Minister Updates: Telecommunications Reform

Good morning,

I am pleased to be here today to update the telecommunications industry, the public, and the media on the significant progress that has been made regarding Regulatory Reform in Bermuda over the past several months.

For some time, the Government has been preparing for major reform of the Telecommunications Industry. The process began in2005, and work has continued steadily ever since with the Department of Telecommunications placing the need for reform as their number one priority.

You will recall the passing of the Electronics Communications Act and the Regulatory Authority Act in November 2011. These two milestone pieces of legislation are indicative of this government’s commitment to establishing a framework that would enable the telecommunications industry to move into the 21st century.

This legislative step was an important one and one which will lead to the issuance of Bermuda’s first Integrated Communications Operating Licence or ‘ICOL’ – something which I will discuss further in a moment.

In short, there have been three major accomplishments in terms of progress made since I last briefed you on the matter in early May of this year.

Firstly, I am happy to report that the three Commissioners who will serve on the Board of the Regulatory Authority (RA) have been appointed and have joined me here today. The new Commissioners are: Mr. John C. Cunningham, Mr. Carlyle Musson and Mr. D. Kent Stewart.

Mr. Cunningham and Mr. Stewart are current members of the Telecommunications Commission and will therefore be able to bring much needed continuity to the regulation of the industry. Mr. Musson has extensive senior management experience within Government and the private sector and is the current chair of the Development Applications Board. Taken together, the skills and experience of the Commissioners will ensure that the Regulatory Authority will be expertly guided as it assumes responsibility for the day-to-day regulation of not only the telecommunications industry, but other industries as well.

Secondly, progress has also been made in identifying a highly qualified candidate to serve as the Authority’s Chief Executive Officer. The CEO will have full responsibility for breathing life into the Regulatory Authority. Once an agreement has been reached, I will be happy to advise you of the decision.

And thirdly and finally, the Department of Telecommunications, with the cooperation of industry and support from our external advisors, has completed substantial work regarding licensing, spectrum, budgeting and other administrative issues in preparation for the transition.

I would like to stress at this time, that I remain committed to converting the licenses of existing A, B and C carriers and other PTS licensees to Integrated Communications Operating Licences (“ICOLs”) by 1 April 2013. This move will benefit Bermudian businesses and consumers by increasing competition which, in turn, will bring greater efficiency and more innovation to the sector under a modernised regulatory regime.

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.

However making the transition from a system that has been in place since 1986 to one that is fit for the Twenty-First Century requires time and care. And, despite the substantial progress we have made over the past months, additional work must be completed before the new Authority can begin operations.

The RA Commissioners will require some time to prepare for their new responsibilities and therefore, to ensure an orderly transition, I have decided to defer the date on which the new laws become fully effective and the Authority assumes responsibility for regulating the sector from next month to the first week of January 2013.

Until that time, the Department of Telecommunications and the Telecommunications Commission will work with me as we continue to carry out our responsibilities under the Telecommunications Act 1986.

In order to ensure that the ICOLs are in place by 1 April 2013, I will use my existing powers and my authority under Section 110 of the RAA to initiate a “pre-consultation” process that will run from October through December 2012.

This process will require active participation by industry stakeholders and the public to ensure that we are, collectively, in a position to complete the transition to ICOLs by 1 April 2013.

I will instruct the Department of Telecommunications to publish a notice in the Gazette, early next month, requesting comments from industry and the general public on three matters and these three matters are:

the proposed definition of relevant markets and the proposed identification of operators who have dominance in one or more of those markets;

the proposed terms and conditions of the model ICOL and associated licences for the radio spectrum used to deliver wireless services; and

the proposed terms and conditions for those providers that will not request or require the standard ICOL, or Class Licence.

Comments will be due six weeks later. As part of the pre-consultation process, I plan to schedule a public forum in the middle of next month. I also anticipate holding meetings with carriers eligible for ICOLs and potential class licensees.

The Electronics Communications Act will be activated at the beginning of 2013, pursuant to which the Authority will launch public consultations on market definitions/SMP designations, ICOLs and class licences & exemptions.

In the coming days, the Department will publish a more detailed timetable for the pre-consultations and meetings that will take place over the next three months.

During the early months of 2013, the RA will also be undertaking numerous other activities, such as adopting administrative procedures, establishing a workplan for the 2013/14 Financial Year, ensuring that radio spectrum is used efficiently, implementing local number portability, and reviewing and revising regulations adopted under the Telecommunications Act 1986.

I am pleased with the excellent progress made to date, and I strongly encourage industry participants and all interested parties to engage fully and actively in the pre-consultation process, working cooperatively with the Department and our advisors to achieve completion of the ICOL conversion process by the end of the first quarter of 2013.

I look forward to addressing you again in the near future with further updates on our progress towards our important goal to create an efficient and effective regulatory regime that creates the conditions in which business can thrive while protecting the public interest.

Thank you.

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