Sunday, 24 June 2012

Capitalism on Parade: Digicel, LIME, Government, Consumers and Competition

By Mario Raphael Boothe

The recent events surrounding the Telecom sector involving the two remaining giants on the Island has brought flash the spotlight on the arguments concerning ‘Competition and its Benefits’ and ‘Governments involvement in the Private Sector”.

I’m sorry – not really – that I have to rain on ‘Big Business’ and Jamaica’s fledging capitalist population parade, but when the entire episode started I had a funny feeling that the Claro clowns would be bouncing around in the streets of New Kingston along with the fan fare associated with the respected camps of Digicel and LIME then it hit that Claro no longer operates within the confines of Jamaica – good times, competitive times.

The Circus came to town after The Office of Utilities Regulation (Governments regulatory right arm), on the command of Government, confirmed that the interim mobile termination rate will be five dollars per minute for incoming domestic and international telephone calls. This follows the amendments to the Telecommunications Act passed in Parliament earlier this year. Digicel - ever bashful on regulations – had some concerns with the OUR setting rates and stated that they had “grave concerns with the overarching powers which the Government is seeking to grant the OUR”. This comes after the ruckus with the Tax Administration.

LIME - been the true ringmaster - of the Jamaican telecom sector and along with the Minister Paulwell - patting himself on the back for job well done – were jumping in absolute Joy to the news of the OUR, this meant controlled competition and maybe a closer race, LIME reduced call charges on its network from $8 to $2.99 cents per minutes for prepaid, with post-paid ones being charged $1.99. A call from LIME to its competitor was 6.99, cheaper than the $8.99 Digicel charged for calls on its own network; LIME wasted no time in challenging its Competitor to drop its own rate for the good of the Jamaican consumer. LIME – playing the clown with egg on his face – trying to fight a lost battle.

Digicel refused to take on the challenge and walk the tight rope of balanced business, having to lower rates and still make a profit. After going behind closed doors and huddling its most paid executives and smartest financial gurus, Digicel took the path that many American Giant Corporations took before it, fight the Regulation instead of complying; shamelessly challenging the OUR in court for setting artificially low prices that wouldn’t have helped consumers in any way as the price would have been transferred elsewhere, after the companies begin losing too much to take on the cost. Digicel playing the sad clown

This was none more so true in Digicel’s, reply to LIME’s low rate after challenging the OUR , – let’s not be the bad guy, just look as the bad guy – with a dramatic cut to 2.89 with lesser benefits we all loved, including

Digicel's will now bill customers on a per minute basis bill customers on a per minute basis, which means The same call on the Digicel network will cost 5 dollars 78 cents, a full 29 cents more.
Digicel reduced the number of minutes customers get free. Customers would normally get 25 minutes free after the first 5 minutes on a call, but that has now been cut to just 10 minutes.
Those who would normally depend on free nights to talk after topping up with 200 dollars each day will find that the benefit has been reduced to one hour free at nights.
While has remained unchanged, continuing:

Billing on a per second basis; which for example will make a 1 and a half minute call on LIME's network cost 4 dollars 49 cents.
LIME customers talk after the first three minutes on the call gets 27 minutes free.
LIME customers are, after topping up with 100 dollars; talk free after 9pm until 

We will be expecting these to change in the near as the losses begin to rack up even more than the normal levels for LIME, in March LIME loss Ja. $20 billion.
The Jamaican population may not understand, Artificial Price setting, Price ceiling or capping, setting Maximum and Minimum Prices but what they should know is that due to lack of real competition within the market Digicel the highest supplier will soon shrink into non-existence after failed attempts to push around its expenses trying balance out its books and eventually leave the – Circus – market for good as a result of inability to supply the growing market and maintain low profits then we are back to the ‘Ringmaster” and a Circus with only a “Ringmaster” is Mono-tonous.

To end on a sarcastically unhappy note, what else does the Telecoms Act has under its- Big Tent of Contention- that might actually be helpful to competitions.

The Telecoms Act, gives power to the OUR and the Spectrum Management Authority ability to impose sanctions for breaches of the act. Technology Minister Phillip Paulwell said the agencies will be empowered to demand certain information from telecoms licensees. 

The legislation will now require mobile companies to share cell towers instead of the current practice of each having their own. Paulwell said this is aimed at bringing order to the system. 

The amendments could also see mobile phone users having the ability to switch networks while retaining their telephone number. 

Sunday, 3 June 2012

The Party that cried "Poor”: Jamaican Politics in Poverty

As the fable goes the shepherd-boy, who watched a flock of sheep near a village, brought out the villagers three or four times by crying out, "Wolf! Wolf!" and when his neighbors came to help him, he laughed at them for their pains.  The Wolf, however, did truly come at last. The Shepherd-boy, now really alarmed, shouted in an agony of terror: "I Pray do come and help me; the Wolf is killing the sheep"; but no one paid any heed to his cries, nor rendered any assistance. The Wolf, having no cause of fear, at his leisure destroyed the whole flock.

The Opposition’s response to Peter Phillips Budget presentation seems to be taking on very similar characteristics to the story mentioned above the fairytale classic “The Boy Who Cried Wolf”. The Audley-Andrew team up seemed perfectly in synch and coordinated as they successfully attacked the Government on their Tax Proposal, “This Budget is not bitter medicine. It is poison." assured Holness; “what has been presented is not stimulus but potential toxic shocks to remaining sectors of the economy” voiced Shaw (Poison – Toxic, hmmm).

The perfect cohesion between the Rhetoric got my nose working and my mind soon to follow; I smelt betrayal in the air and I knew that this was not “Poor People Passion” (demonstrated wholesomely by Portia). Over the period of the Last Election cycle to now, we can definitely make the conclusion that the Peoples National Party led by Mama P most certainly said the word “Poor” and made mention to Poverty in Jamaica more times than their (Big Man Capitalist Counterparts) the Jamaica Labour Party. This is not a singular occurrence as the PNP as retained the ‘Poor People Party’ image since its socialist days under Manley.

In his Post Budget press conference on Friday, Andrew Holness was ‘animated’ (as one media house described it) with passion against the Tax on Basic Food Items, Books and Electricity. His words came forth but had nothing behind, they lacked substance, he ranted against distractions such as the CCJ, CARICOM and removal of the monarchy making absolutely sure that debt and poverty reduction should be atop of the government priorities. The intent of this Political strategy is clearly to get the one up on Portia while been a constructive opposition, but also ensuring that we remember her election promises and now see them fizzle as “barefaced deception”.

While I welcome such political fodder as it does have a place in a democracy, the inability of the JLP to look towards the future and provide us with an alternative budget (as practiced in many countries) showing us that they would do things differently instead of just saying “We would have done it different”, while refusing to present any alternative (tweaking the existing, is not an alternative), is the reason for my “crying wolf” conclusion. Pointing out the PNP and Portia’s failures doesn’t fix Jamaica’s.

The instantaneity of Jamaica Labour Party, to ride on the “Fear and Sensationalist” reaction to the budget by the Jamaican people, speaks volume about the evolution of politics (or lack of) in Jamaica. Even when they bash the Government on playing politics with the emotions of the people (referring to the Bitter Medicine/poison), they themselves get caught pulling the cats tail; to be fair, neither side can plead not guilty on the charge of political deception.  

Andrew Holness and his Labourite counterparts might actually be concerned about the “Poor”, and how the poor will be affected due to the tax package (giving the benefit of the doubt) but we can see that his Actions doesn’t match his rhetoric. Politics is meant to be a ‘rat race’ but not in the literal sense of the word “rat”.

There is no believing a liar, even when he speaks the truth.