EDITORIAL - The Broadcasting Commission's fumbling intervention
published:
Friday | February 22, 2008
It is not quite clear as to the intent of the Broadcasting Commission. But on the surface, it seems a case of a fumbling attempt to reverse a decision it took in the clear light of day or a misunderstanding of the nature and basis of its conduct.
Hardly anyone would be surprised if it is either or both, but especially the latter.
The issue here is that the Broadcasting Commission, through its chairman, Dr Hopeton Dunn, and its executive director, Cordel Green, on Wednesday, obtained an injunction to prevent communications/cable television company, Flow, from completing the acquisition of another cable TV firm, Entertainment Systems Limited.
The Broadcasting Commission's apparent, and on- the-surface complaint, insofar as it is understood, is that Flow breached the terms of its contract by not first seeking the commission's approval for the acquisition. But a deeper issue, many would suggest, is the concern that Flow might be on its way to becoming a monopoly in the cable television market.
We all are agreed that monopolies are not good. They become fat and inefficient and a drag on consumers, whom they tend to gouge. So, no one wants to see Flow as a monopoly.
Indeed, that would have been a consideration of the Broadcasting Commission when it granted Flow a licence to provide cable television services nationally. Prior to this, the Broadcasting Commission had shepherded a hitherto Wild-West sector into some semblance of organisation. The cable market was sliced up into regions and two competitors allowed per region. The players were mostly small operators with little capital and limited technology.
Flow is owned by the Jamaican/Canadian billionaire entrepreneur, Michael Lee Chin, and his Canadian partner, John Risley. They have deep pockets and the capacity to buy know-how. So, Flow has wired Jamaica with fibre-optic cable and offered consumers bundled services - television, voice telephony and the Internet.
There are two ways businesses grow: organically, which is often slow or tedious; or through mergers and acquisitions, which short-circuits the process. That much should have been obvious to the Broadcasting Commission when it granted Flow its operating licence. In the circumstance, the myriad, small, undercapitalised companies in Jamaica's cable television market were clear takeover targets.
What is surprising is that anybody is surprised at Flow's growth strategy. If regulators did not want this to happen, they ought not to have granted a company like Flow an all-island operating licence. But that would stifle entrepreneurship, discourage technological advancement and prevent the application of economies of scale. That is bad for economies.
Regulators, therefore, must not stifle initiatives. At their best, they facilitate the orderly development of the markets. They are at their worst when they assume that their hands are better guiding markets than the markets themselves.
Moreover, it is the naïve regulator who believes that companies negotiate in public and expect bureaucrats to guide them through the process. Their role, in the end, is to make intelligent assessments of the outcomes to determine whether they are within the rules - not expropriate the right of consumers and the market.
Maybe, the Broadcasting Commission may wish to offer other all-island cable licences. And perhaps, there is a need to wake up the Fair Trading Commission.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
