Minister Responds To “Harmful” Digicel Statement

Mr. Speaker

I rise today to respond to the very harmful, unsubstantiated and self-serving press statement issued by a local telecommunications provider last evening.

Mr. Speaker
I would not normally wish to utilize the privilege of a Ministerial Statement to respond to the actions of a local business. But in this instance, I believe the nature of the allegations made by Digicel require such a response.

Mr. Speaker
You would be aware that the Government is engaged in a dispute with Digicel over its provision of International Long Distance services. This dispute involves other local telecommunications providers and is currently before the Courts. It is not uncommon for businesses to have disputes. Nor is it uncommon for regulated entities to have disputes with the regulator.

Normally, such disputes are settled between the parties, or failing that, are settled through our court system. Therefore, you might imagine my surprise and dismay to note that Digicel is seeking to try this matter in the court of public opinion, rather than allow the courts of justice to determine the outcome of our dispute.

Mr. Speaker
Although I do not wish to follow along the same sad path as Digicel and attempt to usurp the dignity of our Courts, I am obliged to set the record straight, as the personal and dangerous allegations and statements of Digicel cannot be allowed to stand without a response.

First, Mr. Speaker, I must provide a brief background, so that you, and the public, can better understand the issues. The entire issue revolves around the provision of International Long Distance services. In addition, the issue exists in the context of the Government’s efforts to implement telecommunications regulatory reform.

Let me begin with the need for regulatory reform, then speak more specifically about International Long Distance, or ILD.

Mr. Speaker
You will recall that in December of last year this House passed the Regulatory Authority Act 2011 and the Electronic Communications Act 2011. Those two pieces of legislation pave the way for regulatory reform. However, in order for reform to be implemented effectively, a number of work streams must first be completed.

One of the critical work streams is determining whether or not any carrier has significant market power in any sector of the telecommunications industry. In other words, the Government believes that fair competition is important. Telecommunications reform cannot be successful if it begins with one provider having dominance in a particular sector.

Therefore the Government has taken steps to ensure that the status quo is maintained before issuing the first Integrated Telecommunications Licences. We wish to ensure that when the starter’s gun sounds, no one competitor has a head start over others.

The current telecommunications regulatory environment recognizes three classes of carriers – A, B and C. Essentially, A carriers provide International Long Distance, B carriers provide what we refer to as Local Loop services, such as BTC for wired services and the Mobile carriers.

The C carriers are primarily Internet Service Providers. The current regulatory environment requires the classes to remain separate. For instance, a long distance carrier cannot provide mobile services, nor can an Internet Service Provider offer mobile services.

Mr. Speaker
The Government is keenly aware that the pace of advancement of technology has exceeded our regulatory controls. That is why we have introduced reform. Under reform, the segregated classes will disappear, and carriers will be invited to offer a suite of services.

Under reform a mobile carrier will be permitted to offer ILD, and internet and even other data and entertainment services. But as indicated earlier, in order to ensure fair competition, it is important that all carriers abide by the current regime until the starter’s gun sounds.

Mr. Speaker
This brings me to the crux of the issue between the Government and Digicel. It is our view that Digicel has jumped the gun and has attempted to gain a head start on other competitors. Digicel disagrees. As a result, a number of legal challenges have been instituted, initially between competing carriers.

At one point the Government was invited, by the Courts, to participate in the legal proceedings. We determined that it was in the country’s best interest for us to participate and have done so.

Under the powers vested in me under the existing Telecommunications Act 1986 I referred the matter to the Telecommunications Commission and asked them to enquire as to whether or not Digicel’s provision of ILD was within the scope of their licences.

I have recently received the report and rationale from the Commission and have invited Digicel and other carriers to comment upon their findings before I determine if I will accept the findings or not. The deadline for responses is 18th June. After considering the responses and the report, I will then decide the action that I will take, if any.

Digicel have challenged every effort to determine the validity of their actions. And in so doing, have sought to cast everyone who dares to question their actions as bullies, as having a vendetta against them, as being unfair to them.

Mr. Speaker, some could be forgiven for coming to a conclusion that Digicel appears to cast others in a manner that perhaps best describes themselves!

The proper place for this matter to be determined is, in the first instance, the Telecommunications Commission. Certainly, if a party perceives themselves to be aggrieved by decisions taken based on the Commission’s findings, they can seek redress through the Courts.

Rather than follow this path, in this instance, Digicel has chosen to challenge the referral to the Commission, and has attempted to have the matter heard by the Courts in the first instance. Further, they have launched countless additional legal challenges over this matter. Having placed the matters before the Courts, one would expect that they would allow the Courts to make a determination.

Instead, they have now sought to curry favour with the public by issuing statements and nearly full page advertisements such as that of last evening and this morning, respectively.

Mr. Speaker
Digicel’s statement begins by accusing the Government of, and I quote, a “dramatic u-turn on its decision to allow Digicel to provide international long distance service.”

Mr. Speaker
Contrary to Digicel’s statement, the Government has been consistent throughout. We have not wavered from our position that holders of multiple classes of licences must operate those licensed entities separately.

In its desperate efforts to cast itself as a victim, Digicel seeks to convince the public that members of this Government and officers of the Department of Telecommunications have treated it unfairly. Of course, no evidence of this alleged unfairness is presented. It is quite shocking to me that their public campaign has now been reduced to attacking individuals.

Digicel makes further personal and unjustified allegations. They make the remarkable claim that officers of the Department of Telecommunications interfered with a decision of the court. Mr. Speaker, how can a legitimate legal challenge be considered interference?

