BTC REJECTS MISGUIDED ANALYSIS IN URCA CONSULTATION

Thursday, September 9th 2010. Nassau, Bahamas. The Bahamas Telecommunications Company Ltd. (BTC) today indicated its strong objection with elements of the methodology employed by the Utilities Regulation and Competition Authority (URCA) as detailed in their preliminary consultation document on the BTC Reference Access and Interconnection Offer (RAIO) as reported in the press this past Tuesday.

While URCA did point out that the analysis was preliminary, and that it was subject to more “rigorous bottom up assessment of [BTC’s] costs and operations”, BTC is concerned that the URCA would publish detailed conclusions on matters that the very same report by the regulator admits require more in-depth analysis.  BTC notes that that the publication of a less than thorough analysis can and would be used by parties with vested interests to wilfully paint an inaccurate picture of the state of affairs at BTC, and to shape public discourse on the company based on an assessment that is far from accurate.

 BTC is of the view that the statements on BTC’s cost structure are flawed and over simplistic. The analysis fails to take account of BTC’s large investment in its next generation networks, and the small size of its operations and the unique operational circumstances in the Bahamas.
URCA produced a table showing how BTC compares to operators for the “number of connections per employee”. BTC contends that the analysis of connections per employee is over simplistic because it ignores economies of scale (which result in small operators, such as BTC, having much lower number of connections per employee than larger operators) simply by virtue of having a smaller customer base. By including operators such as those in Venezuela, Argentina and Poland, where the number of lines is more than 50 times the number of lines in The Bahamas, the analysis put forward produces a very misleading result.

BTC strongly maintains that “the economies of scale” element must be granted appropriate weight in any analysis done on the efficiency on any operator in the Bahamas.  It is no surprise to BTC that URCA’s analysis find that telecom operations in Bermuda and the Eastern Caribbean demonstrate high unit costs per connection.  These operators do business in very small population centers with small customer bases.  And operators in The Bahamas face a further operational challenge, unique even among its peers in the Caribbean:  BTC operates throughout an archipelago of islands and provides services in even the smallest of population centers. Finally, BTC is building for the future because it is investing in new networks and new services which will benefit customers and the economy of The Bahamas.

BTC intends to address these concerns directly with the regulator at the appropriate time and is hopeful that a more robust and in-depth analysis will follow before URCA releases its conclusive findings on BTC’s RAIO. BTC also hopes that moving forward the regulator will ensure that even its preliminary published findings reflect more thorough and sophisticated analysis that will take into account the peculiarities of the Bahamian environment.  Such an approach would not only benefit BTC, it will benefit the entire sector by enabling a mature debate on important issues.

BTC Press Release