Jamaica telecoms market
Jamaica is the third-largest of the Caribbean islands and has a small and open economy. Despite its relative political stability, rich culture and successful tourist industry, it has long struggled with low economic growth and high levels of crime, poverty and public debt.
In 2010, the International Monetary Fund (IMF) lent Jamaica $1.25 billion as part of a programme of fiscal consolidation and public sector reform. More recently, it approved a four-year Extended Fund Facility of $932 million. The World Bank and the Inter-American Development Bank (IDB) have each allocated $510 million to Jamaica for the same period, while the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) continue to support private sector development.
According to The World Bank, the Jamaican economy has shown signs of improvement, forecasting 1-2% growth over the medium term. The Office of Utilities Regulation (OUR) is Jamaica’s telecoms regulator, with the Spectrum Management Authority (SMA) handling mobile spectrum, and the Ministry of Science, Technology, Energy & Mining (MSTEM) responsible for the universal service fund (USF).
However, legislation to create a single regulator for ICT to deal with issues such as termination rates, QoS, number portability and dispute arbitration will be drafted by January 2015. The use of the local internet exchange point (IXP) that allows ISPs to interconnect directly was expected to become mandatory on January 1, to replace the routing of traffic via the US. Both mobile and fixed-line number portability will be introduced as of May 31 2015.
“To bring all the separate regulators together and have one overarching telecoms watchdog is something the industry needs,” states Peter Bell, analyst at telecoms market research firm TeleGeography. “The OUR is just a broad utility regulator, while the lack of competition and regulatory uncertainty has deterred foreign investment. A good example is where the recent 700MHz licence auction failed to attract any bidders.”
The need to introduce new players has been pressing since the wireless market in Jamaica became a duopoly in 2011. One of the chief concerns surrounds mobile termination rates (MTRs), an area in which Digicel (77% market share) and LIME (23%) have clashed in the past. Both players are currently blocking VoIP, while MSTEM has announced that new regulation for VoIP services is being drafted and that the government will be seeking tax revenue from service providers.
“The mobile market is a duopoly and there is little prospect of that changing until the regulatory side of things is clearer,” continues Bell. “Meanwhile, Digicel is waiting for implementation of number portability before it hits the fixed line market with its new multi-service cable operations.”
After a brief period of comparatively healthy growth, Jamaica’s broadband market has stalled. The composition of the market however, has shifted from incumbent LIME towards chief rival, cableco Flow Jamaica, which is a subsidiary of Columbus Communications and one of the few telcos to successfully challenge LIME.
There are also a number of minor ISPs active in the broadband sector, including Digicel, which has a WiMAX network, broadband wireless access (BWA) provider Anngel, and Wifi operators Dekal and Copia Communications.
The absence of local loop unbundling has limited the presence of rival fixed-line ISPs, although that may yet change following LIME’s publication of a reference interconnection offer (RIO) in 2013.
“Both the wireless and broadband sectors in Jamaica are below regional average penetration rates, so there is opportunity for growth,” says Bell. “However, although the CWC/Columbus deal has yet to get the go-ahead, increased monopolisation can decrease the gains made by liberalisation.”
Bell does see positive developments being driven by Jamaica’s government, which in September this year revealed that the USF had invested $5.5 million to build 188 internet community access points (CAPs). The CAPs provide internet access at minimal or no cost to local residents. The construction of a further 48 CAPs is approved, while $12.2 million will fund the “Tablets for Schools” project.
Work also continues on the Islandwide Broadband Network project, in collaboration with LIME and Flow, to extend connectivity in schools, libraries and post offices.