San­dra Chouthi

In a bil­lion-dol­lar mar­ket­place that Irish mo­bile provider Dig­i­cel has de­scribed as "al­ready com­pet­i­tive," the Telecom­mu­ni­ca­tions Au­thor­i­ty of T&T (TATT) is work­ing on invit­ing a third mo­bile play­er. In an in­ter­view with the Busi­ness Guardian last Fri­day at TATT's Eighth Av­enue Ex­ten­sion, Barataria of­fice, ex­ec­u­tive di­rec­tor Cris Seecher­an said the au­thor­i­ty is cur­rent­ly work­ing on de­vel­op­ing a re­quest for pro­pos­als. Last April, Prime Min­is­ter Kam­la Per­sad-Bisses­sar, speak­ing at a Pub­lic Sec­tor Lead­ers Fo­rum in Wash­ing­ton, said the Gov­ern­ment is "...con­sid­er­ing the in­tro­duc­tion of a third mo­bile op­er­a­tor." In an ear­li­er re­port, Seecher­an said that as of De­cem­ber 2010, the mo­bile telecom­mu­ni­ca­tions mar­ket served a to­tal of 1.8 mil­lion sub­scrip­tions, and earned ap­prox­i­mate­ly $2 bil­lion in rev­enue. In last week's in­ter­view, Seecher­an, who was con­firmed in his po­si­tion in May 2011 af­ter act­ing in the po­si­tion since 2006, said the main rea­son TATT is seek­ing to at­tract a third play­er in the mo­bile mar­ket is to "deep­en the com­pe­ti­tion in the mo­bile space." "We've gone a way, but we feel that we've got­ten to a point where the mar­ket is not mov­ing again, vis-a--vis, the prices.

"We feel that in or­der to push the mar­ket to be­come more com­pet­i­tive, a third en­trant is the way to go," Seecher­an said.

Present dur­ing the in­ter­view in the TATT board­room were An­nie Baldeo, man­ag­er, pol­i­cy and re­search; Karam­c­hand Perai, ex­ec­u­tive man­ag­er, tech­ni­cal ser­vices and de­vel­op­ment' and Kirk Sookram, man­ag­er, spec­trum plan­ning, man­age­ment and mon­i­tor­ing. As it is, T&T's two mo­bile providers, Telecom­mu­ni­ca­tions Ser­vices of T&T (TSTT) and Irish com­pa­ny, have al­most equal mar­ket share. Us­ing what the Hirschman-Herfind­ahl In­dex (HHI) to mea­sure com­pet­i­tive­ness, the cur­rent com­pe­ti­tion is at the 5,000 lev­el. "So we have two play­ers. They are both ap­prox­i­mate­ly 50-50, which gives us 2,500 each, when you square that share, 50 per cent squared is 2,500 and 2,500, that brings you to the 5,000 mark, which doesn't sug­gest that the mar­ket is as com­pet­i­tive as it can be. "Nor­mal­ly, a com­pet­i­tive in­dex brings it down to 2,000 or there­abouts," Seecher­an said. He said the lat­est fig­ures up to De­cem­ber 2010 show that there are rough­ly 1.9 mo­bile phones in T&T. "So many dif­fer­ent ap­pli­ca­tions are com­ing in, large­ly in the re­gion of video, video-type ser­vices, da­ta stream­ing, video ser­vices. That is where the mar­ket is mov­ing.

"In fact, the pro­jec­tion is that by 2015, most of the ap­pli­ca­tions would be video ap­pli­ca­tions. That is high con­sumer band­width, so there is a con­cur­rent need of more band­width as new ser­vices are be­ing of­fered and as the tech­nol­o­gy moves," Seecher­an said. The sec­ond rea­son for fur­ther deep­en­ing the mo­bile mar­ket, Seecher­an said, is that a third op­er­a­tor is like­ly to come in with new­er tech­nol­o­gy than TSTT and Dig­i­cel. "That would leapfrog the ser­vices that would be made avail­able to the av­er­age cit­i­zen. We feel there would be a high­er lev­el of com­pe­ti­tion, which would lead to a fur­ther re­duc­tion in prices, make it more af­ford­able to the av­er­age cit­i­zen.

