Bevil Wood­ing

The Ca­ble and Wire­less Com­mu­ni­ca­tions (CWC) an­nounce­ment its plan to ac­quire Colum­bus In­ter­na­tion­al (Colum­bus) sig­naled a ma­jor turn­ing point for the Caribbean telecom­mu­ni­ca­tions sec­tor. The es­ti­mat­ed at US$3 bil­lion CWC deal is the largest of sev­er­al re­cent ac­qui­si­tions and part of a wider trend of mar­ket con­sol­i­da­tion tak­ing place in the re­gion's telecom­mu­ni­ca­tions sec­tor.

These de­vel­op­ments are con­sis­tent with trends in the glob­al telecom­mu­ni­ca­tions in­dus­try. Con­ver­gence of fixed and mo­bile net­works, in­creas­ing con­tent con­sump­tion, and In­ter­net traf­fic growth are dri­ving re­quire­ments for high­er band­width, more ro­bust net­works and greater flex­i­bil­i­ty in con­tent de­liv­ery.

The ap­petite for da­ta takes many forms; from stream­ing movie, TV and video ser­vices like Net­flix, Hu­lu and YouTube; video con­fer­enc­ing tools like Go­ToMeet­ing and Skype; on­line ra­dio ser­vices like Pan­do­ra, TuneIn, and iTunes Ra­dio; da­ta back­up and file shar­ing ser­vices like Drop­Box and GoogleDrive; to in­stant mes­sag­ing, voice over IP, mo­bile apps, pho­to shar­ing and a slew of oth­er ap­pli­ca­tions that trans­late elec­tron­ic da­ta in­to mean­ing­ful con­sumer val­ue.

The new nor­mal

In re­sponse, tele­coms op­er­a­tors around the world and those in the Caribbean must seek ways to in­crease ca­pac­i­ty by build­ing and ac­quir­ing ter­res­tri­al and sub­ma­rine net­works and con­tent de­liv­ery chan­nels to cope with and cap­i­talise on rapid­ly grow­ing con­sumer de­mand for dig­i­tal con­tent.

There is, how­ev­er, a ma­jor point of dis­tinc­tion be­tween what is tak­ing place in de­vel­oped mar­kets like Eu­rope and the US, and what is be­ing ex­pe­ri­enced in the Caribbean. In the Caribbean multi­na­tion­al telecom­mu­ni­ca­tions play­ers are able to make and ex­e­cute their in­vest­ment and con­ver­gence strate­gies large­ly be­yond the scruti­ny of na­tion­al com­pe­ti­tion laws and poli­cies.

The CWC/Colum­bus deal is a case in point. The deal was ne­go­ti­at­ed in the UK and US and the first time most reg­u­la­tors in the Caribbean heard of it was when it was an­nounced on the Lon­don Stock Ex­change. CWC and Colum­bus have since been giv­ing na­tion­al gov­ern­ments and reg­u­la­tors in­for­ma­tion on a bi­lat­er­al, piece­meal ba­sis. This ap­proach min­imis­es the op­por­tu­ni­ty for col­lec­tive analy­sis of the ac­qui­si­tion and its im­pli­ca­tions.

Mean­while, Dig­i­cel, the re­gion's largest mo­bile provider and CWCs most sig­nif­i­cant com­peti­tor, has been mak­ing loud calls for the pro­posed trans­ac­tion to be "con­sid­ered in the con­text of a trans­par­ent and fair process spon­sored by the rel­e­vant agen­cies with re­spon­si­bil­i­ty for these mat­ters." Yet Dig­i­cel's own re­cent ac­qui­si­tions and its larg­er re­gion­al in­vest­ments have been any­thing but trans­par­ent.

Re­gion­al chal­lenge, re­gion­al re­sponse

Against this back­drop, the Caribbean Telecom­mu­ni­ca­tions Union (CTU) has called for a spe­cial meet­ing of reg­u­la­tors, econ­o­mists and in­dus­try ex­perts to ad­dress the re­gion-wide con­cern re­gard­ing the pro­posed ac­qui­si­tion specif­i­cal­ly, the state of the Caribbean telecom­mu­ni­ca­tions sec­tor gen­er­al­ly, and the wider im­pli­ca­tions for re­gion­al de­vel­op­ment.

The CTU is an in­ter-gov­ern­men­tal treaty or­gan­i­sa­tion re­spon­si­ble for de­vel­op­ing pol­i­cy and rec­om­mend­ing ap­proach­es to telecom­mu­ni­ca­tions and In­for­ma­tion and Com­mu­ni­ca­tion Tech­nol­o­gy (ICT) for the re­gion. The or­gan­i­sa­tion plays a key role in ad­vis­ing Caribbean gov­ern­ments and reg­u­la­tors and help­ing them un­der­stand the con­stant­ly evolv­ing land­scape.

Ac­cord­ing to CTU Sec­re­tary Gen­er­al, Bernadette Lewis, the meet­ing sched­uled for De­cem­ber 10 to 11 in Port-of-Spain is in­tend­ed to "forge re­gion-wide con­sen­sus around the reg­u­la­to­ry is­sues aris­ing from the pro­posed (CWC) deal and ad­vise Caribbean Com­mu­ni­ty (Cari­com) heads of gov­ern­ment on spe­cif­ic mea­sures that can be tak­en to mit­i­gate against the on­go­ing neg­a­tive ef­fects of con­sol­i­da­tion in the re­gion's tele­com sec­tor and to en­sure that the Caribbean's con­sumers are pro­tect­ed."

In a cir­cu­lar to its mem­bers, the CTU said that re­cent de­vel­op­ments must be "con­sid­ered in the con­text of the gains pre­vi­ous­ly achieved in the lib­er­al­iza­tion of the telecom­mu­ni­ca­tions sec­tor in the Caribbean, par­tic­u­lar­ly as it re­lates to re­gion­al and in­ter­na­tion­al con­nec­tiv­i­ty and broad­band ser­vices."

