Review of the Legal, Institutional and Regulatory ...mset.gov.jm/sites/default/files/Stern Report - Review of the Legal... · Regulatory Framework for the Telecommunications Sector

Jamaica Promoting the Development of the ICT Sector

Review of the Legal, Institutional and

Regulatory Framework for the Telecommunications Sector and Recommendations for Reform

Peter A. Stern Eng, Ph.D ps associates

Kingston/Montreal, 16 July 2004

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Table of Contents

PREFACE 1 EXECUTIVE SUMMARY 5 I INTRODUCTION: OVERVIEW OF THE TELECOMMUNICATIONS

SECTOR IN JAMAICA TODAY 19 II THE CURRENT LEGISLATIVE, REGULATORY AND

INSTITUTIONAL FRAMEWORK 29 29 II.1 Legislative and regulatory framework II.2 Institutional framework: current arrangements 36 I.2.1 Ministry of Commerce, Science and Technology with

Energy 37 I.2.2 Office of Utilities Regulation (OUR) 40 I.2.3 Spectrum Management Authority (SMA) 42 I.2.4 Broadcasting Commission (BC) 45 I.2.5 Fair Trading Commission (FTC) 48 I.2.6 Consumer Affairs Commission 50 III REFORM OF THE LEGAL, REGULATORY AND INSTITUTIONAL

FRAMEWORK 51 III.1 Introduction 51 III.2 Review of current legal and regulatory instruments 53 III.2.1 Recommendations of the JTAC and the Consultant’s

Report 53 III.2.2 Telecommunications Policy, 2002 54 III.2.3 Proposals for a universal services/access program 55 III.2.4 Comments from stakeholders 56 III.2.5 IADB’s ICT project for Jamaica 58 III.2.4 Additional observations and recommendations 58 a. Licencing 58 b. Interconnection and access to infrastructure 60 c. Pricing 60 d. Universal access 61 III.3 Establishing a sector specific regulator 62 III.3.1 Defining the attributes of the Authority 62 III.3.2 Defining the independence of the Authority 63 III.3.3 Sectoral responsibilities of the Authority 66 a. Convergence of content and delivery 68 b. Spectrum management 75 c. Competition and consumer protection 76

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Table of Contents

d. Efficiency 80 e. Regulation of the other non telecommunications

sectors 80 III.3.4 Policy and regulatory functions 81 III.3.5 Structure and composition 83 a. Governance 83 b. Appointment of members of the Authority 86 c. Terms and conditions of office 87 d. Professional qualifications 88 e. Head of the Authority and his or her appointment 88 III.3.6 Internal structure of the Authority 90 III.3.7 Accountability and measures to reinforce the Authority’s

independence 93 a. Financial and operating independence 93 b. Accountability and reporting mechanism 95 c. Conflict of interest rules 96 d. Justification for removing the regulator 97 e. Who has the power to remove members of the

Authority? 98 III.4 The regulatory process 98 III.4.1 Transparency 99 III.4.2 Who can overturn decisions of the regulator? 99 III.4.3 Empowering the regulator 100 III.5 Jamaica’s regional and international obligations 101 IV REGULATORY ISSUES OF IMMEDIATE CONCERN 105 IV.1 Introduction 105 IV.2 The bandwidth squeeze 105 IV.2.1 Internet access 110 IV.2.2 Downstream: Bottlenecks in the local loop 110 a. Satellites 111 b. License exempt technologies 112 IV.2.2 Upstream: The high cost of backbone capacity 121 IV.3 Proposed action to overcome the bandwidth squeeze 132 IV.3.1 Develop a national broadband wireless strategy 132 IV.3.2 Promoting competition through the development of

alternative infrastructure 135 IV.3.3 Regulating the dominant supplier’s wholesale prices 134 a. Collocation 134 b. Promoting the expansion of local access through

infrastructure sharing: Local loop unbundling 135 c. Benchmarking 137

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Table of Contents

IV.4 International facilities based competition in Jamaica 138 IV.4.1 Introduction 138 IV.4.2 The international telecommunications system 140 IV.4.3 Methods for settling international traffic accounts 143 IV.4.4 Settlement rates 144 IV.4.5 Obligation to interconnect 146 IV.4.6 Interconnection charges 146 IV.4.7 Conclusions 149 BIBLIOGRAPHY AND INFORMATION SOURCES 151 ANNEXES 157 A TERMS OF REFERENCE OF THE PROJECT 159 B RESOURCE PERSONS 159 Government and regulatory bodies 165 Operators and service providers 171 Users, academia, attorneys, consultants, suppliers, etc 173 C STRUCTURE, GOVERNANCE, FINANCING, LEGAL BASIS, ETC. OF

REGULATORY AGENCIES INVOLVED IN THE SECTOR 175 Broadcasting Commission (BC) 177 Consumer Affairs Commission (CAC) 181 Fair Trading Commission (FTC) 185 Office of Utilities Regulation (OUR) 189 Spectrum Management Authority (SMA) 193 D ICT RELATED ISSUES IN THE WTO’S DOHA ROUND

NEGOTIATIONS 197 E CHARGING AND ACCOUNTING IN INTERNATIONAL

TELECOMMUNICATIONS 205 F SUMMARY OF RECOMMENDATIONS 217

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1

PREFACE Jamaica has made considerable progress in liberalizing its telecommunications sector

since issuing its 1998 Telecommunications Policy which presented the principles for a

policy framework for the future and opened the way to reform1. In 1999 the Government

renegotiated Cable & Wireless’ licence which gave its virtual exclusivity for operating all

telecommunication networks and providing all telecommunications services in Jamaica

until 20132. In 2000 the Government adopted a new Telecommunications Act which

confirms the three phased transition to a fully liberalized telecommunications market

which had been agreed with Cable & Wireless. Also in 2000 two additional mobile

licenses were awarded by way of a spectrum auction. The 2000 Act established the

Spectrum Management Authority (SMA), the Jamaica Telecommunications Advisory

Council (JTAC) and a Telecommunications Appeals Tribunal.

Since the market was fully liberalized in March, 2003 there have been nearly 400

licenses of all types issued to 137 companies.

The purpose of the present consultancy was: to review progress and achievements in

reform of the telecommunications sector in Jamaica; to review and evaluate the current

legal, regulatory, and institutional framework; to analyze spectrum licensing policy and

specific issues related to the provision of international telecommunication services; and

to make recommendations on additional reform and policy and regulatory action for

presentation to the Development Council of the Cabinet. The following sources of

information were used:

• The report of the 2002 Policy Reform Project prepared by InfoCom and

Management Consulting Services (“Consultants”)3 and the subsequent

1 Ministry of Commerce and Technology, Telecommunications Policy: A Framework, October 1998 2 Heads of Agreement between the Government of Jamaica and Cable and Wireless Jamaica Limited, 30 Sept. 1999 3 InfoCom & Management Consulting Services, Report of the Telecommunications Policy Reform Project prepared for the Ministry of Industry, Commerce & Technology and the Jamaica Telecommunications Advisory Council, Kingston, June 2002

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recommendations of JTAC to the Minister of Commerce, Science and

Technology4;

• The 2002 Telecommunications Policy5 which is based on the recommendations

of the Consultants and JTAC;

• Pertinent laws and policies of Jamaica and of other countries and organizations;

• Submissions from the Office of Utilities Regulation (OUR), the Spectrum

Management Authority (SMA), the Fair Trading Commission (FTC), and other

agencies;

• Interviews with officials of government, regulators, operators, service providers,

users, and industry groups;

• Various consultative documents prepared by the OUR.

