[dominicanewsonline] Statement by Hon. R. V. Austrie, Minister for Housing, Lands and Telecommunications
Prior to telecommunications liberalization in Dominica, there were low levels of mobile penetration with a mere 9.89 percent. Following liberalization the mobile sector registered phenomenal growth. Also, in 2000, Cable & Wireless (now LIME), offered few telecommunications products and services. Remote areas were poorly served in addition to high rates for international access. Indeed, some might say the situation that existed in 2000 provided the right mix for the successful introduction of competition in telecommunication services. It was also a period when many international organizations were advancing the view that monopolies promoted inefficiencies and maintained high prices.
It will be remembered that the Government of Dominica, along with four other OECS member states, took the view that the time was right to promote open entry and market liberalization and thereby ensure that the widest possible access to telecommunications at affordable rates. A major policy objective of market liberalization was therefore affordable prices. And, this it was agreed could best be achieved through competition in services.
Regionally, the telecommunications sector continued to experience significant growth with rapid progress in policy and technological developments which gave rise to a range of new services and features. In keeping with global trends the mobile market experienced phenomenal growth while there was some decline in the fixed line services. Fixed line services stood at 28.03 percent in March 2006 and 25 per cent in March 2008.
Throughout the liberalization process, there was always a concern that there would be a drop in employment levels as the Incumbent reorganized in preparation for competition. At the time many did not foresee the other direct and indirect employment opportunities that would be created through competition. In fact, there continues to be growth in employment though at an average of approximately 2.0 percent increase per annum.
In 2005/06, Digicel which had not operated in Dominica, acquired the assets of Cingular Wireless and began operations here. Immediately, one witnessed heightened marketing and promotional activities by all three mobile service providers. Calls to the United States reached an all time low of EC$0.49 (cents) per minute though the regular fixed line rate remained at $1.65. Yet this rate of $1.65 reflects a 50 percent reduction of the applicable rate prior to liberalization. Fixed line calls to other OECS countries were fixed at 50 cents per minute.
As indicated earlier, mobile traffic continues to dominate with the total number of subscribers exceeding 70,000 at March 2007 representing a 100 percent penetration rate. Ninety-five percent of subscribers hold prepaid mobile phones. The rate for mobile-to-mobile calls on the same network remains high at approximately 60 cents with calls between networks at 69 cents to 85 cents per minute. These rates are relatively high by international standards and provided the basis for detailed work on a Long Run Incremental Cost (LRIC) model. This assignment now puts the Council of Ministers of ECTEL in a position to approve reductions in interconnection charges which will be implemented within the next few weeks. These proposed reductions had been delayed as the required call termination cost models had to be developed and the appropriate consultation process undertaken.
A new set of Interconnection Regulations have therefore been completed and these deal with interconnection services so that the rates for such services will now be cost based. These costs were modeled on the costs of an efficient provider using suitable technologies.
In the last two years, we also witnessed the introduction of an alternative submarine cable system which was landed in Dominica. You will also recall that even before the new entrant commenced operations, there had been a steady reduction in ADSL broadband rates to $99 per month for download speeds in excess of 256 kbps. We anticipate these rates will continue to fall and or higher speeds will be offered thereby enhancing access to broadband Internet. It is significant to note that Internet subscribers continue to express a preference for broadband access compared to 40 percent who enjoyed that facility four years ago.
For some time the Government has been exploring growth in ICTs but the high cost of leased lines or Direct Internet Access has been a constraining factor. However as these rates fall due to competition and more affordable access to broadband services throughout the Island, it is anticipated that the environment for investments in businesses where Information and Communication Technologies play an important part can be realized.
This is an important element in the drive towards supporting young entrepreneurs to launch small businesses and or merge with similar sized businesses to benefit from economies of scale and scope. Thus a further reduction of 50 percent on current market rates would help drive that process of increased investment forward particularly in areas such as Tourism marketing.
Statement by Minister of Telecommunications Reginald Austrie: Liberalisation of telecoms - the recent experience