Reform Of Telecommunications Industry

Minister of Environment, Planning and Infrastructure Strategy Walter Roban held a press conference today [Oct.26] regarding upcoming reform of the telecommunications industry.

Reform will see the functions of the Department of Telecommunications split among two separate bodies – the Department and the Regulatory Authority. The Regulatory Authority and the Electronic Communications Bills will be tabled in the Legislature on November 18th.

The Minister’s full statement follows below:

Members of the Media Good Afternoon,

For some time, the Government has been preparing for significant reform of the Telecommunications Industry. The process began in 2002, and work has continued steadily ever since.

I am pleased to report that this long and arduous process is about to take a significant step – with the tabling of the Regulatory Authority and the Electronic Communications Bills in the Legislature on November 18th.

Upon assuming responsibility for the telecommunications portfolio in November I have since met with a number of the telecommunications carriers and heard their views and concerns about our plans for reform.

While there were certainly differences among the carriers with regard to the specifics of reform, on one point they were agreed – that reform must be implemented.

I heard the concerns, and ultimately agreed that indeed we must move forward.

As a result, I asked the Department of Telecommunications to place the need for reform as their number one priority.

I committed to the carriers that I would table the reform package, and today I am pleased to be able to make good on that promise. A promise made; a promise kept.

There are a number of steps that must take place before the formal tabling and I can assure you that we are focusing all of our energies on these.

First and foremost, we will meet with the industry stakeholders and share with them the current Bills as well as our implementation plan.

I can confirm now that the Bills have not materially changed since the last versions that were shared with industry stakeholders. But the implementation of reform has shifted.

This shift is a direct reflection of the change in economic circumstances of the Government, the industry, and the public since the initial plans were developed. Rather than establish the Authority in full upon passage of the Bills, we will phase its implementation.

Next, I will seek the support of my Cabinet colleagues to table the Bills and will also discuss the reform plans with my Parliamentary Caucus.

Reform will see an unprecedented redefinition of the regulation and operation of telecommunications in Bermuda.
In short, reform will see the functions of the Department of Telecommunications split among two separate bodies – the Department and the Regulatory Authority.

The Department will continue, but will now focus entirely on telecommunications policy development and advice to the Minister. The Regulatory Authority will assume responsibility for the day to day regulation of the industry.

In addition, reform will see the introduction of the Integrated Communications Operating Licence (ICOL), commonly known as a universal licence, replacing the existing segmented classes of licences.

All of this is driven by a convergence in telecommunications technologies – a change that is not just a Bermuda phenomenon, but a global reality.

At the time of the drafting of the existing Telecommunications Act 1986, given the state of technologies at that time, it was natural and appropriate to provide different classes of licences for different services. For example, video services were not provided along the same highway as voice services.

Today, it is difficult to naturally separate the provision of voice services, from video services, from data services. It is time for our regulatory structure to reflect the current technology, and be positioned to rapidly adjust to the ever-changing nature of the telecommunications industry.

I should note that the tabling of the Regulatory Authority Bill and the Electronic Communications Bill does not signal the end of the reform process. Not by any means. There is still much technical work to be accomplished.

In order for the Authority to be effective it must be staffed with the right blend of experts. The Authority will need to address issues such as the allocation of spectrum, market dominance, and local number portability. On all such matters, Industry stakeholders will need to be consulted before a position is taken.

The Regulatory Authority is designed to regulate not only telecommunications, but other industries as well. Our recently released Energy White Paper addresses regulation of the energy sector, and the Regulatory Authority will be well placed to perform this function.

However, in the first instance, it will focus solely on the telecommunications industry.

Yes, there will be a cost associated with the implementation of the Authority. Ultimately, the Authority is designed to be self-financing, with revenues derived from the industries that it regulates.

For the first year of implementation, and mindful of our current economic climate, it is our desire to not place a financial burden on the industry or on the users of telecommunications service.

We will be seeking from the Ministry of Finance an allocation for the authority’s operating expenses. The level of funding obtained will determine the level of operation that can be sustained in the first year.

During the process of developing our reform regime, the Government articulated a policy that it would not issue any new telecommunications licences, nor would it amend any existing licences. The purpose of this policy was to ensure an even playing field for all carriers. We have held steadfastly to this position.

No doubt you will have noticed significant changes in the corporate structure of a number of telecommunications companies. Let me be clear that while the Government has approved such corporate re-structuring, it has insisted that all licence classes be operated and managed separately.

For example, a holding company that owned a Class B licence holder and a Class C licence holder must operate the companies holding those licences as separate entities and must not bundle the services provided by those separate companies.

The Government was clear that it wished to encourage investment in Bermuda, investment in telecommunications infrastructure and investment in jobs for Bermudians, while maintaining a level playing field for existing providers.

We are satisfied that most providers understood this policy and conducted themselves accordingly, to the benefit of all. We believe that this is the correct position, will reiterate it whenever necessary, and are prepared to put it to the test.

I am certain you might wish to pose questions about a specific provider that is indeed seeking to test our policy. As legal questions on this matter are currently before the Courts, I will say nothing more on this than I have articulated already.

At long last reform is upon us.

As a result of reform we look forward to increased competition within the industry, leading to an increased range of telecommunications services being made available to the public at improved rates.

One need only look at the reduction in rates and improvement in quality brought about through increased competition within the long distance segment of the industry some years ago to see an example of this.

We fully anticipate that the benefits derived from those changes will be easily surpassed by the benefits to be had through telecommunications regulatory reform.

THANK YOU

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