The local counterpart team which was formed to assist in the review consisting of the

following people:

Charmaine Patterson Ministry of Commerce & Technology Evona Channer Fair Trading Commission Lisa-Marie Gordon Fair Trading Commission Kwan Wilson Spectrum Management Authority Dianne Edwards-Davis Spectrum Management Authority Ernest Smith Spectrum Management Authority Michelle Thomas Spectrum Management Authority

All the members of this team are currently participating in the on-line Master’s Degree in

Telecommunications Regulation and Policy (MRP) program developed and organized by

Professor Kim Mallalieu of University of the West Indies Trinidad & Tobago campus.

Members of the counterpart team were to assist in gathering information for the review

and in the formulation and/or confirmation of recommendations contained in this report. 4 Jamaica Telecommunications Advisory Council, Recommendations from the Jamaica Telecommunications Advisory Council to the Minister of Industry Commerce and Technology, Kingston, July 2002 5 Government of Jamaica, Telecommunications Policy prepared by the Ministry of Industry, Commerce and Technology, 17 September 2002

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The terms of reference of the consultancy can be found Annex A, which also shows the

appointments schedules for a first review mission during the week of April 26, 2004 and

a follow-up mission during the week of 7 June 2004.

I am grateful to the approximately 60 people in Jamaica and elsewhere who were kind

enough to provide valuable information which helped greatly in understanding the

current situation and in formulating the recommendations contained in this report. These

were officials of the Ministry of Commerce, Science and Technology with Energy, the

Public Service Reform Unit of the Cabinet Office, the Office of Utilities Regulation, the

Spectrum Management Authority, the Fair Trading Commission, the Broadcasting

Commission, and the Consumers Affairs Commission. They also included the Solicitor

General and representatives of the three mobile operators, a number of Internet Service

Providers (ISPs) and other new entrants, promoters of new submarine cable projects,

users, non governmental organizations, and consultants and experts. Their names are

listed in Annex B.

Peter A. Stern

July 2004

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5

EXECUTIVE SUMMARY

The telecommunications sector in Jamaica today

Since the beginning of the liberalization process in March, 20006, the growth in cellular

mobile subscribers has been spectacular, increasing from about 300,000 subscribers to

1.6 million today, a compound annual growth rate of 52 %. Mobile penetration in

Jamaica today exceeds that of the rest of the Caribbean and even North America;

however, according to the 2001 Population Census household fixed line telephone

penetration rate is only about 45 % and out of a total of 750,000 households nearly 40%

do not have access to a telephone at home or at a neighbour. Also while there is a

relatively large number of Internet users per 100 population (estimated in 2000 to be

nearly 25) the number of people with Internet access is estimated to be in the order of

100,000 which is still quite low and is likely because of a relatively low fixed line

penetration, the absence of many alternatives and the relatively high price of Internet

access.

Not one of the 51 regional cable TV operators offers Internet access services and there

is only one operator (N5) which offers high speed wireless access and only in the

Kingston area but at prices which are about 60 % of those of Cable & Wireless’ ADSL

service. Prices for dial-up are in the order of two times and for high speed about three

times as expensive as in North America and Europe. It is not surprising therefore that

penetration rates for Internet access in Jamaica have remained behind those found in

more competitive markets presenting a serious obstacle to the realization of the

Government’s objectives to develop a strong and effective Information technology (IT)

sector in Jamaica. Of the 100,000 Internet subscribers there are only about 10 % that

have high speed access over wireless and wireline facilities.

While overall international incoming and outgoing traffic volumes have increased and

continue to do so, net settlement payments from international carriers to C&WJ have

been decreasing after reaching a peak in 1998 and 1999.

6 When the current Telecommunications Act came into force

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Reform of the legislative, regulatory and institutional framework for telecommunications in Jamaica

Current arrangements

Following are the current legislative and institutional arrangements for

telecommunications and ICT in Jamaica today.

The primary legislative instruments are: The Telecommunications Act, 2000; The Office

of Utilities Regulation Act, 1995; The Broadcast and Rediffusion Act, 1949 (amended in

1986 and 2001), The Office of Utilities Regulation Act, 1995; The Radio and Telegraph

Control Act, 1970; The Television and Sound Broadcasting Regulations (1996); the Fair

Competition Act, the proposed Consumer Protection Act, and the Post Office Act.

On the institutional side political and policy setting responsibility for the sector rests

primarily with the Minister of Commerce, Science and Technology with Energy. The

Minister of Information oversees the Broadcasting Commission and the Minister

responsible for Development in the Cabinet Office presently oversees the Office of

Utilities Regulation. Responsibility for regulation is divided among the following bodies:

The Office of Utilities Regulation (OUR) regulates several utilities including

telecommunications; the Spectrum Management Authority (SMA) manages the spectrum

on behalf of the Minister; and the Broadcasting Commission (BC) regulates the

broadcasting sector; The Fair Trading Commission (FTC,) and the Consumers Affairs

Commission (CAC) have responsibility to enforce competition and protect consumers for

all sectors, respectively. For the time being CAC does not operate under an act and has

no enforcement powers. The proposed Consumer Protection Act will give the CAC some

powers.

Proposals for reform

The OUR has the legal and structural underpinning to effectively regulate the

telecommunications sector in Jamaica but has come under growing criticism by

stakeholders and especially the new entrants who suggest that it reacts too slowly to

rapidly changing circumstances in the sector, has not been giving sufficiently high

priority to telecommunications, is too cautious and lacks the will and determination to

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take the difficult and sometimes unpopular decisions that are required to regulate a

sector where a powerful incumbent continues to dominate. Such observations, which

may or may not be founded, overlook the many positive achievements of the OUR in

managing the critical first steps in the liberalization process, in spite of its relative youth

and shortage of expert resources The OUR acknowledges that there is a number of

factors which are hampering it from being as effective. Among these are:

- Inadequate human and financial resources needed to regulate effectively;

- Perceived inability under the current Telecommunications Act for it to regulate

certain activities and sub sectors such as interconnection of data networks,

wholesale markets (ex post), anti-competitive agreements or abuse of

dominance in retail markets;

- The confusion resulting from overlapping responsibilities of the Minister and the

OUR, on the one hand, and of the FTC and the OUR, on the other;

- The failure of the Government to recognize the needs of the OUR especially with

respect to its financial and human resources requirements.

There is agreement among stakeholders that basically two types of action need to be

taken to consolidate progress achieved so far and to reinforce the framework for the

sector, namely:

1. The current legal and regulatory framework for the sector should be reviewed

and revised in light of achievements and experiences gained in the process of

sector reform. This includes: i) passing a new Telecommunications Act; and ii)

taking stock of, reviewing, and making adjustments to or completing the drafting

of essential rules and regulations;

2. A single sector specific regulator with sufficient autonomy and powers to be able

to effectively regulate the sector should be established to support of the

Government’s ICT strategy. The Minister announced at the beginning of March

2004 that this would be done before the end of this year and which for the

purposes of this report will be referred to as the Telecommunications Authority of

Jamaica or simply “Authority”.