He said Laq­Tel, which was owned by Dr Joe Laquis, was ini­tial­ly in­tend­ed to be the third op­er­a­tor. Of that ex­pe­ri­ence, Seecher­an said: "For what­ev­er rea­sons, most­ly fi­nan­cial, we feel, Laq­tel did not ma­te­ri­alise." Some of the as­sets of Laq­Tel, which had been grant­ed con­ces­sions and li­cens­es in 2005 for the pro­vi­sion of mo­bile telecom­mu­ni­ca­tions ser­vices in T&T, were auc­tioned off last Sep­tem­ber. The com­pa­ny, now in vol­un­tary liq­ui­da­tion, was levied up­on by its land­lord, Tumpuna Park Ltd, Tumpuna Road, Ari­ma, for falling be­hind on its rent. The Min­istry of Pub­lic Ad­min­is­tra­tion re­voked the com­pa­ny's con­ces­sion in 2008.

RFP be­ing fi­nalised

Seecher­an said TATT hopes to fi­nalise the re­quest for pro­pos­als for a third provider by March 2012. "If we do fi­nalise it with­in this quar­ter, the an­tic­i­pa­tion is that we will is­sue it right away. That is the think­ing, hope­ful­ly, to have pro­pos­als com­ing in­to the au­thor­i­ty, and we feel even al­low­ing us to make a se­lec­tion be­fore the end of this fis­cal year. "We hope to, based on our pro­jec­tions, that we will se­lect a third provider be­fore we end this fis­cal pe­ri­od (Sep­tem­ber)." Seecher­an ex­plained that the auc­tion TATT held in 2007 for a sec­ond mo­bile provider was for the spec­trum. "We will not have an auc­tion again be­cause the spec­trum price has al­ready been set via that auc­tion. The spec­trum is there and avail­able, so there's no need to bid for it. The price has al­ready been set. "The pur­pose of the auc­tion was re­al­ly to set the price of the spec­trum. It's re­al­ly look­ing at the best pro­pos­als from all as­pects-tech­ni­cal, fi­nan­cial, mar­ket-that we can re­ceive in terms of an en­ti­ty mak­ing use of the spec­trum to pro­vide ser­vice to the pop­u­la­tion. "It is es­sen­tial­ly what we call a beau­ty con­test that will be ini­ti­at­ed." Seecher­an, who said that TSTT and Dig­i­cel are al­ware that TATT is look­ing to at­tract a third op­er­a­tor, added that the the RFP will be an open to lo­cal, re­gion­al and in­ter­na­tion­al par­ties. As im­por­tant are the tech­ni­cal re­quire­ments and ser­vices from the best such com­pa­ny. "We'd want to en­sure that who­ev­er is com­ing in is com­ing in with a strong fi­nan­cial po­si­tion." Re­fer­ring to Laq­Tel, Seecher­an said, "We want to make sure we don't re­vis­it a sit­u­a­tion where we might have a very strong tech­ni­cal pro­pos­al, but not the means to car­ry it through.

Re­gion­al mo­bile ser­vices

Seecher­an said TATT feels it's in a good po­si­tion in terms of mo­bile ser­vices in this mar­ket, com­pared to T&T's re­gion­al neigh­bours.

Ja­maica, at one point, was look­ing at hav­ing two play­ers, but there was a con­sol­i­da­tion, with Dig­i­cel ac­quir­ing Claro Ja­maica in 2011.

Claro, which means bright or clear in both Por­tuguese and Span­ish, is the largest mo­bile phone net­work in the Amer­i­c­as. It is part of the Mex­i­can tele­com group Am&ea­cute;ri­ca M&oa­cute;vil, which is one of the four largest mo­bile phone net­work op­er­a­tors in the world, with more than 200 mil­lion cus­tomers. He said Ja­maica's dis­tri­b­u­tion of mar­ket is a bit dif­fer­ent in that it's heav­i­ly weight­ed to­wards one provider. Seecher­an steered clear of iden­ti­fy­ing that com­pa­ny, but the Ja­maica Ob­serv­er stat­ed last week that Dig­i­cel is that coun­try's lead­ing mo­bile provider. "Our mar­ket con­di­tions are a lit­tle bit dif­fer­ent than the Ja­maican mar­ket, where there is a dom­i­nant play­er and a mi­nor play­er. We have, if you like, co-dom­i­nance in Trinidad. They are at the same lev­el in terms of mar­ket share," Seecher­an said.

