‘We’re just trying to protect our business life-blood’ says Govt.
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| By Scott Neil |
The risk of Bermuda having its “life-blood” ocean-bed telecommunications cables severed – leaving the Island’s international businesses cut off from the rest of the world – is one of the considerations driving moves to re-organise the sector.
And that is not a far-fetched scenario. On December 26 last year an earthquake in southern Taiwan caused major disruption to banks and businesses across South-East Asia when six undersea optic cables carrying international telephone lines and internet connections were cut and another was seriously damaged.
Bermuda has three undersea telecom cables linking to the outside world but two of those are outdated and have virtually reached their capacity-carrying limits.
The need for an additional international cable is one of the arguments Government has for now seeking a telecoms shake-up in Bermuda, because to attract the investment needed to pay for a new undersea optic cable it needs to make the local market more attractive to potential cable connection suppliers.
Where the idea runs into hot water with local telecom providers, telecom professionals and some members of the public, is when it proposes the 60/40 rule – which stipulates majority Bermuda ownership – be abandoned and the entire sector opened up to possible wholesale foreign ownership.
A further concern is the plan to block domestic telecom companies such as North Rock Communications, Cellular One, Fort Knox and KeyTech seeking to secure their own deals with Brasil Telecom – the owner of the super-high capacity optic cable that serves the Island – to use its cable.
Under proposed Government regulatory reforms, only Cable & Wireless (C&W) and TeleBermuda International (TBI), which already have international service licences, will be able to “sell” international connectivity to other domestic operators. C&W owns the other two undersea cables and together with TBI also buys capacity on Brasil Telecom’s optic cable.
C&W and TBI will be obliged to offer wholesale international capacity to the other domestic telecom companies on “non-discriminatory terms” according to the proposed reform.
Government wants to create a level playing field for anyone to compete in Bermuda’s telecoms marketplace, but the proposed level playing field has a number of unfair slopes in the eyes of critics of the regulatory reform ideas.
A town hall meeting last night, which was ironically criticised for being poorly advertised, was the final live event to gather consultation feedback from the public. Written submissions will be taken up to February 19.
Judging by the opinions expressed in Cathedral Hall – a well-attended event by telecom industry professionals and public, many of whom had received an e-mail communication within the past few days to alert them to the event – strong objections remain.
William Francis, director of telecommunications at the Ministry of the Environment, Telecommunications and e-Commerce, gave an outline of the proposed scheme at the meeting.
He was joined on a panel by consultant Gita Sorensen, Telecommunications Commission chairman Ronald Simmons and economist and Bermuda College lecturer Craig Simmons. Listening in the audience was Telecommunications Minister Neletha Butterfield.
Mr. Francis explained the Island’s primary undersea cable was a self-healing fibre optic cable owned by Brasil Telecom, which has more data-carrying capacity than Bermuda would likely ever need. But it is at risk of damage from a natural occurrence or being snagged by a ship’s anchor between its length from Bermuda to New Jersey.
Fortunately, the cable is actually a ‘ring’ that sweeps down to the islands of the Caribbean and to Venezuela before shooting back to connect to the mainland US. So, if there is a break in the Bermuda-New Jersey link the connection is not broken as it re-routes south.
But it is still a precarious link. The consequences of the Island being left high-and-dry without fast internet connectivity would have major repercussions for Bermuda’s international business community.
“The international business community wants to have an additional path off the Island. Their life-blood is communication. We are trying to protect international business and everybody in Bermuda,” said Mr. Francis. Audience members questioned the proposals, which would do away with the current set-up of four categories of telecommunication providers. Currently there are class A (international service providers), class B (fixed and wireless domestic providers) and class C (internet service providers) as well as cable TV providers.
But since those categories were introduced in the late 1990s the evolution of new technologies has increasingly made it difficult to separate the services that have sprung up and cross-over the previous classification boundaries.
Ending those segregated categories and allowing telecom operators to apply for Unified Domestic Licences covering all aspects of telecoms delivery is Government’s ultimate goal. The 60:40 rule would need to go to create a level playing field because it already applies to varying degrees to the different players depending on which ‘class’ they are currently in.
And the reason why the domestic operators are not being allowed to seek their own international connectivity deal with Brasil Telecom is to make things more attractive for an investor to put in place a new undersea cable, explained Mr. Francis.
One man who questioned the panel said he was worried because he had seen such a deregulation fail in other places, naming Cayman Islands as an example.
Other concerned voices raised the question of why the domestic operators were being denied the right to negotiate their own cable connection but had to go through C&W and TBI, their rivals in the same market. That would lead to the smaller operators being squeezed out by “the big boys”, said another audience member.
“Why are we doing this? No-one is asking for this. We are listed as the 19th best place in he world for our telecommunications and number one in the world for our size jurisdiction. How can you do better than number one?” said another man who wished to see the status quo remain.
Former Telecommunications Minister Senator Bob Richards, also in the audience, spoke of his involvement in the original setting up of the different classes within Bermuda’s current telecoms sector in the late 1990s and how it had protected the Island from the disadvantages of having one company monopolising the marketplace, and the 60:40 rule had also insulated Bermuda from the fall out of the telecom “bubble” bursting on the international scene in 2002.
Sen. Richards agreed that the “alphabet classification” of licences should end, but said the 60:40 rule should remain.
Anyone wishing to place a written submission into the consultative process for the proposed regulatory reforms to Bermuda’s telecommunications has until February 19 to do so through the Department of Telecommunications.