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Each of these two actions is examined in this report against a backdrop of the

Government’s Telecommunications Policy, the observations and recommendations for

revision to the current legal, regulatory and institutional framework of the Jamaica

Telecommunications Advisory Council (JTAC), the recommendations in the June 2002

Report of the Telecommunications Policy Reform Project (“Consultant’s Report”) and

OUR’s recommendations on a universal services/access program for Jamaica issued in

May 20047, and various comments on the current arrangements submitted by the

various stakeholders including the OUR and SMA. Additional observations and

recommendations on licencing, interconnection, pricing and universal services resulting

from the present study are also presented.

Recommended action

Following are the main recommendations related to the reform of the legal, regulatory

and institutional framework for telecommunications in Jamaica, that are contained in this

report:

• A new Telecommunications Act and key enabling regulations (including

interconnection, licencing, price regulation, and universal services) should be

drafted and submitted to Parliament. The new Act should provide a basic,

fundamental legal framework for a liberalized telecommunications sector in

Jamaica with details left for regulations and other agency action. This should be

achieved through a formal consultative that ensures that the opinions of all

stakeholders are taken into account in the drafting new legislation and

regulations and establishing a new institutional structure. Technical assistance

financed through the Inter-American Development Bank’s ICT project should be

sought in drafting the new Act and key regulations. The technical assistance

should include developing and coordinating the consultative process and defining

specific training (also to be financed from the IADB program) for young

professionals.

7 Office of Utilities Regulation, Toward Universal Service/Access Obligation for Telecommunication Services in Jamaica: Recommendation of the Office of Utility Regulation to the Minister of Commerce, Science and Technology, Document TEL 2004/07, May 14, 2004

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• A single sector specific regulator (Authority) should be established by merging

the telecommunications regulatory functions of the OUR the spectrum

management functions of the SMA and the radio spectrum technical functions of

the Broadcasting Commission. Regulation of broadcasting content should not be

incorporated into the new Authority at this time. This should be subject to further

study. The functions of the neither Fair Trading Commission nor the Consumers

Affairs Commission should be merged into the Authority. The relationship

between the Authority and these two Commissions with respect to referrals

should be stated but only in general terms in the Act and informal flexible working

procedures for dealing with fair competition and consumer complaints pertaining

to telecommunications should be developed between the FTC and the Authority,

on the one hand, and the CAC and the Authority, on the other. Regulation of non-

telecommunications public utilities should not be assigned to the new

telecommunications Authority. These should remain with the OUR for the time

being.

• The Authority should be constituted as a collegial body (a Board) with five or

seven full time (professional) members including a Chairman. Members of the

Board should be appointed on the basis of their professional competence in the

legal, technical, economic and financial areas for renewable fixed 5-year periods

through a recommendation of the Cabinet. Appointments should be staggered.

The Chairman should be appointed through a recommendation of Cabinet from

among the part time (professional) members of the Board. The Chairmanship

could be permanent (for the period of that member’s term of office) or it could be

rotated among the members of the Board.

• The Authority should have an internal structure with 6 functional departments

(Engineering/Technical, Spectrum Management, Economic Regulation, Policy,

Research and International Relations, Corporate Affairs, and Legal Affairs) each

reporting to one of 3 Vice Presidents. The 3 Vice Presidents should report to the

President of the Authority (See organization chart).

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Corporate Affairs Legal

President

Engineering/Technical

Spectrum Management

Economic Regulation

Policy, Research and International

Affairs

Parliament

Minister responsible for the Information and Communication Technology (ICT) Sector

Telecommunications Regulatory Authority of Jamaica

Vice President Vice President Vice President

Board of the Authority (5 or 7 part time Members including the

Chairman)

• The Authority should report to the Minister responsible for the Information and

Communications Technology (ICT) sector (presently the Minister of Commerce,

Science and Technology with Energy) and annually to Cabinet by means of

annual reports submitted through the Minister and which re made public.

Companies, which are required to fund the Authority through regulatory fees,

should be given the opportunity to comment on the Authority’s draft annual

budget, which the Authority should be obliged to take into account before

finalizing and submitting its budget to Cabinet (through the Minister) for approval.

Strong conflict of interest provisions should be included in the new Act to govern

the selection and appointment of members of the Board of the Authority. The

reasons justifying the removal of a member of the Board of the Authority should

be stated clearly and unambiguously in the new Act. The person or persons with

the power to appoint Members of the Board should also have the power to

remove them but only for the reasons stated in the Act. Members of the staff of

the Authority should be hired and dismissed only by the management of the

Authority. The President of the Authority should be selected by the Board with his

or her appointment approved by the Cabinet. Members of the staff of the

Authority should be hired and dismissed only by the management of the

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Authority. The President of the Authority should be selected by the Board with his

or her appointment approved by the Cabinet.

The Authority should develop comprehensive procedures defining the regulatory

process which should be transparent. There should be provisions in the new Act

to appeal decisions of the Authority in front of the Telecommunications Appeal

Tribunal. In the first instance, however, any decision should be appealed with the

Authority itself and only subsequently in front of the Tribunal. Adequate

resources should be made available in the Authority’s budget to develop and

maintain a comprehensive up-to-date web site containing information on all of the

Authority’s current and past regulatory proceedings, as well as easy decisions,

regulations, consultations, and other data and statistics for the sector.

The Authority should be encouraged to undertake actions to strengthen the

regulatory process and its effectiveness in regulating the

telecommunications sector in Jamaica. The Government should encourage

active participation in regional and international fora some with other

countries in the Caribbean possibly under the ambit of the Caribbean

Telecommunications Union.

The bandwidth squeeze

The impact

In spite of now having a fully liberalized telecommunications market like in most of the

rest of the Caribbean Jamaica continues to suffer from excessively high costs for

bandwidth. This has a direct impact on the prices that consumers must pay for goods

and services that depend on telecommunications as a factor of production. A

consequence of this is that Jamaicans pay significantly more than people living in

competitive markets for Internet access; however, the scope for C&WJ’s competitors’

offering services at prices much below those of C&WJ is limited because of the high cost

of:

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i) the local loop (The downstream bottleneck);

ii) connecting to the Internet (The upstream bottleneck); and

iii) acquiring incoming local telephone lines (channelized T1s) and toll free (1-800)

numbers necessary to offer dial up Internet services.

If not the only supplier of these facilities and services, C&WJ is dominant in all three.

Downstream (local loop)

On the downstream side a number of technologies have or are being developed as

complements or alternatives to copper in the local loop. Among these are satellite and

newer licence exempt technologies.

New wireless technologies and applications have increased the demand for spectrum

dramatically over the past few years. Cellular mobile services, where global subscriber

numbers have now exceeded fixed, are often cited as an example. The International

Telecommunication Union reported that it has been advised of more frequency

assignments in the last ten years than in the whole preceding period from the start of

radio. The scarcity of spectrum especially in the desirable range between 350 to 6,000

MHz is becoming more acute in spite of the fact that the usable spectrum is today 5,000

times wider than it was at the beginning of the radio era in the late 1920s. The need for

ever more spectrum and computerization are leading to the development of new ways to

transmit and receive signals over the air and to manage the radio frequency spectrum.

