Telecommunications Companies: ICOLs Issued

Good afternoon and thank you for coming to today’s press conference. This marks a major step forward in the further deregulation of the Bermuda telecoms industry – a process which began in 1995.

I’m joined today by Regulatory Authority Chairman Mr. Kent Stewart, CEO Mr Philip Micallef and Commissioner Mr Carlyle Musson and as well as Authority staff.

Perhaps the best place to start today is the Mission of the Department of Telecommunications which is to: “enable an innovative and sustainable telecommunications industry for Bermuda.”

Today I am pleased to announce that telecommunications in Bermuda has moved significantly closer to this goal with the issuance of 19 Integrated Communications Operating Licenses, or ICOLs, to local telecommunications companies.

Before the issuance of ICOLS, telecommunications companies in Bermuda operated under a class license system – Classes A, B and C – which enabled companies to offer either landline, cell phone, internet or cable television – but not all of them. As technology continued to advance, it became clear that this system was no longer relevant or workable as companies sought to bundle services and create operational efficiencies and better pricing for consumers. The issuance of ICOLs will facilitate this process.

Under the previous Government steps were taken to scrap the class license system and move toward issuing ICOLS under a new Regulatory Authority structure that would be funded by and oversee the industry.

The framework for the RA was established by two important pieces of legislation that were passed by Parliament in December 2011 – namely the Regulatory Authority Act (RAA), and the Electronic Communications Act (ECA). The RA was formally brought into operation on January 28th 2013.

The Regulatory Authority is the ‘body corporate’ that has assumed all regulatory responsibilities for the telecommunications industry. However, for an interim period, the Broadcasting industry will continue to be regulated by the Department of Telecommunications.

The RA is politically independent and self-sustaining, and is led by a board of commissioners. The Chairman is Mr Kent Stewart and the other Commissioners are Mr Carlyle Musson and Mr John Cunningham. The Chief Executive of the Authority is Mr Philip Micallef who is responsible for the day-to-day operations of the Authority.

The RA’s issuing of ICOLs is a major step towards enabling an environment of fair and enhanced competition.

And for the Bermudian public, the goal is to have the telecommunications industry provide greater choice, speed and lower prices. In Bermuda and other jurisdictions, better regulation has proven to result in economic growth, increased investment, improved quality of service, and more rapid technological innovation in the sector, which can only be good for consumers.

I would like to thank my predecessors and the technical officers who participated in all the steps leading to the formation of the Regulatory Authority, as well as the Commissioners and staff of the RA who have diligently stuck to their first ICOL issuance deadline of 29th April.

And last but not least, to all of the telecoms carriers for their patience, feedback and collaboration. I will now ask Chairman of the Regulatory Authority, Mr. Kent Stewart, to give details on the ICOLs and RA milestones. Thank you.

As you have heard, nineteen Integrated Communications Operating Licenses, or ICOLs for short, were issued yesterday. We had expected to issue 21, but the merger of North Rock and Logic has handed us some unusual issues and so we have delayed the issuance of their ICOLs. I will talk a little more about this nearer the end of my statement.

As the Minister has remarked, the issuance of the ICOLs is a major milestone in the efforts of the Regulatory Authority to create a new telecommunications environment in Bermuda.

The framework we have now created shifts the emphasis so that the needs of the consumer and those of the Carriers will be able to be matched without the burden of Regulatory barriers.

In simple terms, there are generally four types of telecommunications service – the provision of television, internet, mobile telephone and fixed or landline telephone. Traditionally, providers have been licensed to operate only in one or, at most two of those areas. So consumers in Bermuda typically get cellphone service from one company, landline service from another and perhaps internet and television service from a third.

However, the ICOLS we have just issued now allow any of the providers of telecommunications services in Bermuda to pick and choose what they want to offer to the consumer. We anticipate that some will bundle services in all areas together, so that a consumer, if he or she wants, can get everything from one company, and need pay only one bill every month.

But, yesterday, we also released our Market Review and designated certain firms as having Significant Market Power. These firms are the Dominant players in Bermuda, in certain product or service areas, and so we wish to ensure that they do not abuse their Dominant positions. This is a little bit like having a horse race with handicaps!

The Dominant players will be subject to handicapping – we call them “Remedies” and these Remedies will be the next major project that the RA undertakes. We except to release our Consultation on Remedies around the 6th May, only a week away and then, after a consultation, we will release our Decision on Remedies around the 8th July. So, for now, Dominant firms are still in the race but have some restrictions on what they can do right now until we find the right balance of remedies going forward.

So, we soon hope to see a much greater range of choice for the consumer and, we are confident, lower prices as a result of the increased competition we will have created. I should emphasize that we not advocating that consumers should change what they are purchasing now. If they are comfortable with the services they currently enjoy, then that’s fine. But consumers on the lookout for a better deal should have a much greater range of services to choose from in the months ahead.

I would like here to pay tribute to all the players in the telecommunications industry, who have cooperated with us splendidly in this awkward and sometimes rather painful process of creating a better environment both for the consumer and for them to operate in. They have shown a praiseworthy spirit of cooperation and great patience as we have moved painstakingly, step by step, towards our goal. I’m sure some of them must have wished great harm to be visited on us at times, but I think they all understand that what we are doing is in the end for the good of Bermuda.

This is not, by any means, the end of the Regulatory Authority’s work. We have Local Number Portability, Spectrum Management, Universal Access, Consumer Protection and many other items on our list for this year.

In fact, I urge anyone in Bermuda who is interested in our work to pay a visit to our webpage, at www.rab.bm. The legislation that created the Regulatory Authority obliges us to operate completely in what you might describe as the sunshine of public scrutiny. You’ll find our plans, our finances, the minutes of our board meetings and our communication with service providers all there for you to read and ponder over.

If I may, I would like to return to the Order that the Regulatory Authority issued yesterday regarding the Amalgamation between Logic and North Rock. We have simply decided to have both firms “stay as you were before the amalgamation” for a few more weeks before they embark on their merger plans. This will allow the Regulatory Authority to examine whether there are any issues that the merger creates that will upset the industry dramatically. As Mrs. Coelho stated yesterday, there will be many other firms that can now enter their service offerings and compete with Logic/North Rock so we will observe the market, start a consultation on the issue and also start working on the issues involved in transferring the various telecom licenses that were held by North Rock over to Logic.

We certainly expect to see further mergers and consolidations coming. Bermuda is tiny in the telecommunication world and cannot support 20 businesses all doing the same thing. Some firms have specialty products or services and may simply decide to continue as they always have – some will merge with others and some will try and take over the world – that is all OK because market forces are at work and the Regulatory Authority is observing to ensure that play is fair.

Finally, before we take questions, I would like to take to thank the staff of the Authority for the amazing work they have done to get us to this point. I would also like to thank my fellow Authority Commissioners, John Cunningham and Carl Musson for their wise guidance and help. Philip Micallef’s strong work ethic and wise council has helped Bermuda immensely.

And I would be remiss if I did not also thank the former Government Ministers and their civil service staffs for all the hard work they did on the creation of the Authority and its enabling legislation. Minister Gibbons and his Permanent Secretary Ross Weber have moved mountains in the last few weeks to get us to ICOL day and for that we are grateful.

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