Thursday, 21th October 2010CCT Statement on TRC Investigation on Digicel
By CCT Statement on the TRC Investigation into Allegedly Anti-Competitive Behaviour of Digicel
The Telecommunications Regulatory Commission (TRC) has notified the public that it will be investigating Digicel for anti-competitive behaviour in pricing calls to Digicel destinations in the Caribbean. This investigation comes following a complaint filed by Caribbean Cellular Telephone Ltd (CCT) in July 2009.
Commenting on the TRC announcement, José Luis Fernández, General Manager of CCT, said "This investigation is critical to protecting BVI consumers. There is no question that Digicel and LIME are engaged in anti-competitive practices that are specifically designed to drive CCT out of business, eliminate the local competitor, then raise prices to BVI consumers."
The issue being investigated by the TRC revolves around the rates that Digicel charges its own customers for calls and roaming services to destinations in the Caribbean compared to the price Digicel charges CCT for such services in those countries.
Digicel, which, with Lime, enjoys a dominant position in the provision of such service, offers its customers rates that are vastly below the price charged by it and its affiliates to CCT. For example: As part of their end user plans, Digicel sells minutes as cheaply as 0.6 cents/min, while the price to CCT for terminating calls on their sister companies' networks in the Caribbean is 19 cents/min. on average, or 32 times as much (see below).
Digicel International Long Distance (Caribbean)
Price/Minute to Retail Customer $0.006*
Price/Minute to CCT $0.19
* Caribbean Weekly Plan, 2,100 minutes for $14 per week (0.6 cent per minute)
These below-costs prices are only possible if Digicel has entered into agreements with its sister operating companies in the Caribbean to be charged little or nothing for these services, while enabling it to charge high rates to non-affiliated companies like CCT to "make good" on the lost revenue.
Mr. Fernandez continued "These practices are clearly illegal under BVI law. But more important, these low prices will not last. They are strictly designed to drive CCT out of business. Once that is accomplished and there is no more native competitor, consumers can be sure that prices will skyrocket and service will diminish."
CCT points out that the issues being raised in this investigation are not simply theoretical. Since the launching of these unfair and illegal plans more than 15 months ago, CCT has lost a significant part of its prepaid client base. CCT has requested the TRC to require both LIME and Digicel to charge CCT, as a maximum, rates equivalent to the ones being applied to their end customers.
In concluding comments, Mr. Fernández said: "CCT was born in the BVI, has always served the BVI, and plans to continue competing in the BVI. But that can only happen if competition is fair and operates on a level playing field. Our demand to the TRC is to immediately take all necessary and timely steps to ensure that fair competition will take place."