Computerized radios (“smart radios”) can identify not only a particular frequency or

frequency band but also the time of day, the angle of arrival, the physical location of the

transmitter and receiver, and specific codes that have been added to signals. Several

signals can therefore be transmitted at the same time over the same band of

frequencies. The result of technologies such as spread spectrum, smart antennas, agile

of cognitive radios and software defined radios has been to effectively increase the

amount of spectrum available for various fixed and mobile applications including

broadband local access. At the same time these technological developments are inciting

policy makers to reflect on new, more efficient ways of managing the radio frequency

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spectrum. Among these is the practice of allocating increasing quantities of licence-

exempt spectrum.

Upstream

On the upstream side private companies, cellular mobile operators, and ISPs have little

choice beyond those of C&WJ’s domestic and international leased capacity offerings.

Satellites can provide both backhaul (backbone) and local loop facilities. Satellite

operators offer up-stream connectivity to the Internet to ISPs and others either through

two way links which includes IP Transit or through a one way link, typically with the

return (higher capacity) via satellite.As backhaul the maximum capacity that a satellite

transponder offers is typically 36 MHz of bandwidth (approximately 18 E1s); however,

because of the latency, inferior throughput offered by satellite and generally higher

prices, ISPs prefer fiber optic cable connections. Prices for international leases using

submarine fibre optic links are substantially higher in Jamaica (and indeed in the rest of

the Caribbean). For example, the price for a lease of an E1 circuit in Europe over a

distance roughly equal to the distance between Jamaica and Miami (as the crow flies in

both cases) is in the order of US $ 500 per month, less than 1/25th of the price of a

Jamaica – Miami lease when compared on a per Mbps basis. This does not include the

one time installation charge which is in the order of US $ 6,000 for a T1. The high

international leased circuit prices can be attributed to the limited fiber optic cable circuits

available to users in Jamaica where there are presently just two undersea fiber optic

cables which land in Jamaica, The Trans-Caribbean Cable System (TCS-1) and the

Cayman - Jamaica Fiber System. On the Jamaican side C&WJ controls both.

While the joint owners of the Dominican Republic - Kingston segment of TCS-1 own

capacity up to the cable landing station in Kingston, they have no means of breaking out

this capacity and bringing it to a potential client on the island. They would need to make

arrangements with C&WJ, install multiplexers, and other equipment in C&WJ’s cable

station and then find a means to connect to the local customer through the domestic

network.

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Proposed submarine fibre optic cables for Jamaica

At least four projects to build new submarine cables into Jamaica have been announced.

• The Trans-Caribbean Cable Network ("TCCN") is a project of Trans-Caribbean

Cable Company ("TCCC") which proposes to build, operate, and maintain a

cable system with a current configuration connecting Kingston with the Cayman

Islands and the Dominican Republic at Santo Domingo where it would connect to

existing systems and at least one of the planned Eastern Caribbean cables (the

Eastern Caribbean–1 and Win–1 systems). TCCC would own and/or control each

landing station guaranteeing each subscriber of leased capacity equal access to

cable facilities in each station.

• More recently Caribbean Crossings announced its intention to extend its

Bahamas Internet Cable System (BICS) with a fully protected design running

through the Bahamas’ island chain to Jamaica. This would provide connectivity to

the USA through the BICS system with two landings in Boca Raton, Florida.

Caribbean Crossings indicated its interest in also building a land based fiber optic

network joining the major centers on the island and connected to the proposed

Jamaica – Bahamas cable and in supporting the development of the presently

fragmented cable TV sector.

• The promoters of the eastern Caribbean Win-1 cable system are also proposing

an extension to Jamaica from Puerto Rico.

• Separately a consortium which includes Digicel and Jamaica Network Access

Point (JNAP) has announced its intention to build a cable between Jamaica and

Florida.

Policy makers and regulators in Jamaica can address the issue of high leased circuit

costs by: i) developing a national strategy to promote deployment of the most

appropriate broadband wireless access technology for the particular circumstance; ii)

promoting competition in the provision of domestic and international backbone capacity;

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and where competition is lacking or insufficient to impact prices, and iii) regulating the

monopoly’s or the dominant operators’ prices for such capacity.

Recommended action

The recommended action in this report is as follows:

• The SMA together with OUR and BC should develop a comprehensive national

wireless broadband policy with the objective of promoting the construction of high

speed local loop facilities using the best and most cost effective new and existing

technologies using both licenced and unlicenced spectrum. To the extent feasible

regional collaboration should be sought in carrying out these studies and in

developing such strategies.

• The Ministry, OUR and JAMPRO should develop and implement a strategy to

promote the construction of alternative backbone facilities in Jamaica and

internationally. This strategy might consist of a combination of initiatives including

offering tax and other incentives to investors, creating a point for information and

coordination for potential investors, and facilitating the acquisition of required

land and rights of way. Access to cable facilities landing in Jamaica should be

provided to all licenced operators and service providers on a non-discriminatory

basis. The Ministry should assist in obtaining the necessary environmental

permits by coordinating with the Ministry and agencies responsible for the

environment in Jamaica and concerned environmental and fishing groups. The

Government can lend its support to potential investors in the latter’s discussions

with authorities in the countries of the far end landing points .

• Of the three possible actions for putting pressure on the incumbent operator’s

high wholesale prices (forced collocation, provisions for local loop unbundling,

and benchmarking) priority should be given to benchmarking and negotiations

with the incumbent using these benchmarks as a reference. In developing

benchmarks OUR should seek to collaborate with other regulators and especially

in the Caribbean. At the same time the OUR should proceed with its study on

local loop unbundling.

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International facilities based competition in Jamaica Since the market for international facilities based operators was opened to competition

at the start of Phase III of the transition, 59 international carrier licences have been

issued (in addition to C&WJ whose licence already permitted it to be an international

operator). This licence permits a licencee to operate an international gateway and to act

as a transit point for international incoming and outgoing telecommunications traffic in

Jamaica.

International operators are arguing that they are being squeezed between continually

decreasing settlement payments on the one hand and the fixed termination rates they

have to pay, on the other. Those that are receiving incoming Voice over IP (VoIP) traffic

at the going rates were clearly disadvantaged. Given the strong opposition to the

imposed rates, OUR in April 2004 rescinded an earlier decision effectively deregulating

international settlement rates completely and leaving a decision on termination rates for

incoming international calls on fixed and mobile networks for a later date. This was

confirmed in a further decision by OUR on June 9, 2004. Rates for terminating calls on

fixed and mobile networks will henceforth be those negotiated between the international

operator and the operators of the fixed and mobile networks. To this will be added a US

$ 0.035/min contribution to the Universal Services Fund levied by the Ministry of

Commerce, Science and Technology.

Other than for termination of international originated calls interconnection rates in

Jamaica appear to be in line with international benchmarks.

With respect to interconnection C&WJ has argued that it should not be obliged to

interconnect with international operators and service providers because under the

Telecommunications Act the obligation to interconnect is restricted to international

operators and service providers that have customers. Since these do or may not, strictly

speaking, have their own customers C&WJ suggests it is not covered by the obligation

to offer them cost based interconnection. This is a somewhat disingenuous argument but

does point to the need to clarify provisions related to interconnection in the Act and

accompanying regulations.

