Cable & Wireless Is Told To Raise Rates Again
ICTA Managing Director
Dave Archbold
Thursday, June 24, 2004
Following a recent review, the Information & Communications Technology
Authority (ICTA) issued a press release on Tuesday that Cable & Wireless must
raise the rates for its postpaid mobile services because they are below cost.
The ICTA made a similar ruling in April for the same reason, but Digicel
requested a reconsideration of the Authority’s decisions on the grounds that the
increases that Cable & Wireless was required to make were not sufficient to
prevent anti-competitive pricing.
After hearing submissions from all interested parties, the ICTA ruled that
there were sufficient grounds to carry out a further review, known as an
imputation test, which it recently completed.
According to the ICTA, the majority of the rate increases required were due
to the additional and revised cost information provided by Cable & Wireless. It
said the company had acknowledged that, due to an error on its part, it had
significantly understated some of the costs that it provided to the Authority,
which were used in an earlier decision.
The Authority has required Cable & Wireless to increase its post-paid mobile
service rates by only 60 percent of the amount by which they failed the current
imputation test because it said it wanted to balance the need for immediate
corrective action with the possibility that minimum rates might be reduced as a
result of future imputation tests.
In its press release, the ICTA indicated its decision was for the good of the
competitiveness of the telecom market. “The Authority believes that, as has been
found in other countries all over the world, the development of a strong
competitive market is the best way to ensure that consumers receive the benefits
of liberalisation, including the latest in technology, a choice of providers and
competitive rates,” the press release said.
“The Authority is concerned that Cable & Wireless’ current rates, if left in
place, could seriously harm or significantly delay the development of a strong,
competitive mobile services market in the Cayman Islands.”
The ICTA also criticised Cable & Wireless in the press release for the speed
in which it provided information. “The Authority received, after all formal
proceedings were closed, a submission from Cable & Wireless to the effect that
certain cost estimates were overstated and certain revenue sources were
excluded. If this information had been submitted much earlier in the process,
this would have allowed the Authority to take the information fully into account
in their current decision.”
On another issue, the ICTA found that Cable & Wireless had not provided
“clear and timely information” to all of its post-paid mobile subscribers
regarding many aspects of their plans. The Authority said therefore it had
directed Cable & Wireless to fully inform all of its post-paid mobile
subscribers of these matters.
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