Cable & Wireless Reaffirms Commitment to BVI
The question of rebalancing and the future viability of the company in the BVI came up for much discussion as Cable & Wireless General Manager Keith Lowe met with reporters here last week. Mr. Lowe provided an update on the latest round of negotiations between Cable & Wireless and the Organization of Eastern Caribbean States (OECS). He noted that agreement was reached on four key areas, the underlying principle being the establishment of working groups. “The first one was recognition that we could not go to a flash liberalization, but an agreement that we should move to full liberalization in the shortest possible time,” he stated. They agreed that the process would start on April 1st and last between 12 and 18 months.
The first phase would provide for competition in domestic mobile, Internet services, the provision of customer premises equipment and the licensing of VSAT services for selected call centre and data entry operations. There was no mention in the first phase of competition in the domestic fixed or international circuit. This leads to the second principle, that of rebalancing of pricing. Mr. Lowe said the reality is that revenues from international service and business customers cross subsidize the local network. “Therefore, when you move into a competitive marketplace, you run the risk of all the competition targeting the profitable high revenue sector of international business,” the BVI C&W G.M said. He explained that rebalancing would therefore be necessary as the ability to finance the building of the local infrastructure is negatively affected. The third principle agreed on was the importance of establishing a transparent regulatory environment and the fourth was ensuring that during this period of time, all the legal issues that will arise out of creating a different economic model for the provision of communications, is adequately addressed.
A follow up meeting was scheduled for Friday March 16th in Grenada. In the British Virgin Islands, where C&W employs 129 people, government announced in January that the mechanism was being put in place to begin negotiations with Cable & Wireless on liberalizing the local market. Mr. Lowe said his negotiating team would be prepared to go within about 30 days of the call. Speaking to the future of the British telecommunications giant in the BVI, the General Manager reaffirmed Cable and Wireless’ commitment to the territory, saying C&W has a lot of confidence in the islands. “Cable & Wireless has always said that we’re eager to play an active part right across the Caribbean.” He said the market of the BVI, with its financial services and tourism industries, fits into the company’s global strategy of focusing on data and Internet communications for businesses. “So, the BVI is a marketplace, along with the rest of the Caribbean, where we would like to participate,” he added, “but clearly, the environment has to be one where it is appropriate for us to do business.” Mr. Lowe is hopeful that the negotiations with the BVI government will lead to a workable solution when the license expires in 2007.
In the meantime, Cable & Wireless continues to upgrade its network to better serve its customers. These islands have become the first in the world to use a new switching technology called an ATM/IP backbone, up quite a notch from ADSL. This is an investment in excess of US$20M. He said this would allow the Caribbean to attract virtually any technology-based industry they want to the region. “And therefore, it is an incredible benefit for any of the Caribbean islands that remain connected to the Cable & Wireless infrastructure.” Reportedly, the company has built switches on every island. Now, as part of this investment, they’re moving to a hub system and across the Caribbean, there will only be two gateway switches, with one in the BVI. The Main Street building is being renovated to accommodate this facility, which should be ready in 18 months time. In addition, the BVI has been chosen to locate two additional regional projects - a network monitoring centre to monitor the entire network and ensuring that the service is being provided to and maintained on all islands.
The third project is a data centre, where all the information about the company is housed. There is however a downside. While more employment opportunities are becoming available, about seven operators will shortly be laid off. As part of the Leeward Islands area, BVI’s operator services will now be done in Anguilla. The Cable & Wireless General Manager said this is part of its cost cutting measures. “(Another) One of them is that I am currently reviewing the property that we have and we’re currently in the middle of developing our Palestina office and we will move our finance and human resources people out of Pasea,” Mr. Lowe revealed. He reported that overall revenue from telecommunications is declining. He said in order to remain a viable organization, C&W has to ensure that all costs are brought in line with revenue.
Cable & Wireless provides basic telephony in the BVI. During the last two years, the company has introduced pricing plans offering customers additional savings, there’s been an increase in Internet support hours, rates to business customers for high speed data connection have decreased, Internet rates have fallen and the company has reduced IDD rates by 27%. “And it is our intention to keep on driving those prices down,” he stated.
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