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Promoting a competitive market in international telecommunications in Jamaica has

been one of OUR’s main preoccupations since the beginning of liberalization. This is not

surprising given the importance of this market segment. Following are some conclusions

drawn in this report based on a brief analysis of this issue.

• There is no justification for having different termination charges applied to calls

originating outside Jamaica and from within because the costs are the same;

• The OUR has correctly concluded that it is impossible to regulate the rates

(settlement rates) which foreign international operators are prepared to pay to

have calls that they originate terminate in Jamaica;

• International incoming calls are therefore not the right instrument for imposing

and access deficit contribution (ADC). In the absence of fully rebalanced

domestic rates for telephone services other mechanisms must, therefore, be

found to subsidize access deficits and universal services;

• The OUR needs to implement rules or regulations to ensure equal access for

outgoing international calls. The proposed rules in its consultative document,

“Assessment of Dominance in Mobile Call Termination: Supplementary

Consultative Document” are a good basis for doing this.

• The obligation for C&WJ or any dominant operator to interconnect with any

international operator or service provider needs to be clearly and unambiguously

stated in the new Act and interconnection regulations.

Recommended action

The report recommends that:

• Termination charges for calls originating from outside Jamaica should not be

treated differently from termination charges for calls originating in Jamaica and

that other mechanisms should be developed to subsidize access deficits and

universal services (possibly within a comprehensive universal services/access

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program in Jamaica). Regulations for equal access (indirect access) should be

implemented as quickly as possible. The new Act should clearly indicate the

obligation for every operator and service provider to make direct and indirect

interconnection available to the public telecommunications networks and public

telecommunications services of other operators and service providers.

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I. INTRODUCTION: OVERVIEW OF THE TELECOMMUNICATIONS SECTOR IN JAMAICA TODAY

The telecommunications sector in Jamaica has evolved significantly since the

Government and Cable & Wireless in 1999 agreed to a three phased transition to

a liberalized telecommunications sector. Since the beginning of the liberalization

process in March, 20008 the growth in cellular mobile subscribers has been

spectacular, increasing from about 300,000 subscribers to 1.6 million today

resulting in a compound annual growth rate of 52 %. Mobile penetration in

Jamaica today exceeds that of the rest of the Caribbean and even North America

(Canada and USA) as indicated in Figure 1. With three competing operators

(soon to be four) Jamaica has one of the highest mobile penetration rates in the

Caribbean (Figure 2).

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1996

1997

1998

1999

2000

2001

2002

Caribbean North America Jamaica

Source: ITU WTI 2003 Figure 1

Mobile Penetration Rates in Jamaica, the Caribbean and North America (Canada and USA)

8 Date when the current Telecommunications Act came into force,

20

0

10

20

30

40

50

60

70

80

90

Martini

que

Fren

ch G

uyan

a

Guadelo

upe

Jamaic

aAru

ba

Antigua

and B

arbu

da

Baham

as

Cayman

Islan

ds

Virgin

Islan

ds (U

.S.)

Puerto

Rico

Trinida

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obag

o

Surinam

e

Domini

can R

ep.

Belize

Barbad

os

Domini

ca

Saint K

itts a

nd Nev

is

Guyana

Saint L

ucia

St. Vinc

ent a

nd th

e Gren

adine

s

Grena

daHait

i

%

Source: ITU WTI 2003

Figure 2 Comparison of Mobile Penetration Rates in Countries and Territories of the

Caribbean

Calls from mobile telephones to Cable & Wireless Jamaica’s (C&WJ’s) fixed

network cost in the order of J $ 6-12 (US $ 0.10 - 0.20) depending on whether

the call is made from a C&WJ mobile or competing mobile operators’ network

and on the time of day the call is made. Calls from a fixed to a mobile telephone9

cost in the order of J$ 7/min. or US $ 0.12/min. irrespective of the mobile network

to which the call is made. The price for calls from a mobile to a mobile subscriber

vary between J $ 4 and J $ 17.80/min. (US $ 0.067 – 0.30/min.) depending on

whether the originating and destination subscriber are on the same or different

mobile networks, the time of day and the originating subscriber’s tariff packages.

9 The cellular mobile market in Jamaica has a calling party pays (CPP) system of payment for calls from a fixed to a mobile subscriber. This means that it is the person making the call, not the mobile subscriber, who pays for the mobile subscriber’s air time. This method of billing predominates in Europe, for example, but is opposite to the practice in North America (USA and Canada) where the mobile subscriber pays the air time for both incoming and outgoing calls.

21

According to Global Mobile the relative market share of the three mobile

operators at the end of 2003 was: C&WJ, 45.5 %; Digicel, 50 %; and Oceanic

Digital, 4.5 %10.

The impact on prices has been particularly remarkable in international calling

where not only the two new mobile operators but a number of international

operators and service providers compete. Figure 3 shows the impact on

international calling rates.

$0

$10

$20

$30

$40

$50

$60

$70

$80

2000 2001 2002 2003 2004

J $

per m

inut

e

Canada, USA, UK Western EuropeCommonwealth Caribbean Rest of World

Source: C&WJ

Figure 3 Evolution of C&WJ’s International calling Rates

The impact of market liberalization has not been felt in the fixed line market

where there are only two competitors: C&WJ, with about 450,000 customers

connected mainly with copper wires; and Gotel, a new entrant with a basic fixed

wireless backbone network covering 97 % of the island, but has only 1 % of the

fixed line market11.

10 Global Mobile, Volume 11 No. 7, April 7, 2004 11 Office of Utilities Regulation, Dominant Public Voice Carriers, Supplementary Consultative Document: Market Definition for Telephony Access, Document Tel 2003/05, 18 July 2003. Gotel is experimenting with

22

With fixed line penetration below 20 % and decreasing (Figure 4) Jamaica ranks

low with respect to other countries and territories in the Caribbean. (Figure 5).

0

10

20

30

40

50

60

70

8019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

02

Caribbean North America Jamaica

Source: ITU WTI 2003 Figure 4

Evolution of Fixed Line Penetration Rates in Jamaica, the Caribbean and North America (USA and Canada)

The 2001 Population Census revealed that the household fixed line telephone

penetration rate is in the order of 45 % and that out of a total of 750,000

households nearly 40% do not have access to a telephone at home or at a

neighbour12. Separately, the OUR in a 2003 consultative document on

dominance in the fixed line market determined that about 29 % of Jamaican

households in rural areas, 8 % in other towns and 11 % in the Kingston

Metropolitan Area (KMA) do not have telephone access13.

various wireless access technologies. One of its biggest challenges today is to raise capital to build out a network. 12 Jamaica 2001 Population Census 13 Office of Utilities Regulation, Dominant Public Voice Carriers, Supplementary Consultative Document: Market Definition for Telephony Access, Document Tel 2003/05, 18 July 2003

23

0

10

20

30

40

50

60

70

80

90

Cayman

Islan

ds

Virgin

Islan

ds (U

.S.)

Saint K

itts a

nd Nev

isBarb

ados

Antigua

and B

arbu

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upe

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amas

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adine

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maica

Surinam

eBeli

ze

Domini

can R

ep.

