Fixed line customers win, thanks to introduction of new regulatory regime
The Eastern Caribbean Telecommunications Authority today announced that OECS Ministers for Telecommunications and Cable & Wireless reached an agreement on a new Price Regulation Regime. Under the terms of this agreement, Cable & Wireless fixed line customers in the ECTEL Member States could pay as much as 22% less for their fixed-to-fixed local calls from 1 December 2004, with a further 20% reduction for fixed-to-fixed local calls coming in December 2005.
The agreement was formally signed at a ceremony held at the Grand Beach Resort in Grenada on Friday 30th July, 2004 and covers a four-year period for the Member States of the Commonwealth of Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines.
Local calls on the fixed network will decrease from 9 cents (peak period), 8 (off-peak period) and 6 cents (weekends) to 7 cents, 5 cents, and 5 cents respectively on 1 December 2004. Off-peak and Weekend rates will further decrease to 4 cents and 4 cents respectively on 1 December 2005.
The Price Cap Plan must now be approved by the National Telecommunications Regulatory Commission (NTRC) in each ECTEL Member State. However, all sides are confident that once implemented, the new regulatory pricing mechanism will result in benefits to consumers of fixed line services throughout the ECTEL Member States.
ECTEL led the negotiations on behalf of its Member States and was advised by a consortium of international consultants with funding from the World Bank. Mr Eliud T. Williams, Managing Director of ECTEL stated that this new regulatory regime represents a significant step forward in the complete liberalization of the Telecommunications sector in the OECS. He believes that customers can look forward to further improvements in service quality and reductions in prices in the years ahead.
Hon Reginald Austrie, Chairman of Council of Ministers of ECTEL believes that “properly and competitively priced telecommunications services through efficiently managed networks provides us with the best chance for transforming our societies through the level of economic growth that would provide our people with job
opportunities that fully utlize their knowledge and skills. It is against this background that I welcome the price cap regime.”
The agreement also makes provision for additional benefits to consumers – average reductions of 10 cents per minute for fixed-to-mobile calls by 1 December 2005. Both residential and business consumers will benefit from these changes.
There is yet more value offer ed to residential customers – residential fixed customers will get 60 FREE minutes of local fixed-to-fixed calls in the evenings and on weekends with effect from 1 December 2004. This means that as much as 25 percent of existing users will have no payments to make for their evening and weekend locals calls and this percentage could increase as the volume of free local call goes up from 60 to 80 in December 2005.
Once approved by the National Telecommunications Regulatory Commission in each country, the Agreement will commit C&W to the specific rate reductions outlined above, effective from 1 December 2004, over a two-year period. The agreement also imposes a “price cap” regime of regulation on C&W. This regime will require C&W to realize efficiency gains in each year and to pass on some of these gains to its customers in the form of lower rates.
A price cap regime is a method of regulating the rates charged by a utility company to its customers. Under this price cap plan, maximum rates, or “caps”, are placed on telecommunications services, and the company is not permitted to raise its rates above those levels. The company is also expected to make efficiency gains in each year which are then passed on to customers in the form of rate reductions.
Executive Vice President of Cable & Wireless in the Eastern Caribbean, Paul Aspin, says that “C&W is particularly excited to deliver a new innovative fixed line solution for our residential customers with the introduction of 60 free evening and weekend minutes. That’s a call to your loved one every day, on Cable & Wireless, free of charge.” He further stated that “this agreement ushers in a new era of closer cooperation with the Governments and the implementation of a regulatory regime that is consistent with international standards.”
The Agreement also makes provision to harmonize rates across the ECTEL Member States with divergences for some services, such as local calls, limited to 35%.
