Third mobile operator study eyes November

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Some 45 percent of Bahamians believe Aliv’s mobile market entry has reduced prices, sector regulators have revealed, as they prepare to complete their study on the feasibility of a third operator by November 2022.

The Utilities Regulation and Competition Authority (URCA), unveiling the final report and determination on its mobile phone market review, pledged to keep “a close watch” on the sector and how competition evolves despite the acknowledged benefits caused by the smashing of the Bahamas Telecommunications Company’s (BTC) monopoly in November 2016.

Referring to the results of a consumer survey conducted on its behalf by Public Domain, URCA said: “The persons surveyed said Aliv’s market entry has resulted in lower pricing and greater data allowance (45 percent/43 percent) and greater call and SMS allowance within bundles (23 percent).

“Although URCA has come to the conclusion that competition in the market has developed to a point where certain ex-ante measures applicable to BTC’s retail mobile activities are no longer appropriate (see article on Page 3B), its concerns for potential lessening of competition in the market in future remains. It is critical, therefore, for URCA to keep a close watch on the progress and developments in the market.

“Relating to the issue of a third mobile licence, URCA advises that it is moving ahead with the feasibility assessment as it is required to do by virtue of the Communications Act and other relevant documents. The expected completion date for the study is end of November 2022. This timeline, however, is contingent on the operators’ timely and expeditious submission of critical information to URCA.”

Both Aliv and BTC have voiced doubts on whether The Bahamas is a sufficiently large enough consumer market to support a third operator, although many will see their position as laced with self-interest. URCA, meanwhile, agreed that the roll-out of 5G (fifth generation) technology and networks could stimulate further competition moving forward.

“Clearly, fifth generation (5G) mobile technology offers tremendous opportunities for mobile operators to exploit any comparative advantage gained by introducing new technologies,” URCA acknowledged. “5G build out to The Bahamas is likely to impact current and future competitive dynamics in this market, thereby ensuring that the market is not mature or stagnant in the coming years.

“This is especially if one of the existing players manages to gain a substantial lead in the provision of 5G network and services such that it could ‘tip’ competition in its favour. It was not apparent to URCA, however, that one player is likely to gain a substantial lead over its rival in 5G and hence alleviate concerns for potential lessening of competition in this market, thereby alleviating concerns for potential co-ordination in the future.”`

Suggesting that the Bahamian mobile market is leaning towards convergence, or co-ordination, between its two major players, URCA added: “Co-ordinated behaviours are prevalent in cellular mobile markets internationally, especially where the major players have converging market characteristics as is currently the case in The Bahamas.

“From URCA’s perspective, these factors point to a mobile market that may be tending towards a steady phase. As such, it is too early to say whether 5G will yield durable and efficient competition between BTC and Aliv.”

Elsewhere, URCA objected to Aliv’s argument that it continues to look at the mobile market “in silos and fails to recognise the gradual replacement of traditional services (TV, messaging and voice) by OTT (over the top) data services with customers accessing OTTs across multiple devices and platforms”.

Responding to concerns over its treatment of apps such as What’s App, the regulator said: “URCA takes issue with the assertion that it continues to define markets in silos. The economic principles and procedure used in this market definition exercise are compatible with best practice regulation and provide a conceptual framework within which evidence on market definition can be organized and assessed.

“As such, in arriving at the boundaries or scope of the relevant product market, URCA has given utmost consideration to all relevant factors and evidence before it at this time. This includes consideration of not just the current status and recent trends of mobile, but also likely future developments which could impact on the boundaries of the relevant product market.

“In particular, the survey evidence before URCA in relation to substitution away from mobile services to OTT services was carefully reviewed and considered. While the evidence before URCA appears to show that some demand-side substitutability exists between OTTs and mobile services (especially mobile messaging), it is not conclusive that OTTs are direct substitutes for mobile services at this time.”

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