Source: The Royal Gazette
Bermuda lags behind many rival business jurisdictions in the quality of its telecommunications links and Government’s proposed reforms of the industry will help to rectify the situation.
That is the view of Cable & Wireless chief executive officer Eddie Saints, who believes the changes will bring advantages to consumers, especially international business.
And he suggested that local internet service providers (ISPs), which have strongly opposed the reforms, should instead accept change as inevitable and take the opportunities it brings.
Mr. Saints’ company has just unveiled plans to install a new $22-million undersea fibre optic cable, linking the Island with the US. It will have 700 times the capacity of the ageing cable it will replace.
The proposals by the Ministry of the Environment, Telecommunications and E-Commerce (METEC) would remove restrictions on foreign ownership in the telecommunications industry by dropping the 60/40 rule. They would also dismantle the licensing system that currently restricts companies to a single area of operation such as internet or local call provision.
The proposals have received a mixed reaction from the industry, with some saying the new rules would encourage the large foreign investment necessary for the Island to have the very latest telecommunications technology.
But others, notably the predominantly locally owned ISPs, say dropping ownership restrictions would lead to a monopoly or duopoly and wipe out Bermudian ownership in the industry within a year.
The Government has gauged opinions of the industry and the public and the proposals are yet to be confirmed as policy.
“We provide basic services in Bermuda, but not the kind of high-speed service you can get in other jurisdictions like Monaco and Jersey, where you can get 12 megabits delivered to the household,” Mr. Saints said.
“We are lagging behind others now, but we are hoping to see significant benefits to consumers from our investment in the new cable.
“We can buy computers with integrated internet-ready boxes and cameras and microphones fitted, capable of dealing with multi-stream video, and so you can just plug it in and communicate with the world. Our only restraining factor is the local internet network.
“With the amount of investment needed, there is no doubt that the reforms put forward by the Ministry are necessary.” He said the ISPs had been given “every opportunity to contribute to the reform process in a transparent manner”. Mr. Saints claimed the reforms would bring the best answers for everyone.
“I believe there are some unfair protections in the industry at the moment,” Mr. Saints said. “They (the ISPs) want to go and operate internationally but they don’t want a level playing field.
“There are two schools of thought here. Some people want to keep everything the same. Others accept that change is inevitable and will try to make the most of it.”
Mr. Saints said C&W Bermuda was delighted to have been able to make the investment in the new cable, which is hoped to be fully operational by the end of October.
He said the move was a “vote of confidence” in Bermuda, though it had been challenging to make the business case for the investment, since the Island market was so limited.
“We have been providing links between Bermuda and the rest of the world for 117 years and this is very much a long-term investment,” Mr. Saints said.
“We are hopeful that the reforms will go through and that will enable us to provide customers with a full suite of services. We want to be a one-stop shop for consumers and that will certainly make things easier for them.”
Last summer, C&W made a $205-million takeover bid for KeyTech Ltd., the owners of Bermuda Telephone Company and Logic Communications, among other companies. The Government opposed the move and so did KeyTech, which felt the bid undervalued the company.
The reforms now being proposed by Government would appear to allow that deal to now take place. But C&W said last week it had dropped its interest in KeyTech.
Mr. Saints explained: “I believe that takeover would be right for Bermuda. From our point of view, it was that we could bring that high capacity to the Island but not deliver it to the home or the desktop.
“It is because of uncertainty over what will happen with the reforms and because we aren’t sure whether the 60/40 rule will be dropped that, right now, we have moved away from that course of action.”
The CEO added that C&W owned a share of Quantum, which it would support to bolster high-speed internet connections through Quantum’s broadband network.
Bermuda is already served by a high-capacity fibre optic cable operated by Brasil Telecom. But after C&W made its announcement about its new cable, METEC Minister Neletha Butterfield responded by saying the Government was still looking for a telecom company to install another submarine cable. Mr. Saints said he was not at all bothered by that.
“Our decision to install this cable was nothing to do with the cable tender process,” he said. “It was a business decision.
“I know the international business community is very concerned about having a higher capacity and diverse cable infrastructure. So as far as Bermuda is concerned, the more cables we have the better.
“But I think it might be difficult for anyone to make a business case for the making the kind of investment necessary to install another new cable.”