For govt, telecoms competition 'should outweigh profit concerns'

Fri, Apr 25th 2014, 09:46 AM

While the liberalization of the telecommunications sector could lead to lower profits for the government from its 49 percent stake in the Bahamas Telecommunications Company (BTC), former Minister of State for Finance James Smith said yesterday it is more important for the government to ensure consumers have lower prices and better service.
"If competition brings down prices and increases quality, then the consumer is better off and that would override any concern about dividends going to the government," Smith said.
"The public good would [be better] served if at the end of the day consumers are getting better service at better prices.
"Beyond that, I don't think the government or BTC would want to be in the position of preserving profits by way of a monopoly."
Bradley Roberts, Progressive Liberal Party (PLP) chairman and BTC board member, agreed with Smith.
"The government's role is to ensure that the consumer gets the best bang for [the] dollar and [that happens] through competition," Roberts told The Nassau Guardian.
Smith also said that competition in the mobile sector would mean lower prices, which could drive up profits for BTC and the new entrant.
"In regard to the sharing in profits, you're assuming the new company would outgun the existing BTC.
"For instance, if you now have 50,000 subscribers and prices go down and the service quality goes up, people might end up with two or three phones and both companies are making more money because the pie has grown."
BTC is the country's only mobile phone service provider.
Its monopoly ended this month.
Smith and Roberts both said they had no concerns about the government being in conflict by approving a license for a competitor to BTC, which the government has a major stake in.
Smith noted that the regulator of telecoms is the Utilities Regulation and Competition Authority (URCA), which operates independently.
"I think the government has really no interference over URCA's decisions, plus there is the fact that it is very transparent," he said."So I think the question of conflict would not hold in this case."
Roberts added, "The government sets the sector policy and they [URCA] implement it. The sector policy has been established. I don't see it [as] a concern."
The Ingraham administration sold 51 percent of BTC to Cable & Wireless Communications (CWC) in April 2011. A condition of that sale was a three-year extended monopoly on cellular services.
According to the sale terms, a second cellular service provider can now enter the market.

Click here to read more at The Nassau Guardian

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