Guyana

Haiti

Source: ITU WTI 2003

Figure 5

Comparison of Fixed Line Penetration Rates in the Caribbean

According to TeleGeography in 2002 Jamaica had 349.6 million minutes of

incoming and 56.3 minutes of outgoing international public switched

telecommunications traffic resulting in a surplus of 293.3 million incoming

minutes. that is, there was six times more incoming than outgoing traffic. The top

3 destinations for Jamaica originated traffic were the USA, UK and Canada

accounting for 81.4 % of all outgoing traffic. Most other calls went to the

Caribbean (Cayman Islands, The Bahamas, Trinidad & Tobago, Barbados,

Cuba, St Lucia, ….). The same TeleGeography, however, indicated that the USA

had 100.7 million minutes of traffic coming from and sent 647.3 million minutes to

Jamaica, a significant discrepancy due to bypass and different reporting

methods14.

14 TeleGeography 2004, Primetrica Inc., Washington, D.C. A publication which provides statistics on international traffic flows, bandwidth, etc. A net surplus of international incoming traffic translates into positive net income for operators that terminate traffic in Jamaica. See section II.4.2 of this report. According to TeleGeography these discrepancies are due to differences in reporting methodologies for USA and UK

24

Figure 6 shows the net out payments of USA carriers to C&WJ each year

between 1985 and 2000. The cumulative total over the period was US $ 1.12

billion. While overall international incoming and outgoing traffic volumes have

increased and continue to do so, net settlement payments from international

carriers have been decreasing after reaching a peak in 1998 and 1999.

020406080

100120140160180

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

US

$ m

illio

ns

Source: FCC

Figure 6 Net Outpayments of USA Carriers to C&WJ

Each Year between 1985 and 2000 While there is a relatively large number of Internet users per 100 population

(estimated in 2000 to be nearly 25) the number of people with Internet access is

estimated to be in the order of 100,000 which is still quite low and is likely

because of a relatively low fixed line penetration, the absence of many

alternatives and the relatively high price of Internet access15. For example, C&WJ

offers an unlimited dial-up service for US $ 35/month (J $ 2,100) and an ADSL

access with 256 kilobits per second (Kbps) downlink and 128 Kbps up-link for US

$ 93/month. While Internet Service Providers (ISPs) such as N5 and emoquod

are able to offer dial-up services for between US $ 15 and 25 they are not traffic (e.g. billing point vs. originating point) and inclusion of some refile or bypass traffic. Carriers or regulators may also exclude some cross-border traffic (e.g., between Ireland and Northern Ireland). The discrepancies Jamaica are particularly large, and suggest that much of the traffic sent from the US was transmitted via "grey market" channels, such as Voice over IP. Since many of these grey market operators seek to maintain a low profile, and try to operate outside the public eye, it is practically impossible to gather accurate statistics. 15 The number of users is estimated to be seven times this.

25

generally able to offer competing prices for high speed access because of the

high prices which they have to pay to C&WJ to access customers through its

local loop and backbone facilities to connect to the Internet. The price for the

lease of international fiber optic cable capacity in Jamaica is about ten times as

much as on competitive routes in North America and Europe or across the North

Atlantic.

Not one of the 51 regional cable TV operators offers Internet access services and

there is only one operator (N5) which offers high speed wireless access and only

in the Kingston area but at prices which are about 60 % of those of Cable &

Wireless’ ADSL service. Prices for dial-up are in the order of two times and for

high speed about three times as expensive as in North America and Europe. It is

not surprising therefore that penetration rates for Internet access in Jamaica

have remained behind those found in more competitive markets presenting a

serious obstacle to the realization of the Government’s objectives to develop a

strong and effective Information technology (IT) sector in Jamaica16. Of the

100,000 Internet subscribers there are only about 10 % that have high speed

access over wireless and wireline facilities.

The number of licences that have been issued since liberalization began is

evidence of how open the telecommunications market has become in Jamaica.

As of the end of March 2004 there have been 368 licences issued to 137

companies including 64 Internet Service Provider (ISP), 28 Domestic Carrier, 39

Domestic Voice Service Provider, 48 International Voice Service Provider, 59

International Carrier, 53 International Service provider and 27 Data Service

Provider licences.

In the broadcasting sector, in addition to the 51 regional cable TV operators,

there are 18 radio broadcasters and 3 free-to-air national television operators.

These are regulated by the Broadcasting Commission.

All telecommunications services which were reserved to provision by an

exclusive operator in Jamaica’s 1997 basic telecommunications commitment

16 Government of Jamaica, A Five Year Strategic Information Technology Plan, March 2002

26

under the General Agreement on Trade in Services have now been liberalized

(Table 1).

The purpose of this report is to review and assess the current legal, regulatory,

and institutional structure of the telecommunications sector in Jamaica and to

propose reform of the current arrangements and adjustments to remove

remaining impediments to achieving a fully competitive telecommunications

market not only in the cellular mobile sub sector but also in all other areas of the

sector.

The report recommends some streamlining and simplifications in the legal and

regulatory framework and reorganization of the institutional framework for

regulating the sector. It also examines some pressing issues in particular as they

relate to i) the bandwidth squeeze both in the local loop and the backbone

infrastructure and ii) the competition in international facilities and services

markets. Recommended action related to these pressing issues can be

implemented immediately under the current structure and arrangements.

27

Summary of WTO Commitments on Market Access and National Treatment (15 February 1997 or after)

Commitments on Regulatory and Trade Disciplines and Legal Obligations; Foreign

Ownership Limits

Current Situation

Voice telephone services for public and private use are reserved to the exclusive operator (TOJ) until September 2013 Other basic telecommunication services (telex, telegraph, facsimile, private leased circuit services) are reserved for exclusive operator (TOJ) until September 2013 Closed User Groups (voice telephone, packet-and circuit-switched data services, video) in free zones cannot be interconnected with the local public switched network until September 2013 Value added services (electronic mail, voice mail, on line data processing and retrieval, EDI, code and protocol conversion) Internet and Internet access can be provided without limitations Enhanced facsimile services are reserved for exclusive operator (TOJ) until September 2013 Terrestrial-based digital mobile telephone services are reserved to an exclusive operator for 5-10 years Other digital, terrestrial-based mobile services (data, PCS, paging, trunking) can be provided without limitations; however trunked radio networks cannot be interconnected with the local public switched network until September 2013. Domestic satellite-based mobile telephone services are reserved to exclusive operator for 5-10 years For international satellite-based mobile telephone services and international fixed satellite services the exclusive operator (TOJ) has right-of-first refusal until September 2013 Telecommunications equipment sales, rentals, maintenance etc. can be provided without limitations Teleconferencing can be provided without limitations except for the obligation to use the transmission facilities of the exclusive operator (TOJ)

Commits to all non-discrimination, transparency, regulatory, licencing interconnection, competitive safeguard, and access to and use provisions of the framework agreement, the Telecommunications Annex and the regulatory principles Reference Paper. There are no foreign ownership restrictions.