CTU's ac­tions go be­yond the pro­posed CWC ac­qui­si­tion of Colum­bus, and be­yond Dig­i­cel's ap­peals. The CTU's en­try at this junc­ture is a sig­nif­i­cant re­sponse to a re­gion-wide con­cern on the state of the Caribbean telecom­mu­ni­ca­tions sec­tor gen­er­al­ly, and sig­nal of the ur­gent re­quire­ment to de­fine a strong, co­her­ent re­gion­al po­si­tion.

Sim­ply put, on­ly a mul­ti­lat­er­al ap­proach will be ef­fec­tive in en­gag­ing multi­na­tion­al play­ers. The wider re­gion­al so­cio-eco­nom­ic im­pli­ca­tions of is­sues rang­ing from ser­vice, pric­ing, em­ploy­ment im­pact, in­fra­struc­ture in­vest­ment and da­ta se­cu­ri­ty to na­tion­al com­pet­i­tive­ness and in­vest­ment at­trac­tive­ness can be eas­i­ly ob­scured if dis­cus­sions and re­spons­es are too nar­row­ly de­fined by na­tion­al in­ter­ests, ex­ist­ing pol­i­cy, or out­mod­ed leg­is­la­tion.

The CTU's in­ter­ven­tion is re­ceiv­ing strong sup­port from the Or­gan­i­sa­tion of East­ern Caribbean States (OECS), a nine mem­ber group­ing com­pris­ing An­tigua and Bar­bu­da, Com­mon­wealth of Do­mini­ca, Grena­da, Montser­rat, St Kitts and Nevis, St Lu­cia and St Vin­cent and the Grenadines, An­guil­la and the British Vir­gin Is­lands.

Ac­cord­ing to Di­rec­tor Gen­er­al of the OECS, Dr Di­da­cus Jules: "There is an in­her­ent dan­ger in gov­ern­ments and na­tion­al reg­u­la­tors on­ly en­ter­tain­ing bi­lat­er­al talks with CWC and Colum­bus ex­ec­u­tives. The pri­or­i­ty of in­di­vid­ual gov­ern­ments to pro­tect lo­cal na­tion­al in­ter­ests must be bal­anced against the need to si­mul­ta­ne­ous­ly safe­guard re­gion­al in­ter­ests."

The East­ern Caribbean Telecom­mu­ni­ca­tions Au­thor­i­ty (ECTEL), the agency re­spon­si­ble for reg­u­la­tion of the sub-re­gion's tele­com sec­tor, is tak­ing steps in the right di­rec­tion. It has act­ed as a voice for the sub-re­gion, cau­tion­ing that con­sol­i­da­tion in the sec­tor could po­ten­tial­ly re­sult in a neg­a­tive im­pact on com­pe­ti­tion, and re­duce choice by con­sumers of both ser­vices and ser­vice providers.

It re­mains to be seen if the CTU will be as suc­cess­ful in gal­vanis­ing the wider Cari­com group­ing in­to a com­mon po­si­tion. How­ev­er, if all the CTU achieves is sen­si­tis­ing gov­ern­ments and reg­u­la­tors and high­light­ing pri­or­i­ty ar­eas for con­sid­er­a­tion, it will be worth­while.

Op­por­tu­ni­ty to evolve

In the midst of the mar­ket con­sol­i­da­tion and reg­u­la­to­ry de­fi­cien­cies it has ex­posed, there is a re­al op­por­tu­ni­ty for the re­gion to evolve. In the evo­lu­tion, the re­gion's stake­hold­ers must be the pri­ma­ry ar­chi­tects.

The need for com­pre­hen­sive Caribbean de­bate on this sub­ject is just one el­e­ment of the so­lu­tion.

The sec­ond key is to de­fine and ex­e­cute a more co­her­ent de­vel­op­ment agen­da for the sec­tor that is bet­ter aligned to the re­gion's vi­sion for its fu­ture. This es­pe­cial­ly im­por­tant giv­en the fact that share­hold­ing in the ma­jor telecom­mu­ni­ca­tions providers in the re­gion is still large­ly con­trolled by in­di­vid­u­als and en­ti­ties ex­ter­nal to the re­gion.

It is rea­son­able to ex­pect that the multi­na­tion­al com­pa­nies share­hold­ers' pri­ma­ry fo­cus is on max­imis­ing re­turns on their in­vest­ments. They have no par­tic­u­lar com­pul­sion to eval­u­ate or ad­dress re­gion­al con­cerns from the per­spec­tive of Caribbean stake­hold­ers who will be di­rect­ly im­pact­ed. The re­spon­si­bil­i­ty falls to Caribbean gov­ern­ments, reg­u­la­tors and oth­er stake­hold­ers to make their voic­es heard, and to take in­formed ac­tion.

Caribbean gov­ern­ments and reg­u­la­tors must there­fore act in con­cert to meet the chal­lenge of multi­na­tion­al-led mar­ket con­ver­gence. This is the best way to lim­it the dam­age it can oth­er­wise im­pose up­on re­gion­al economies and, at the same time, chart a course for a more con­nect­ed Caribbean

Bevil Wood­ing is an in­ter­net strate­gist with Pack­et Clear­ing House (www.pch.net) an in­ter­na­tion­al non-prof­it or­gan­i­sa­tion re­spon­si­ble for pro­vid­ing op­er­a­tional sup­port and se­cu­ri­ty to crit­i­cal In­ter­net in­fra­struc­ture, in­clud­ing In­ter­net ex­change points and the core of the do­main name sys­tem. Fol­low on Twit­ter: @bevil­wood­ing