The Public Utilities Commission (PUC) made the ruling to help boost the final price government hopes to receive if it goes through with the privatisation of the telecommunications company, formerly BaTelCo.
Sounds fairly innocent. Why should BHC have to sell any of its circuits to a competitor?
However, this announcement is not as innocent as its appears. This decision is going to have far-reaching consequences for the Bahamasﾴ reputation as a country in which to do business. The Bahamas has already lost the confidence of the international telecommunications fraternity, many bankers, and business persons in general. Who can safely venture into a business enterprise in the future if government, with a flick of the pen, can change all the grounds rules on which the business and its earning expectations were based?
ﾓThe PUC,ﾔ said the announcement, ﾓis satisfied that the effect of this (that is selling its fixed line connections to a rival) would erode BTCﾴs international revenue to an unacceptable extent and would harm BTCﾴs ability to fund the provision of local service and meet its universal service obligations.ﾔ
Isnﾴt it strange to be thinking of this at this late date when government has already undermined BTCﾴs ﾓinternational revenue to an unacceptable extentﾔ with its announcement ﾗ through Minister Bradley Roberts ﾗ that it would spend $60 million on a Family Island undersea cable, and another $28 million on a cellular upgrade during a privatisation exercise.
The announcement was made despite government being warned of the consequences of its actions by one of the three consortiums bidding to be the strategic partner. It was made clear to the Ministry of Finance ﾗ the Prime Ministerﾴs ministry ﾗ that the proposed projects, as later announced by Mr Roberts, could have ﾓa significant adverse impact on the cash flow and leverage levels of BTC.ﾔ It was made very clear that the consequence of this decision would adversely affect what it would be able to pay for BTCﾴs equity. And so it has.
It was also made clear that all these costly plans could be done far more cheaply after privatisation. So much cheaper, in fact, that we urge the Opposition to investigate this claim and, if found to be true, demand that government give the public an accounting for the excessive expenditure.
What the PUCﾴs announcement has done is effectively made it almost impossible for DigiTel, subsidiary of Systems Resource Group (SRG), to go ahead with its plans to offer the public fixed-line services from January 1, 2004 as planned.
We draw two conclusions from this. It is our opinion that the PUC is no longer an independent body, but subject to government interference.
We have come to this conclusion because of the history of this licence.
Privatisation of BaTelCo, the telecommunications monopoly, was supposed to have been completed in 2000. It gave a privatised BaTelCo, no longer a corporation, but now the Bahamas Telecommunications Company, two years of unfettered space to build without competition. The exclusivity period ended on March 31, 2002 and December 31, 2003 for cellular and fixed-line services respectively.
In September 2001 the PUC moved to liberalise telecoms in the Bahamas by inviting applications for the licence that was awarded to SRG in February, 2002.
The governmentﾴs telecommunications policy was then amended in May 2002, cancelling all moratorium dates until further notice, because BTC had not met its privatisation deadline.
Was SRGﾴs licence now null and void? The PUC ruled that it was not. It held that SRG had gained its licence rights in February 2002 and that a change to telecoms sector policy should not affect these rights. It further stated that if a court challenge by a rival bidder to the awarding of SRGﾴs licence had not interrupted the process, SRGﾴs licence could have been executed before May 1, 2002.
In effect what the PUC is now saying is that having granted SRG ﾓlicence rightsﾔ, which when that licence was given out could only be utilised through BTCﾴs leased circuits, those rights can now be rendered useless by the withdrawal of the circuits. Remember BTC is a monopoly, which under its own licence is obligated to provide these circuits to whomever the PUC licenses. And the PUC licensed SRG.
The position now is that SRG (DigiTel) has a licence that has been made virtually ineffective.
In June the PUCﾴs view was that SRG had ﾓlicence rightsﾔ that could not be altered by a change of policy. A short three months later it has pulled the plug, changed the rules and left SRG dead in the water.
We would need a lot of proof to be convinced that this was a PUC decision.
ﾕ (Tomorrow we shall discuss our second conclusion on this matter).
Editorial, The Tribune
September 3rd, 2003