The Telecommunications Act, 2000 which was adopted on 1 March 2000 provides for a three phased liberalization timetable. On March 1, 2000 mobile and data transmission services including Internet access (using Cable & Wireless Jamaica’s (CWJ’s) facilities), the provision of single line and multi-line customer premises equipment, the wholesaling of CWJ's international switched voice minutes and free trade zone carrier services were opened to competition. On September 1, 2001 WLL, the resale of CWJ's switched domestic voice minutes and Internet access over facilities of subscriber television operators were opened. The whole telecommunications market was liberalized on 1 March 2003, three years after the passage of the Act. As of the end of March 2004, 368 licences have been issued to 137 companies including 64 Internet Service Provider (ISP), 28 Domestic Carrier, 39 Domestic Voice Service Provider, 48 International Voice Service Provider, 59 International Carrier, 53 International Service provider and 27 Data Service Provider licences. This includes C&WJ’s facilities based domestic and international licences and 4 cellular mobile licences (C&WJ, Digicel, Oceanic Digital and AT&T)

Table 1

Comparison of Jamaica’s WTO Commitments and Current Regulatory Framework

28

Chapter I of this report presents an overview of the current legislative, regulatory

and institutional framework. Chapter II discusses the reorganization of the

regulatory framework and makes a number of recommendations on the proposed

single regulator for the telecommunications sector as well as on the current legal

and regulatory instruments. Chapter III discusses regulatory issues of immediate

concern. Annexes A to E present, respectively, the terms of reference of the

project, a list of resource persons interviewed or contacted for the project, the

structure, governance, financing, legal basis, etc. of regulatory agencies involved

in the sector in Jamaica, a brief discussion of ICT related issues in the WTO’s

Doha Round negotiations, and a discussion of charging and accounting in

international telecommunications. A summary of recommendations can be found

in Annex F.

29

II. THE CURRENT LEGISLATIVE, REGULATORY AND INSTITUTIONAL FRAMEWORK

This chapter presents a brief overview of the current legal, regulatory and

institutional framework of the Information and Communications Technology (ICT)

sector in Jamaica. The main objective of this review is to analyze alternatives to

improving this framework. No detailed analysis is presented of any of the relevant

legislative instruments, which have been described in the Report of the

Telecommunications Policy Reform Project prepared by InfoCom Management

Consulting Services for the Ministry of Industry, Commerce & Technology and

the Jamaica Telecommunications Advisory Council (“Consultant’s report”).

II.1 Legislative and regulatory framework

The primary legislative instruments for the ICT sector in Jamaica are: The

Telecommunications Act, 2000; The Office of Utilities Regulation Act, 1995; The

Broadcast and Re-diffusion Act, 1949 (amended in 1986 and 2001); The Office of

Utilities Regulation Act, 1995; The Radio and Telegraph Control Act, 1970; The

Television and Sound Broadcasting Regulations (1996); the Fair Competition

Act, the proposed Consumer Protection Act, and the Post Office Act. Each is

described below.

The framework for the telecommunications sector is contained in The

Telecommunications Act, 2000, which also describes the functions and duties of

the Office of Utilities Regulation (OUR) established in 1995 under the Office of

Utilities Regulation Act, 1995. The Telecommunications Act contains provisions

on licensing, spectrum management, interconnection, numbering, rights of way,

equipment standards, universal services, and consumer protection and defines

the relationship between the OUR and the Minister (who may give it general

policy direction) and between the OUR and the Fair Trading Commission (FTC)

with respect to matters which OUR may refer to the latter. The

Telecommunications Act also establishes the Spectrum Management Authority

(SMA), defines dominance and sets out the obligations of dominant operators

with respect to the filing of a Reference Interconnection Offer (RIO), the pricing of

30

interconnection, the resolution of disputes, indirect access, and number

portability. The Act defines the powers of the OUR and operators to prevent

unauthorized bypass of international services and establishes a

Telecommunications Advisory Council as an advisory body to the Minister and a

Telecommunications Appeals Tribunal. Most importantly the Act defines the three

phased transition to a fully liberalized telecommunications sector. Mainly

because of this the Act has always been considered to be transitional in the

period until full liberalization has been achieved even though it contains many of

the important aspects of a liberalized telecommunications sector.

Section 13 of the Telecommunications Act 2000 defines three types of licences:

a carrier licence which authorizes the licencee “to own and operate the facilities

specified in the application”; a service provider licence which authorizes the

licencee “to provide the services specified in the application”; and a dealer

licence which authorizes the licencee “to sell, trade in or import any prescribed

equipment”. In reality, however, 14 different types of licences have been issued.

(Table 2). These correspond roughly to different sub-categories of licences

issued by the Minister of Commerce, Science and Technology during the

different phases of the transition according to Section 78 of Act.

As mentioned earlier nearly 400 licences have been issued since liberalization

began.

The OUR has drafted a number of rules, none of which has yet been passed by

Parliament as required by the Telecommunications Act.17 Table 3 lists the rules

which have been drafted and submitted for approval and those which are to be

completed. Until now OUR has regulated largely by way of decisions which are

developed through a process of public consultations and which so far have

primarily concerned interconnection, the establishment of dominance, universal

services, directory information services, numbering, pricing (rebalancing C&W’s

rates and price caps), indirect access (= equal access), and prepaid calling

cards.

17 Section 71 says that the OUR can make rules “subject to affirmative resolution (i.e. approval by Parliament). According to section 72 enabling regulations are made by the Minister.

31

Licence

Name Designation Description

Data Service Provider DSP The Licensee is authorized to provide specified non-voice services within Jamaica.

Domestic Carrier DC The Licensee is authorized to own and operate fixed network facilities used in the provision of specified services between points in Jamaica.

Domestic Voice Service Provider DVSP

The Licensee is authorized to provide specified voice services, originating in a fixed network, between points in Jamaica.

Free Trade Zone (FTZ) Carrier FTZC

The Licensee is licensed to own and operate facilities used in the provision of specified services between points in a Jamaican Free Trade Zone and points outside Jamaica.

Free Trade Zone Service Provider FTZSP

The Licensee is authorized to provide specified services through the use of facilities of a duly licensed FTZ carrier.

International Carrier IC

The Licensee is authorized to own and operate facilities used in the provision of a transit service or a specified service between points in Jamaica and points outside Jamaica, or with ships at sea and small vessels in coastal waters.

International Service Provider INT’L SP

The Licensee is authorized to provide international voice and data services to the public through the use of facilities owned and operated by a licenced telecommunications carrier.

International Voice Service Provider IVSP

The Licensee is licensed to resell international switched minutes obtained from a licensed telecommunications carrier.

Internet Service Provider ISP

The Licensee is authorized to provide telecommunications services in relation to internet access.

Internet Service Provider for Subscriber Television Operators

ISP (STVO)

Issued to entities licensed under the Broadcasting and Radio Redifusion Act to provide subscriber television service, authorizing the provision of services in relation to internet access.

Table 2

Licences for Telecommunications Services in Jamaica (Licences issued by the Minister of Commerce, Science and Technology)

32

Rule Section (Act)

Drafting completed

Drafting to be

completed Appeals 60.4 X Application for License 11 X Certification of Standards 57 X Competitive Safeguards 35 X Functions of the Office 4 X Indirect Access 36 X Interconnection 29.3 X International Service 50 X Number Portability 37 X Numbering 8.2 X Penalties 71 X Pre-contract Dispute 34.2 X Price Caps 46 X Quality of Service Standards 44 X Referral to FTC 5 X Resale of International Minutes 79.3 X Rights of Carriers & Service Providers 51 X RIO by Dominant Carrier 32 X

Table 3 Rules Drafted and to be Drafted by OUR

New sector specific acts are being prepared for the electricity and water sector

(Water Sector Act) which the OUR also regulates.

