On February 18, 2009, the Turks and Caicos Telecommunications Commission released Telecom Decision 2009 -4 which establishes a new “price caps” plan regulating the prices that Cable and Wireless, now known as Lime, will be allowed to charge for its fixed line telecommunications services over the course of the next four years. The new plan comes into effect on April 1, 2009 and will expire on March 31, 2013.
Price cap plans, which are a common form of regulation in many Caribbean as well as other countries, place upper limits or caps on all regulated service prices. Regulated service prices cannot be raised above a price cap at anytime, but they can be reduced below the cap.
Under the plan established by the Commission, the maximum permitted price of calls from fixed line to mobile phones will be reduced, in a graduated manner, by 26% under the new price cap plan relative to the current price of 50 cents per minute. Thus, the maximum allowed per-minute fixed to mobile call charge will be reduced to 46 cents as of April 1, 2009 and then further reduced to 43, 40 and 37 cents on the 1st of April of each of the following three years.
In addition, all other domestic fixed line services offered by Lime will be capped or, effectively, frozen at current levels for the full term of the price caps period. However, if the annual rate of inflation exceeds 5% in any year during the period, then the prices for these services could be increased, but only to the extent inflation exceeded the 5% threshold. The fixed line services subject to this pricing constraint include Lime’s residential and business access and installation services, fixed-to-fixed on-island and inter-island calling, enhanced services such as voice mail, and domestic private line services.
The fixed-to-mobile price reductions combined with the domestic fixed line service price freeze will result in estimated savings to consumers of approximately $2.5 million in total, or just over $600,000 per year, on average, over the four year price cap period.
As set out in the Decision, the Commission has a commitment from Lime that its pricing of international direct dialed calls from fixed lines will always be equal to or lower than Turks and Caicos Islands Telecommunications
the price of such calls from mobile phones, and thus will reflect the impact of competition in the mobile telephone market.
As part of the ongoing management of the price caps plan, the Commission will require the company to file proposed rate changes for approval, and to demonstrate that they continue to be in compliance with the applicable constraints, and each year Lime will be required to file a compliance report to ensure ongoing adherence to the plan.
The Chairman of the Commission, Bennett Stubbs, stated that: “We are very pleased that the Commission was able to introduce pricing reforms that will benefit all Turks and Caicos Islanders, and in these difficult economic times, provide some relief from price increases that are hitting so many essential services. The Chairman added: “The Commission will continue to strive to motivate improvements in services from the telecom sector, and to press the operators to ensure that TCI leads in the region in terms of the availability of state-of-the-art new digital communications services demanded by global visitors and businesses seeking to invest in our country.”
The Turks and Caicos Telecommunications Commission is responsible for regulating the telecommunications operators in Turks & Caicos Islands, as set out in the Telecommunications Ordinance of 2004. The Commission is charged with maintaining effective and fair competition in the telecom sector that will benefit consumers and to ensure that rates, conditions and quality of the services provided to consumers are reasonable, bearing in mind that the operators are private businesses with a right to a fair profit on their investments. We are also responsible for managing the radio waves and the use of the radio spectrum by the cellular operators, radio and television stations, private radio systems used by businesses and industry etc., making sure that the users do not interfere with the radio frequencies assigned to others.
For more information on the Price Cap Decision click here.
