Court Orders Digicel To Suspend Service

[Updated] Puisne Judge Ian Kawaley today [Oct. 27] ordered Digicel to drop its new long distance service until all legal disputes had been resolved.

The judge made his ruling in the Supreme Court this afternoon after lawyers from the Attorney General’s Chambers argued Digicel was pre-empting forthcoming amendments to laws governing telecommunications in Bermuda.

Arguing its Voice over Internet Protocol long distance service is “compeletely legal”, Digicel had said it had intended to continue offering it despite ongoing legal manoeuvres by both Government and rival telecommunications providers.

“Digicel wishes to remind the public that the VoIP long distance service offered by Transact, which is now part of the Digicel Group of Companies, is completely legal. This service was found legal by the Supreme Court, which invited the Government to object within seven days,” said Digicel Bermuda CEO Wayne Caines earlier this week.

“… We will continue to provide this lawful service. We would like to clarify that this VoIP long distance service provided by Transact is essentially the same as that provided by North Rock Communications and Logic, which is currently available to mobile users of both Digicel and CellOne.

“Transact and Digicel welcome competition, as we believe this will allow the customer to receive the best service with the best value. Already, both long distance incumbents have reduced their prices to compete with our long distance prices launched on October 13. The ultimate winner is the customer who, because of the competition that has ensued due to our entrance into the long distance market, is now able to benefit from better prices market wide.”

In a statement on the matter last week, a Government spokesman said: “Digicel has begun the process of providing long distance service following its recent acquisition of Transact Limited. This move has caused consternation within the telecommunications industry, with carriers seeking relief and clarification from the courts. The Government re-iterates its position that it has not changed its policies regarding telecommunications licences. Its position remains that companies holding more than one licence must operate those licences separately.”

“Government also reminded the public that given the rapid pace of technological development and the imminent reform of the telecommunications laws, the outcome of the litigation will be of tremendous importance for the future of Bermuda and goes well beyond the immediate commercial disputes, to which Government is not presently a party …”

The full statement from Digicel this evening follows below:

The Supreme Court today has decided that the Dept. of Telecommunications (represented by the Attorney General’s Chambers) should be given an opportunity to voice its objections regarding Digicel’s Long Distance service.

Unfortunately, the Attorney General’s Chambers does not appear to have formulated any cogent or coherent objection despite being given an opportunity to do so over the last 7 days.

This is rather startling given that the relevant Ministers and their departments were kept fully informed during and after the necessary governmental approvals were obtained.

Wayne Caines, CEO of Digicel Bermuda, comments on the matter, “I empathise fully with the Judge. A case of this magnitude requires all the appropriate time and attention in order to ensure all stakeholders that our long distance service is fully compliant with all legal and regulatory requirements.”

“Throughout the process of acquiring Transact we have consistently disclosed to the Government that our intentions were to launch a long distance service under the 114B license held by Transact. ”

“The fact that our competitor’s object is not a surprise. And in response to our competitor’s objections we are neither surprised that the Government has requested time before the Courts to be heard on its position.”

“We strongly believe that once the facts of our case are fully presented before the Court that it will be evident that Digicel and Transact are operating within the law and the boundaries of our respective licenses.”

Unfortunately, until the trial is completed and despite consumer demand, Digicel Long Distance will pause from accepting new customers to its service.

Digicel has always maintained that this new service is legal. Mr Caines continues, “The telecommunications landscape has changed dramatically since the Telecommunications Act of 1986 and it is clear that there is a lack of understanding about the technology being used by Digicel in order to provide VoIP long distance services in Bermuda.”

Facts and history on how the long distance service is provided are below:

• On September 21st 2011, Digicel acquired Transact Limited, a local internet service licensed to provide internet services.

• The acquiring of Transact Limited was an entirely legal acquisition. All correct legal and regulatory steps were taken by the relevant parties to complete this corporate transaction. The Bermuda Government and Minister Roban approved the acquisition and granted the 114B license in September 2011.

• Transact uses VoIP technology to carry long distance traffic and this method is no different from the method used by Logic and North Rock to carry their own long distance services to mobile and landline customers.

• Transact Limited is a member of the Digicel Group of companies and currently only provides Digicel customers with long distance services.

The long distance service is marketed under the Digicel brand name. When a Digicel customer signs up for Transact’s long distance service, they are in fact contracting directly with Transact Limited. This is fully disclosed and clearly printed on all long distance sign up forms.

The people of Bermuda have already benefited from better value due to increased competition in the market and Digicel is confident that the Bermuda Government and the Supreme Court will continue to allow Transact to continue to compete on a level playing field with other ISP’s, namely Logic and Northrock.

Update Oct.28: Statement from CellOne:

Yesterday in Supreme Court the Government spoke out in opposition to Digicel regarding their recent long distance offering. The Attorney General’s Chambers cited a number of concerns with the Transact purchase and that Digicel had “jumped the gun” and “broke ranks” ahead of planned regulatory reform measures. In particular it sited documentation from the Department of Telecommunications which confirmed that Class “C” ISPs such as Transact could not offer long distance service to mobile subscribers on a direct dial basis. By the close of the hearing the Supreme Court not only refused Digicel’s original injunction application requiring that CellOne provide interconnection but that Digicel must immediately cease their current offering of long distance service to all customers.

“We are pleased with today’s outcome. It’s consistent with what we’ve been saying all along.” said Frank Amaral, CellOne’s Chief Operating Officer. “As a leader in Bermuda’s wireless sector we appreciate the competitive pressures to come to market with enhanced offerings but this needs to be done within the confines of the rules, after all we are a regulated industry.” Mr. Amaral went onto say “They seem to be surprised by the outcome but they have known all this time that the only way a mobile subscriber in Bermuda can use an ISP for long distance service is to use a prepaid card and to dial an access number. Only through a Class A, like TBI, can one dial directly from their mobile phone”.

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