took out an injunction against the OUR's action. Last week, however, the injunction was overturned and Cable and Wireless is now awaiting word from the utilities watchdog.
"There was a stay on the minimum settlement rates in terms of what we had asked from the OUR," said Lawrence McNaughton, vice president of carriers and service providers at C&WJ.
He continued: "The newer players are trying to get rid of the maximum termination rates also. They (the new players) are referred to as margin gatherers. The difference between them and us Cable and Wireless, Digicel, Oceanic, Gotel is that we have invested billions in infrastructure."
"Essentially they are in the market just to terminate traffic on those networks which have invested. They don't have any customers, they don't have anybody with a telephone number. They have no market share. The customers are held by infrastructure players."
Said McNaughton: "These guys want to come and terminate minutes on the networks of those who have invested. What this means is that the country gets less money and we certainly, as Cable and Wireless do get less money from that set-up."