Digicel wishes for the public to believe that the submission of court documents in response to their court challenge was designed to “undermine Digicel’s reputation…” In other words, Digicel acts as if the only view possible is their own, and if anyone dares to challenge their view then they must be undermining them.

No, Mr. Speaker. Digicel is not the only party that is entitled to a view. Nor are they the only party who can seek a resolution through the courts.

Every action of members of this Government, the Ministry of Environment, Planning and Infrastructure Strategy and of the Department of Telecommunications has been fair, balanced and legitimate. Digicel’s efforts to cast them as otherwise are a crude attempt to paint themselves as the victim.

As an aside, Mr. Speaker, I noted from a Bermuda Sun story yesterday that the Digicel Group earned a profit of over one billion dollars. Yes, Mr. Speaker, one billion dollars. That, Mr. Speaker, on revenues of approximately two point five billion dollars.

Could you imagine approximately forty percent of your revenues realized as profits! As a free market individual, I admire and congratulate them on their commercial success.

However, is Digicel really asking the public to believe that a corporation that has profits, let alone revenue, that are greater than this country’s entire revenue are being victimized by a lowly Department of less than ten persons! Again, one might be forgiven for assuming that Digicel appears to cast others in a manner that perhaps best describes them.

Mr. Speaker
Digicel carries their theme of victimization further; again without substantiation. They attempt to suggest that the Government has discriminated against them in favour of other carriers. In particular they refer to, and I quote, “a gross imbalance in spectrum allocations between Digicel and its direct competitors…”

What Digicel fails to state is that carriers were essentially given spectrum as they entered the market. They failed to state that the spectrum that Digicel now holds was actually allocated to its predecessor companies, long before Digicel entered the Bermuda market.

Therefore, how can they claim this as an example of discrimination against them? They also fail to state that the allocation of Spectrum is one of those critical work streams that must be completed prior to the introduction of reform.

They also fail to state that they, along with other providers, have not paid a cent for the Spectrum that they hold. But they have been able to amass a comfortable profit from the use of that spectrum. Profits that can apparently be spent on exhaustive and expensive legal battles.

Mr. Speaker
Digicel goes on to claim, again in an effort to paint themselves as a victim, that “the Department has allowed other operators to act well outside the scope of their licences with impunity.” Again, no evidence is presented in support of this very serious allegation.

Digicel has raised concerns about the services provided by other carriers. The Department has investigated the claims, and has worked with carriers to ensure that a breach of the respective licence does not occur.

Mr. Speaker
I should add that, far from discriminating against Digicel, the Government is a significant corporate customer of Digicel. And in this regard, the Government of Bermuda provides Digicel with substantial revenues. If we were so intent on undermining them, discriminating against them, and placing them at an unfair advantage in comparison to other providers, wouldn’t it have been much easier to simply cancel all of our contracts with Digicel?

Mr. Speaker
We have noted a very sad pattern with Digicel – it appears that it is perfectly fine for them to push the envelope. And should someone question them, they cast themselves as being treated unfairly and the object of discrimination. But should anyone else attempt to push the envelope, they will seek to challenge them at every turn.

Mr. Speaker
Perhaps the most abhorrent statement made by Digicel occurs in the penultimate paragraph of their press release. As much as it pains me to repeat their salacious comments, I must do so in order to demonstrate the lengths to which they have chosen to go. I quote:

“Furthermore, it is also Digicel’s belief that the activities of certain officials will greatly damage Bermuda’s reputation as a place to invest and do business. This is the behaviour of countries administered by oppressive Governments — and not what one would expect in an ostensibly sophisticated business environment such as Bermuda.”

Not satisfied with personally attacking individuals in their attempts to have it their way, they also seek to damage the reputation of the entire country by describing a Government that is seeking to determine a dispute through the Courts as oppressive! Perhaps the overriding message from Digicel is that the Government and everyone else should simply get out of their way and allow them to do as they wish.

Mr. Speaker
To question an action is not oppressive. To seek a resolution through the legitimate referral to the Telecommunications Commission is not oppression. To accept the Court’s invitation, in response to a matter initiated in the courts by Digicel, is not oppression. Contrary to Digicel’s suggestions, to question Digicel is not the behaviour of an oppressive Government. Rather, it is a Government that takes seriously its responsibility to enable fair competition.

Mr. Speaker
The Telecommunications Act vests considerable power in the Minister to fairly regulate the Telecommunications industry and to address breaches of the law or policy. Contrary to Digicel’s claims of victimization and discrimination, I have thus far not taken any action to impede their ability to make a profit from services that we believe are outside of the scope of their licences.

I had the ability to issue a Cease and Desist order, but did not do so. I had the ability to revoke their licence, but did not do so. I had the ability to recommend to the Minister responsible for Business Development that he revoke their 114B licence, but did not do so. But yet, we are cast as acting against their interest.

Mr. Speaker
My Ministry has as its primary focus the implementation of Telecommunications reform. The actions of Digicel are a significant distraction and impede our ability to focus our attention where it is needed. But we will not be daunted.

For it is absolutely important that at the implementation of reform, when all carriers will be allowed to offer a full suite of services, that no one carrier is in a dominant, anti-competitive position. Should this be allowed to occur, the consumer will ultimately suffer.

It appears that this is exactly what Digicel seeks. In contrast, we stand firmly on the side of fair competition.

Thank you Mr. Speaker

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