Baldeo, TATT's man­ag­er, pol­i­cy and re­search, in­ter­ject­ed to say, "In terms of 2010 fig­ures, in Ja­maica the mo­bile pen­e­tra­tion rate was around 113. That means that for every 100 in­hab­i­tants, there were 113 mo­bile sub­scrip­tions. "In Trinidad, as at 2010, we had a mo­bile pen­e­tra­tion of 143, which means that for every 100 in­hab­i­tants, there were 143 mo­bile sub­scrip­tions. So we do have a high­er lev­el of pen­e­tra­tion when it comes to mo­bile sub­scrip­tions.

Mo­bile rates

Seecher­an said that T&T was ranked sixth on the per minute price of a lo­cal call for on-net phones, that is, call­ing on the same net­work, on the In­ter­na­tion­al Telecom­mu­ni­ca­tion Union data­base. "Ac­cord­ing to this, we are sixth, where the least cost is Ja­maica at US$0.13 per minute. In Trinidad, it is US$0.20. "Off-net calls (calls made on an­oth­er net­work), we ranked sec­ond at about US$0.20. Guyana is US$0.18. Ja­maica was third. Their last fig­ure was US$0.34. "If you are call­ing from a fixed line on the mo­bile net­work, we are ranked fourth at US$0.20. "We feel more com­pe­ti­tion here would re­duce the prices," Seecher­an said. He said TATT has just de­vel­oped a cost mod­el known as Long Run Av­er­age In­cre­men­tal Costs (LRA­IC), which, he added, was the best mod­el to be adopt­ed to do cost analy­ses. "This will al­low us to look at the cost of pro­vi­sion­ing a ser­vice, vis-a-vis, the price that the ser­vice is be­ing of­fered at. We hope to use it to look at var­i­ous cost ex­er­cis­es in var­i­ous mar­kets, mean­ing the mo­bile mar­ket, the fixed mar­ket. "That is a tool we were asked to de­vel­op way back dur­ing in­ter­con­nec­tion dis­cus­sions and ne­go­ti­a­tions. "That gives us the op­por­tu­ni­ty to look dis­pas­sion­ate­ly, if you like, at costs pro­vi­sion­ing and be­ing in a po­si­tion to as­sess whether the prices charged are goug­ing or if it's a fair mark-up on costs for a provider to af­ford a rea­son­able re­turn on in­vest­ment," Seecher­an said.

Re­sponse from Lisa Agard ex­ec­u­tive head of mo­bile and le­gal ser­vices, at Telecom­mu­ni­ca­tion­sSer­vices of T&T

1. How does TSTT view the fact that a third mo­bile provider is ex­pect­ed to be­gin op­er­a­tions in the T&T mar­ket from the point of view of in­creased com­pe­ti­tion?

The no­tion of hav­ing a third mo­bile provider in the mar­ket­place is not a new one to TSTT, giv­en the his­to­ry of the on­set of com­pe­ti­tion back in 2005 when con­ces­sions were is­sued to three play­ers, one of whom as we all know nev­er start­ed its op­er­a­tions. TSTT had, in fact, con­clud­ed an in­ter­con­nec­tion agree­ment with this provider and had be­gun to gear up its op­er­a­tions to com­pete against two play­ers. At that time, there was still a lot of growth po­ten­tial in the mar­ket place, and while three play­ers for a pop­u­la­tion of 1.3 mil­lion peo­ple may have been a lot, there was a pos­si­bil­i­ty of one op­er­a­tor per­haps be­ing a niche play­er. Fast-for­ward five years af­ter mo­bile com­pe­ti­tion, the play­ing field is en­tire­ly dif­fer­ent. With mo­bile voice sub­scrip­tions at 1.7 mil­lion and pen­e­tra­tion by pop­u­la­tion at 134 per cent, the mo­bile voice mar­ket is sat­u­rat­ed. In oth­er words, for a new play­er to be sus­tain­able, they will have to take mar­ket share away from the ex­ist­ing providers. That is not a sim­ple task in a su­per com­pet­i­tive en­vi­ron­ment, with­out, per­haps, the pre­cip­i­ta­tion of a price war. While a mar­ket­ing price war will ben­e­fit con­sumers in the short-term, it may not nec­es­sar­i­ly bring medi­um-term and long-term ad­van­tages to the in­dus­try and the coun­try since op­er­a­tors will have to di­vert re­sources from in­vest­ment in ad­vanced in­fra­struc­ture, which ul­ti­mate­ly pol­i­cy­mak­ers should be en­cour­ag­ing. The in­ter­na­tion­al trend par­tic­u­lar­ly in North Amer­i­ca is to­ward con­sol­i­da­tion of mo­bile en­ti­ties, not the ag­gre­ga­tion of op­er­a­tors. Even in Ja­maica, with a pop­u­la­tion that is al­most twice the size of T&T, the ad­vent of a third op­er­a­tor was short­lived. To­day, there are on­ly two op­er­a­tors.

