OPEN LETTER ON FLOW’S PROPOSED ACQUISITION BY CWC, FROM DIGICEL BARBADOS BOSS; “Start Telling the Truth Cable & Wireless”

I was initially pleased to see that a Cable & Wireless representative took the time to respond to my letter on the proposed acquisition of Columbus by Cable and Wireless but after reading his response I was disappointed to see that Chris┬áDehring didn’t take on board my comments nor did he take the opportunity to ease the concerns of the public. Consumers in Barbados do not want to listen to generic rhetoric about how it is good for consumers, they want Cable & Wireless to spell out the exact benefits of this deal to consumers and to Barbados. Too often, as we have seen many, many times over the years, Cable & Wireless try and deflect the attention away from themselves rather than face up to growing public concerns. The return to monopolistic ways is very real if this acquisition is approved without the proper regulatory oversight and consumers across Barbados and the Caribbean are very mindful of this – they do not want to be dragged back in the dark old days of a Cable and Wireless monopoly.

Paddick_CWC

Cable & Wireless are not dealing with the issues that this proposed merger brings. Instead they are trying to distract consumers and commentators alike away from the real and pressing consumer issues by highlighting irrelevant information on its regional competition.

People in Barbados are really concerned about the return of a monopoly and recent statements from Cable & Wireless have not dealt with these genuine concerns. The statements and claims from Cable and Wireless over the past few weeks have no real relevance to the Barbados market. Not once have they admitted that they are reverting to a monopoly in fixed line and home internet or that they will have close to 50% market share in subscriber TV. Barbadian consumers deserve better than this – Cable and Wireless should start telling the truth.

Mark Linehan CEO, Digicel Barbados Limited

Mark Linehan
CEO, Digicel Barbados Limited

Here are the facts relating to some of the claims from Cable & Wireless:

  • Cable & Wireless Claim #1:

Cable & Wireless/Columbus would be “the region’s second ICT provider” with 6 million customers compared to Digicel’s 13 million.

Fact #1: What they are not saying – the new Cable & Wireless/Columbus entity will be the monopoly provider of fixed telephone and home internet in Barbados and will have close to 50% of Pay TV services. Cable & Wireless are trying to say that because Digicel has 13 million subscribers across the globe that this deal should be approved in Barbados. What they are not saying – 7 million of Digicel’s customers are in the Pacific and Haiti where Cable & Wireless and Columbus do not operate.

  • Cable & Wireless Claim #2:

Digicel is in more countries than Cable & Wireless.

Fact #2: This number of countries that Digicel and Cable & Wireless operate in has no relevance to the fact that in Barbados the new Cable & Wireless/Columbus entity will create monopolies and eliminate competition. What they are not saying – the impact of this new monopoly on fixed line, home internet and Pay TV services to consumers and competition in Barbados. This is why the Government and the Regulator must analyse the merger carefully and ensure the conditions for competition will continue.

Cable & Wireless Claim #3:

The merger “only” impacts 6 out of 42 countries.

Fact #3: The 2012 Cable & Wireless/Columbus joint venture already brings submarine fibre to 42 markets and while this should be noted for full transparency it is not very relevant to understanding what the merger means for the region. Cable & Wireless and Columbus’ operations and the services they offer overlap in six countries in the Caribbean namely, St. Lucia, St. Vincent & the Grenadines, Grenada, Jamaica, Barbados and Trinidad & Tobago. What this proposed merger will do is ring fence the markets for fixed telephone and home internet and Pay TV from competition in most of these countries. What they are not saying – in Barbados the merger will create monopolies in Fixed Telephones and Home Internet and gives the new entity close to 50% market share in Pay TV.

CWC_Paddick

In sum, Cable & Wireless is paying over US$3 billion to buy its main competitor (Columbus) that will give them a monopoly in Barbados for Fixed Line and Home Internet and close to 50% market share for Pay TV. Monopolies like Cable & Wireless keep competitors out and increase prices – the recent past is still very fresh in all our minds.

Cable & Wireless is trying to rush the approval of the merger by saying that it must be completed by February. In other parts of the world mergers can only proceed if they have no anti-competitive effect and the merging parties agree to conditions that allow competition to thrive.

Why does Cable & Wireless want the Caribbean to rush? The merger must only be allowed if conditions are imposed that prevent the new Cable & Wireless monopoly from excluding competitors and raising prices.

It is interesting that the Cable and Wireless representative references the Digicel Claro deal but seeing that he did, it is worth noting that it took over 8 months to get the relevant approval for the Claro acquisition in Jamaica and even more interesting is that the regulator in El Salvador never approved the acquisition of Digicel by Claro in El Salvador so that element of the deal never went through. Food for thought.

Since the Cable & Wireless mobile monopoly was broken by Digicel in Barbados mobile prices have decreased by over 50%. Cable & Wireless cannot be allowed to prevent competition for fixed telephones, home internet and Pay TV services.

Barbados cannot be allowed go back to the dark days of the Cable & Wireless monopoly – Government and Regulatory approval must ensure that Digicel and other operators are able to compete.

Yours sincerely;

  • Mark Linehan

CEO, Digicel Barbados Limited

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