What are the implications of the Fair Trading Commission’s conditional approval of the LIME and Flow merger?
The Fair Trading Commission has made its decision on the merger of Cable & Wireless Communications PLC (CWC) and Columbus International Inc., approving the application subject to 14 conditions.
The Barbados ICT Professionals’ Association is the foremost professional membership organisation for individuals and corporations. Our primary focus is the expansion and development of information and communications technology opportunities in Barbados and the Caribbean, and we welcome the opportunity to comment on this outcome.
Following an invitation to participate in the commission’s enquiry on the proposed merger in accordance with its mandate to investigate any acquisition that is greater than 40 per cent of the market share under the Fair Competition Act CAP 326C, the association submitted its official response in December last year.
We felt it was important to have a win-win outcome, where the merger could proceed while allowing for the competitive status quo to be maintained. Our recommendations in this context were: at a minimum, fixed broadband must be a regulated service as is fixed voice today, in order to protect the consumer from price gouging and poor service; likewise net neutrality must be implemented pre-merger to ensure competition from other services and/or alternative products are not negatively impacted, for example over-the-top (Netflix, etc.), voice over Internet protocol (Skype, etc.) and whatever future services may come about.
In addition local number portability (fixed and mobile) must be implemented pre-merger to allow the consumer free movement between operators without barriers to switching; virtual unbundled local access for fiber access and local loop unbundling for cooper access should be implemented pre-merger to enable an open access, service-based competitive environment; infrastructure sharing (co-location and facilities access) reference offers should be implemented by CWC and Columbus pre-merger.
We also recommended that the merged entity must maintain local staff to manage key technological and operational functions. This would mitigate against the risk of super-normal profits being expatriated by the merged entity at the same time as extra-regional outsourcing of functions reduces the value to the local economy of the operation; and the commission should insist that CWC and Columbus disclose their intended efficiencies, so that it can weigh the benefit of those efficiencies against the adverse competitive and economic effects noted previously.
Finally, we suggested that the consumer service level key performance indicators for fixed voice should be reviewed and aligned to further protect the consumer in the monopolistic market. The same should apply to fixed broadband when it becomes a regulated service.
While the association is still to conduct a full analysis of the commission’s decision and its conditions, we are pleased that at first glance some of our recommendations were in fact adopted. This included the commission’s stipulation that “the merged entity must maintain net neutrality thus facilitating the use of over-the-top services”, and that “the merged entity, in accordance with its commitments, must be technically ready for local number portability in the fixed network by September 30, 2015 and mobile number portability in the mobile network by November 30, 2015”.
It is also noteworthy that in an effort to ensure the market remains competitive, the commission is mandating the sale of fibre infrastructure “in the zones where there exists total overlap
of the LIME and Flow networks”. These and other steps will be necessary to make certain that the playing field is as level as possible for competing businesses, companies that rely on services offered by CWC and Columbus, and individual consumers.
