Peter Espeut
SOME MANY years ago in this column, I accused Cable and Wireless (C&W) Jamaica Ltd. of holding back the economic progress of Jamaica by taking certain business decisions. I suggested that our island was too small for a telephone call from one part of Jamaica to any other part of Jamaica to be a long distance call.
While this increases the revenues of C&W, it drives up the cost of doing business in Jamaica, and makes us uncompetitive relative to other countries. This is an example of how the business decisions of one single company can affect the progress and economic development of a whole nation.
TWO-TIERED RATE STRUCTURE
The context was that Cable and Wireless had just made the business decision to have a two-tiered rate structure during business hours and at night: one rate for intra-parish calls and another (higher) rate for inter-parish calls. This business decision put rural residents and businessmen at a disadvantage, as a higher percentage of their calls could be expected to be out of parish - even to call the Kingston Metropolitan Area.
A call from one side of Guy's Hill to the other (Guy's Hill is on the border of St. Catherine and St. Mary, and not far from St. Ann) would be a long distance call, while a call from Old Harbour to Ewarton (tens of many miles apart within St. Catherine) would be a local call. Such a policy would hold back rural development and favour the urban over the rural.
Last week, Cable and Wireless announced that they have applied to the Office of Utilities Regulation (OUR) to change their rate structure to permit one rate across the island; in other words, all calls will now be local calls, and long-distance charges within Jamaica will be abolished. Well, it's about time! C&W is simply applying to landlines what has already been in effect for cellular users: one charge across Jamaica. C&W has made a lot of money off of us because of that business decision.
Of course there is a trick to it. Cable & Wireless would never change such a lucrative policy unless they were going to make even more money. My suggestion was to charge one local rate across the island, but this is not what C&W has asked for. The one rate will be higher than the intra-parish rate and lower than the inter-parish rate. The telephone bills of rural landline telephone users who rarely call out-of-parish will increase, and the bills of landline customers in the Corporate Area who rarely call out of town will increase.
Yes, it is true that the bills of rural users who call Kingston often will reduce, as will the bills of urban users who often call to country; but what is certain is that the overall revenues of C&W will increase. What will have happened is effectively a Nicodemus rate increase for Cable & Wireless. This change of rate structure is a rate increase masquerading as an improvement for customers.
17.5 PER CENT PROFIT
Never forget that C&W's licence allows them to make 17.5 per cent profit each year on their capital, no matter how efficient or inefficient they are; no matter what their level of business, no matter what the state of the Jamaican or overseas economy, they will make 17.5 per cent profit on their capital base. What sort of market capitalism is this? This is raw protectionism, where the profits of this foreign company are carefully protected against the vagaries of the market by a government sworn to protect the interests of their citizens. There is no risk at all in this for Cable & Wireless. If capitalism is about risk-taking, then look somewhere else. It is we who risk suffering greatly so that C&W can make their guaranteed rate-of-return.
I am almost sure that Mirant have the same deal about electricity - a guaranteed rate of return on their investment. This is why the rate increases come so frequently; the government must provide for Mirant's guaranteed rate of return.
I would like a guaranteed rate of return in the education system: where parents are guaranteed a place for their children in a good high school, and that 80 per cent of the kids will learn to read by Grade 11. The Jamaican public will never be as lucky to get the same deal as C&SW and Mirant.
By the way, did we get the 217,000 telephone landlines we were promised by C&W?
Finally, I would like C&W to give us the same level playing field that exists in New York and London. When you log on to the Internet in most places overseas, you can stay on all day at no extra charge, since the telephone company charges a flat rate for each landline call. In Jamaica, our telephone company has taken a decision to meter all our landline calls by the second, which drives up the cost to use the Internet. In this information age where information is money, how can we compete against countries which have this low cost advantage over us? Here again, the business decision of one company is disadvantaging a whole country.
Peter Espeut is a sociologist and is executive director of an environment and development NGO.