2. How does TSTT plan to treat with such com­pe­ti­tion in terms of prod­ucts and ser­vices?

In­no­va­tion has al­ways un­der­pinned our op­er­at­ing core, whether it is at the tech­nol­o­gy or prod­uct lev­el. We were the first and still the on­ly op­er­a­tor to have a 4G wire­less Wi Max Net­work and a Next Gen­er­a­tion Core Net­work. On the prod­uct/ser­vice side, TSTT was first to in­tro­duce the fol­low­ing:-

Black­ber­ry

Wire­less alarm mon­i­tor­ing

Pre­paid da­ta

Wire­less se­cu­ri­ty video ver­i­fi­ca­tion

Sam­sung Galaxy phones and tablets

iPhone

3. TATT's Cris Seecher­an said in an in­ter­view that there needs to be com­pe­ti­tion in terms of prices of prod­ucts/ser­vices and in­creased ser­vices, es­pe­cial­ly video-re­lat­ed. Does TSTT plan to step up its game in that area to match such ex­pect­ed evo­lu­tion?

A com­bi­na­tion of fac­tors should be con­sid­ered, not the least of which is, of course, cap­i­tal in­vest­ment. The mo­bile in­dus­try is con­stant­ly evolv­ing and, as such, re­quires in­tense cap­i­tal in­vest­ment. The glob­al de­mand and growth po­ten­tial for da­ta re­lat­ed ser­vices which sup­port video con­tent is ex­po­nen­tial. T&T is no ex­cep­tion in terms of de­mand for such ser­vices, un­doubt­ed­ly in­flu­enced and fu­elled by North Amer­i­can me­dia but, of course, at lev­els that are af­ford­able. While, for ob­vi­ous com­pet­i­tive rea­sons, we are not able to re­veal our prod­uct and ser­vice plans for the near fu­ture, rest as­sured we are acute­ly aware of the de­mand by our cus­tomers for such ser­vices. We will con­tin­ue our in­vest­ments to en­sure that an ad­vanced mo­bile net­work is de­ployed that will en­able our cus­tomers to have the same ex­pe­ri­ence as mo­bile cus­tomers in more de­vel­oped economies.

4. Is the T&T mar­ket big and strong and sus­tain­able enough to with­stand a third mo­bile play­er?

Ul­ti­mate­ly, that ques­tion is best di­rect­ed to pol­i­cy mak­ers and po­ten­tial new en­trants. Any new op­er­a­tor will have to as­sess the po­ten­tial of the mar­ket in terms of in­vest­ment re­quired and an­tic­i­pat­ed re­turn. As pre­vi­ous­ly in­di­cat­ed, the mo­bile busi­ness is very cap­i­tal in­ten­sive, and it will be a very chal­leng­ing en­vi­ron­ment for a third op­er­a­tor, giv­en the mar­ket sat­u­ra­tion.

Re­sponse from Pen­ny Gomez Dig­i­cel's com­mu­ni­ca­tions man­ag­er:

"Dig­i­cel is not averse to com­pe­ti­tion. We be­lieve that we will con­tin­ue to dif­fer­en­ti­ate our­selves from the mar­ket by de­liv­er­ing on our pil­lars of: best val­ue, ser­vice, net­work and in­no­va­tion. "How­ev­er, Dig­i­cel does ques­tion the vi­a­bil­i­ty of a third mo­bile op­er­a­tor in what is al­ready a com­pet­i­tive mar­ket­place. "It will mean di­vert­ing scarce fund­ing to dri­ving pro­mo­tions to at­tract cus­tomers, rather than in cap­i­tal in­vest­ment. This can lead to the coun­try be­ing de­railed off the fast track in in­no­va­tion in the con­text of glob­al telecom­mu­ni­ca­tions."