KeyTech “Concerned” By RA Consultation

May 29, 2013

In a filing with the Bermuda Stock Exchange, KeyTech Limited released a statement in response to reported action by the Regulatory Authority [RA].

The RA said [PDF] they will “consider whether additional regulatory remedies are required to address cross-market ownership – that is, whether specific measures are required to address ownership by KeyTech of numerous operators across a range of markets.”

“In respect of residential services, there are currently only two networks that are capable of supplying access and local calls, BTC and NRC, both of which are 100% owned by KeyTech,” said the RA.

“A third network, BCV is potentially capable of supplying access and local calls. BCV is partially owned by KeyTech, which means that all three networks that currently supply services to residential customers, or could do so in future, have common ownership with the result that competition is unlikely to be effective.”

“The RA notes that KeyTech has further consolidated the broadband access markets with amalgamation of Logic and North Rock in April 2013. As a result, KeyTech now has holdings in all three of the largest broadband access networks.”

The filing, by KeyTech CEO Lloyd Fray, stated, “KeyTech Limited was surprised and concerned to learn that the Regulatory Authority is proposing to conduct a separate consultation of the KeyTech Group when it received the Consultation: Obligations for Operators with Significant Market Power, given the lack of communication with KeyTech Limited beforehand and the fact that the KeyTech Group is not the only telecommunications group with multiple carrier subsidiaries.

“KeyTech Limited understands the need for a level playing field in the telecommunications industry and our subsidiaries are in favour of supporting competition. The KeyTech Group is, however, concerned by the approach being taken by the Regulator in the Consultation Paper as the Regulator appears to be attempting to regulate beyond the individual carrier level. KeyTech Limited is, accordingly, taking legal advice.

“KeyTech Limited is a non-regulated entity. KeyTech Limited is an investment holding company which, in addition to its wholly owned subsidiaries, owns non-controlling interests with no management control of BDC/CellOne and Bermuda Cablevision.

“As the owner of Bermuda’s original telecommunications company, BTC, which invested in and created Bermuda’s first cell phone company, BTC Mobility, KeyTech Limited has continued to develop and invest in Bermuda’s telecommunications industry for over 125 years. KeyTech Limited created or purchased separate companies because this was a requirement under the old regulatory regime that made it mandatory that we have a separate license for each company.

“In 2008, KeyTech Limited invested $27 million and built a submarine high-capacity cable system linking the US and Bermuda, which enabled Bermuda to diversify its previous reliance on international cable companies [Cable & Wireless and GlobeNet/Brasil Telecom]. This cable system has also allowed all Bermuda telecommunications entities to manage the cost of their off-island links.

“Over the last six years, through KeyTech Limited’s three wholly owned subsidiaries [BTC, Logic and Cable Co.], KeyTech Limited has made a substantial investment – of over $100 million into the Bermuda telecommunications infrastructure.

“Telecommunications is the backbone of international business and the high-quality infrastructure in this area is one of the key reasons that international companies continue to be attracted to doing business in Bermuda.

“KeyTech Limited’s subsidiaries have always worked to maintain a good relationship with the Regulator and they will continue to work through the consultation process in good faith. Furthermore, we reiterate our understanding that the objective of the new Regulatory Authority is to provide a light touch with a view to regulating to the minimum extent necessary to promote and encourage continued investment in Bermuda’s telecommunications infrastructure.”

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Comments (6)

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  1. doctor says:

    okay, so Keytech invested millions and should be immune to regulation?

    ketytech is the people’s hero you insinuate?

    I think not.

    keytech has also made MILLIONS many times over. They spent money to make money and benefited from a license system that helped them to maintain their position, for 125 years.

    Stop crying and let the RA do what they are set up to do – regulate so that we the people can benefit from the best pricing possible while still allowing companies like Keytech to earn revenue…

  2. George says:

    ………….and so it begins! Lawyers fees just went up again!

    Lets be quite frank about the issue of monopolies/duopolies on the Island! Yes we need to encourage steady investment in industries such as telecommunications and energy by companies such as Key Tech and Ascendant through their subsidiaries etc.(and there is only so much business to go around), but at the end of the day the customer should not be the ones who bare the brunt of this investment paying through the nose for services while these companies (and that of their holding companies) continue to increase despite the country being in a recession!

    You want to know why the RA was created Lloyd Fray precisely to address this type of scenario! So take a deep breath – put down the hotline to your lawyers and consider something other that double digit increases in your profit margin for a change!

  3. Truth is killin' me... says:

    Well said George. Power to the people!!!

  4. Bermuda Boy says:

    KeyTech have had it their way for far Too long. Give someone else a chance or is it THEIR WAY or NO WAY?

  5. Amazed says:

    This is a bogus complaint from KeyTech because the Ministry of Telecommunications clearly stated what they intended to do with the issue of market dominance and its effects in its original policy proposal as far back as 2005.