Calling Cards – Coming to Barbados. Eventually….

Everywhere you go in the world, you’ll find Long Distance Calling Cards.

Everywhere, that is, where the telecommunication industry has actually been liberalized and competition actually exists.Calling cards are retail products provided by telephony carriers to consumers, providing access to alternative (and completely legal) long distance services. These are usually available in $5 to $20 denominations, and provide a local telephone number for the customer to call and a Personal Identification Number (PIN) to use.

The per-minute rates provided are very competitive. For example, during a recent trip to Canada your author purchased three different calling cards from three different providers, from a choice of over twenty. The rates from Canada to the United States and Europe ranged from six to ten cents (Barbados currency) per minute.

How calling cards work is quite simple - from the consumers’ perspective they simply use a regular telephone or cell phone, and dial a local number. This connects them to an automated calling platform which authenticates the user (using the PIN, credit card, etc), and then presents “long distance dial-tone” - the customer then dials the long distance number desired, and the call continues.

From the carrier’s perspective, implementation is similarly easy. A competitive carrier purchases “Trunk Side Access” circuits from the incumbent carrier or another existing competitive carrier, and connects these to a “Telephony Switch”. The calls are then carried over long distance circuits owned or purchased by the competitive carrier to the caller’s destination.

While not as convenient to the consumer as just dialling straight through to the desired number, calling cards do provide a means of quickly and easily offering competitive long distance calling services to a market. Because of this, calling card services are an excellent litmus test for a truly liberalised and competitive marketplace.

An important observation is that the required circuits are exactly the same as those provided by the incumbent carrier to any company purchasing telephone service. The incumbent doesn’t have to make any changes to their systems, other than provide the circuits being purchased. The incumbent’s revenue is the monthly charge for the circuits.

So why don’t we have calling cards here in Barbados? We will. Hopefully soon.

The legal framework required for calling cards was completed last year by the Telecommunications Act Review Committee (TARC), in the creation of the Barbados Two Stage Dialing Policy.

Drafted using an inclusive, collaborative process conducted over many months - involving all commercial stakeholders, the Commission, the Ministry and independent interested parties - the Policy clearly defines how calling cards are to be implemented here in Barbados. Interested readers are encouraged to download the Policy from the www.telecoms.gov.bb web site.

Unfortunately, Cable and Wireless (C&W) have been uncooperative with those licensed carriers who have attempted to implement the Policy in order to offer competitive long distance services to Barbados. They have refused to quote on the “Trunk Side Access” requested by the carriers, claiming such services cannot be purchased by an “Other Licensed Operator”.

This is unfortunate, but understandable. C&W make several million dollars a month in long distance, most of it profit. They’re not going to give that up without a fight. It is their job to maximize their returns as much and for as long as possible. They’re very good at it.

So what has to happen for calling cards to be a reality here in Bim?

C&W are regulated by the Fair Trading Commission (FTC). The next step required is for the FTC to review Cable and Wireless’ response to the Two Stage Dialing Policy, and issue a ruling. While they’re at it, they should review the Reference Interconnection Offers.

When such reviews will be conducted, or how they may be triggered, is not entirely clear at this time. This author would encourage all interested parties, including the competitive carriers unsuccessfully requested services from C&W, and the general public, to formally write the FTC and request that urgent action be taken on this matter.

In this author’s opinion, there is no reason why Bajan’s should not be able to call friends, family, business associates and customers anywhere in the world, using a regular telephone, for ten cents a minute or less. This isn’t going to happen over night, but is reasonable to expect in ten years.

But only if - and this is a big if - real competition is introduced to our marketplace and true liberalization actually occurs. Adam Smith’s invisible hand of free markets really does work, but only when competition actually exists.

The policy framework exists now for this to happen. It just needs to be properly enforced.

Over to you, FTC.

Published in the Barbados Advocate Business Monday 2008.02.25. Reprinted with permission.

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