Of this, we are given an allowance,
which may be revoked without notice.

It may be traded for other forms of currency.
Squandered.
Simply enjoyed.

It may not be saved…

Tick, tick, tick….

Copyright 1988 Chris Halsall. All Rights Reserved.

IN any jurisdiction, companies operate ultimately under the legislation created by a central authority, i.e. the Government. Therefore, the argument can easily be made that this authority must seek to devise, and more importantly enforce, legislation preventing companies from inhibiting the development of liberalization and fair competition.

Publicly traded companies (those listed on one or more stock markets) tend to act particularly aggressively, as they are dependent upon ever greater profits in order to raise their share price. Their executives’ remuneration packages are invariably tied to this, and often current (and ex-) employees hold a number of shares as well.

The stock market is a harsh mistress. Therefore a public company’s primary concern is about “making the numbers” for the next quarter — everything else is secondary. Stock prices have even been known to fall when a Company does manage to make their numbers, but do not “exceed analysis’ expectations”.

There’s nothing wrong with this, of course. To the contrary — it is raw capitalism at its purest; the most effective form of wealth creation ever devised by humans. But it must be appreciated and understood: capitalism is heartless, and companies feed upon their markets.

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IT is reasonable to observe that before one can control something, one must understand it.

Cable and Wireless (C&W) is, arguably, simple to understand. It is an example of the organism known as the Company. Dogs have a tendency to bark. Barracuda have a tendency to bite. Companies have a tendency to work to maximize their financial returns using every means at their disposal.

This metaphor is not used in jest, but instead as a serious model. Companies exist in ecosystems like any other organism, and will behave in predictable ways towards the furtherance of their own self interests. They are what are known as “autonomous agents”, or “Actors”, within a system. It is worth noting that, legally, a Company is a Person.

Publicly traded companies (those listed on one or more stock markets) tend to act particularly aggressively, as they are dependent upon ever greater profits in order to raise their share price. Their executives’ renumeration packages are invariably tied to this, and often current (and ex-) employees hold a number of shares as well.

The stock market is a harsh mistress. Therefore a public company’s primary concern is about “making the numbers” for the next quarter — everything else is secondary. Stock prices have even been known to fall when a Company does manage to make their numbers, but do not “exceed analysis’s expectations”.

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CONSUMERS in Barbados who have been early adopters of new telephony offerings should be commended. Not only have they encouraged competition, but some have faced some strange challenges…

Imagine that you have just activated your new service, using one of the new competitive providers. You call everyone you know using your new phone, and gloat about how great it is. Clarity is amazing. Calling features are astounding. You’re doing the “happy dance”.

But, strangely, some people start telling you that they cannot call you back on your brand new phone number… This becomes a serious issue — a phone which can’t be called is not much use.

Why would this happen? Well, it is actually quite simple…

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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.

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THE liberalization of the local telecommunications market is not only good for consumers, but would also greatly enhance Barbados’ level of competitiveness vis-à-vis the rest of the world.

This was the argument made by Director of the consulting firm Ideas 4 Lease, Chris Halsall, in an interview with the Business Monday.

Halsall was very passionate when he made the argument, stating that “as long as our telecommunications rates as high as they currently are, we’re not going to be anywhere near as competitive as, for example, Mexico, India, and Thailand. There are a lot of places in the world with much better telecoms at much better rates.”

He was making this point regarding the issue of the current state of long distance telecommunications, the cost of which he believes to be too high.

He stated that “International voice is Cable & Wireless’ traditional cash cow” and that no one should be angry with them because their job is to maximise their returns. However, he is of the view that there needs to be a “true elimination of these outrageous long distance charges – and the only way to achieve this is with regulation.”

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POLICIES have been agreed on, legislation has been passed, however, liberalization of the telecommunications market has not progressed in the way that it should.

As a result, one local commentator is calling on Government, specifically the Barbados Fair Trading Commission (FTC), to take steps towards enforcing the legislation that has been passed, and to ensure that the level of liberalization sought is brought to fruition.

Chris Halsall, Director of independent consulting firm, Ideas 4 Lease, made the point that the local Telecommunications Act Review Committee, on which he sits, has done some excellent work in the last year regarding the push towards liberalisation, including the Voice over Internet Protocol (VoIP) Policy, and then more recently the Two Stage Dialing Policy, and the Indirect Access and Equal Access Policy. All of these can be downloaded from the www.telecoms.gov.bb web site.

He stated that Government had set a January 1st 2008 for the implementation of Two Stage Dialing, and October 1st 2008 for Indirect and Equal Access. However, the competitive long distance providers – Sunbeach, Blue Communications, and TeleBarabdos – have been trying to purchase the required interconnecting circuits from the Cable & Wireless without success, even through they are clearly defined within the Policy.

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REAL and effective competition is still sorely needed in the telecommunications marketplace if the FTC is to be successful in achieving its stated goal of reducing rates for consumers.

According to Chris Halsall, Director of the independent consultant group Ideas 4 Lease, without true competition in the market, the Price Cap Mechanism (PCM) will not benefit consumers unless it is applied more broadly and appropriately.

He was making this point given the fact that the Barbados Fair Trading Commission (FTC), which acts as the regulator, tends to argue that once policies or legislation exists that allowed for competition in the provision of a particular service, then there was no need for them to regulate activity in this area.

“One thing I would argue is that the Commission and the Ministry have made a mistake on, is that as soon as there is the opportunity for competition, they deem that the market has been liberalized and, therefore, there doesn’t need to be any regulation.”

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THE new period of the Price Cap Mechanism (PCM), the system used to regulate the telecommunications industry, could result in reduced rates for certain services for consumers, if the right adjustments are made to the plan.

This was the assertion made by Chris Halsall, Director of Ideas 4 Lease, an independent consulting group, and a voting member of the Telecommunications Act Review Committee.

Halsall was commenting on the recent “First Decision” released by the Barbados Fair Trading Commission (FTC) on the issue of the controversial PCM, which over the last three years has allowed local telecommunications provider, Cable & Wireless, to raise their rates on fixed line domestic service by 7 per cent (compounded) each year.

He first stated that he is “very pleased that the FTC has decided to continue with the Price Cap Mechanism. That was the correct decision.”

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The application of the PCM [in Barbados] of the PCM, including assigned values to the formula and the incentives in the baskets, is a mystery to the exercise of regulatory authority.

It would seem that there is a deliberate attempt by the [Fair Trading Commission] to favor the company in its approach to the functioning of the PCM as a regulatory mechanism at the level of policy, because the PCM parameters have been set contrary to all the statutory provisions for exercising regulatory authority.

In any forum this level of ineffectiveness, and failure to consider the costs to the consumer in setting the rates, could naturally be described as a gross dereliction of duty; total incompetence.  What makes this case different is that we know from experience that we are dealing with highly qualified professionals who are in possession of the facts and who know the rigours of regulation.

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