New tariff increases needed for telecoms liberalisation

-GTT tells PUC

PUCGTT: Commissioners and other members of the Public Utilities Commission (PUC) at centre along with the representatives of GTT on the left and representatives of the Guyana Consumers Association at right.

Seeking to justify its application to increase wireline access and landline metered charges for intra-network calls, the Guyana Telephone and Telegraph Company (GTT) has told the Public Utilities Commission (PUC) that it is necessary for the liberalisation of the telecoms sector.

However, its application is being opposed by a local consumers group over the company’s failure to fulfil its contractual obligations.

Speaking at a hearing on Wednesday at Duke Lodge, Mark Reynolds, head of Legal and Regulatory Affairs at GTT, explained that the present application seeks to address the gap that exists between the cost of the provision of service for landline or copper residential access and the current tariff.

Reynolds said that a balance in tariff would improve the telecommunications sector, which would encourage service providers to invest in technology. “The act of moving towards more balanced tariffs is known as rebalancing in the telecommunications industry. It’s a normal practice and every country in the telecommunications industry has done this prior to liberalisation. The reform will provide financial incentive to GTT and to all the service providers in the future to expanded service to all consumers,” he explained while stating that the recommendation for rebalancing was done by the International Telecommunications Union (ITU) in 2001.

He also referenced several countries, including Jamaica, Mexico and Belize, where the rebalancing was done prior to liberalisation.

“It is part of the process of stimulating competition and ensuring proper indicators are given to competitors or new entrants in terms of what is the actual cost of providing service to consumers,” Reynolds explained.

However, Guyana Consumers Association (GCA) President Patrick Dial rebutted Reynold’s arguments, while saying that the comparisons that were made were unfair since the factors in the different countries were not similar to those in Guyana.

“The ITU statement was made 17 years ago and time has changed and there’s nothing permanent and therefore whatever was there has to be re-evaluated. And we are saying in this situation that those references cannot apply because there is no direct reference to Guyana, and Guyana’s situation is both peculiar to itself and particular because it is a monopoly and these references referred to a free market. Absolutely none refers to a monopoly,” Dial said.

GTT has also said that the increases would help it achieve its guaranteed rate of return but Dial argued that an entitlement should be dependent on the company meeting its obligations.

“…When GTT came here, they [were] contracted to provide landline telephones to the entire coastal population and in six interior areas which were identified. GTT has done nothing of the sort and even on the coast here people want, there are areas where there are thirty something thousands of people want landlines and can’t get it. Until GTT satisfies these things, and this is not the only ones, there are other things. Until GTT satisfies these things I cannot see them getting an entitlement. An entitlement is dependent on your performance,” Dial argued.

Balanced tariff

Meanwhile, Delreo Newman, GTT’s Director of Inter-regional and Government Affairs, said the company is seeking a $50 increase, which he said is equivalent to 6.6% as well as another 6% in six months for local or intra-lateral calling rates.

“According to the model, if we were to maintain the same number of subscribers, all things being equal, if we’re to get a balanced tariff and that is if we are to make no return on the access lines, we would have to increase prices approximately by $2,700 more than what it currently is. That would be a balanced tariff,” Newman said.

He added that other than the 6% increase, persons who opt in to the “lifeline” service would not see any further increase to the rate.

“Also, I would like to remind the Commission that the Bank of Guyana reported that inflation for 2017 was just shy of five percent, so really we are seeing a real rate of increase of just over one percent,” he said.

Newman also noted that they will also be providing their customers with 10 minutes of local calls free and five minutes of international calls free every month.

“Currently, 38% of our customers make calls for 10 minutes or less and 46% of our customers make 5 minutes of inter calls or less. So almost 40% of customers would not see another rate increase if they opted for the lifeline service,” he said.

However, GCA advisor and former GTT CEO, Yog Mahadeo noted that the GCA is of the view that liberalisation is not something that should be used or abused and that when the lawmakers of the country were thinking of liberalising the telecommunications sector, they would have thought about the welfare of the country and the consumers by extension, along with the welfare of the companies and investors. “We would ask that your respectable office be mindful of the vision in this country in liberalisation,” he said.

Mahadeo also said that despite being advisor to the Association for more than two years, he has only seen about one application by GTT that referenced figures, and their absence results in the organisation not being able to have a holistic view of the situation and the company’s reason for its application.

Following the submissions by the GCA, GTT, Ramon Gaskin and clarifications being given to the Commissioners, the matter was adjourned until November 20th by Chairwoman of the Commission Della Britton.

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