All the provisions of The Radio and Telegraph Control Act, 1970 except those

pertaining to enforcement were repealed in 2000 when the new

Telecommunications Act came into force. Up to then this Act provided the

framework for licensing and regulating the sale and use of radio and telegraph

equipment (except for broadcasting) in Jamaica and required that all radio and

telegraph equipment used in Jamaica be licensed. Under this Act the Minister

had the authority to exempt certain such equipment from licensing requirements.

It established a Radio and Telegraph Control Advisory Committee which advised

the Minister on the control of such equipment.

As of March 2000, the legislative framework for managing the radio frequency

spectrum in Jamaica is found in the Telecommunications Act, 2000 which in

Section 23 gives the Minister the authority (on the recommendation of the

33

Spectrum Management Authority) to grant spectrum licences18. Anyone who

wishes to use radio equipment is required to obtain a spectrum licence. The

Telecommunications Act, 2000 also: i) amended the Radio and Telegraph

Control Act, 1970 by deleting the definitions of telecommunications and

telegraphy and the word telegraph wherever it appeared; ii) requires that the

SMA in performing its functions have regard to the provisions of the Radio and

Telegraph Control Act; and iii) with respect to the sale of radio equipment

stipulates that a person shall not sell, trade in or import any prescribed

equipment unless that person is the holder of a Dealer License. The Minister

upon the recommendation of the Office of Utilities Regulation grants a Dealer

License.

Today enforcement remains the responsibility of the Post and

Telecommunications Department which works in cooperation with the SMA to

accomplish its enforcement functions.

The following licences are issued by the Minister under the Telecommunications

Act:

Private radio station (including emergency and security services, and amateur radio operators)

VSATs

Satellite earth stations

Maritime mobile

Aeronautical

Alien amateur permits

The Postmaster General pursuant to the Radio and Telegraph Control Act issues

the certificates listed below upon the review of the relevant application and the

preparation of the certificates listed below by the SMA. The certificates are then

passed on to the Postmaster General for signature.

Certificate of competence

18 Broadcasters are exempt from the requirement to obtain a spectrum license.

34

Radio technician certificate

Ship operator’s certificate

Type approval certificate

Licensing of broadcast radio stations is the responsibility of the Broadcasting

Commission.

The framework for wireless and wireline broadcasting in Jamaica was

established in the Broadcasting and Rediffusion Act of 1949 which includes

provisions for sound and television broadcasting licenses, subscriber television

service (cable TV) and redifusion (wired distribution network) services19. This Act

defines the requirements, responsibilities and the terms of licenses and the

eligibility, process and conditions, for license applications. It also established an

Appeal Tribunal and a Broadcasting Authority, which was replaced in 1986 by the

current Broadcasting Commission through an amendment to the original Act. The

Act was further amended in 2001 to include non-commercial broadcasting

services and special broadcasting licences.

The Television and Sound Broadcasting Regulations (1996) elaborate on license

application requirements, licensees, license renewals, rules on advertising,

station operation, treatment of political and news broadcasts, operation and

maintenance of a subscriber (cable TV) service, rules regarding relations with

cable TV subscribers, and content regulations (protection of minors and libelous

broadcasts).

The proposed Consumer Protection Act, 2004 deals with the sale, purchase or

provision of goods and services establishing rights for the protection of

consumers; and duties of consumers and providers. It creates offences for

misleading and deceptive conduct, false representations, unfair and unsafe

practices; ensures that the contracts made between consumers and providers

contain provisions that satisfy the test of reasonableness; provides for the

19 The Act foresees four types of broadcasting services: 1) sound broadcasting, 2) television broadcasting, 3) subscriber television, and 4) video programming and three types of licences: 1) sound broadcasting, 2) television broadcasting, and 3) sound and television broadcasting. These licences may be exclusive or non-exclusive and commercial or non-commercial.

35

registration of providers of goods or services to consumers. It improves redress

received by a consumer whose rights have been breached and establishes the

Consumer Affairs Commission with powers which include conducting

investigations into conduct by providers of goods or services, respectively, which

is reported to have affected or be affecting the rights of consumers. Finally it

provides redress for the Commission by the offender where the Commission

defends a matter in court; and enables providers and consumers to seek

mediation services before taking the matter to be settled by the court;

The main purpose of the Fair Competition Act, 1993 is to ensure that the benefits

of the competition in Jamaica are unhindered by anti-competitive practices. It

establishes the Fair Trading Commission and sets standards relating to

transactions within the business community and between the business

community and consumers. The Act Its objectives are to: i) encourage

competition in the conduct of trade and business in Jamaica; ii) ensure that all

legitimate business enterprises have an equal opportunity to participate in the

Jamaican economy; and iii) provide consumers with better products and

services, a wide range of choices at the best possible prices.

The Act, which contains two broad categories of prohibitions – those dealing with

anti-competitive behavior and those dealing with consumer protection - applies to

all persons and businesses operating in Jamaica with some exceptions given to:

the activities of trade unions involved in collective bargaining; activities required

under international treaties; agreements relating to the use of any copyright,

patent or trademarks, activities by professional associations intended to develop

standards of competence necessary for the protection of the public; and activities

that are declared exempt by the Minister, subject to affirmative resolution. The

Act prohibits: abuse of dominance; price fixing; bid rigging; tied selling; exclusive

dealing; double ticketing; misleading advertising; unavailability of goods

advertised at a bargain price; and sale above advertised price. Any person who

obstructs an investigation by the FTC, refuses to give evidence, gives false

information, destroys documents or fails to comply with a requirement is liable for

a fine or terms of imprisonment for terms relating from two to five years.

36

The Post Office Act, 1941 provides for the establishment of the Post Office

through the appointment (by the Governor General) of a Postmaster General

whose powers and privileges are described in the Act. The Postmaster General

has wide powers to make regulations on all matters related to postal services in

Jamaica including the setting of rates, the latter with the approval of the Minister.

The Act confers on the Post Office exclusivity for “receiving, collecting, sending,

dispatching, and delivering all letters” except in a few specific cases including

messenger (courier) services. The Act also deals with matters of procedure,

offences and enforcement in the postal service.

II.2 Institutional framework: current arrangements

Political and policy setting responsibility for the Information and Communications

Technology (ICT) sector rests primarily with the Minister of Commerce, Science

and Technology with Energy. The Minister of Information oversees the

Broadcasting Commission and the Minister responsible for Development in the

Cabinet Office presently oversees the Office of Utilities Regulation. Responsibility

for regulation is divided among the following bodies: The Office of Utilities

Regulation (OUR) regulates several utilities including telecommunications; the

Spectrum Management Authority (SMA) manages the spectrum on behalf of the

Minister; and the Broadcasting Commission (BC) regulates the broadcasting

sector; The Fair Trading Commission (FTC,) and the Consumers Affairs

Commission (CAC) have responsibility to enforce competition and protect

consumers for all sectors, respectively. For the time being CAC does not operate

under an act and has no enforcement powers. This should change when the

proposed Consumer Protection Act is passed.

The following is a brief overview of each of these institutions. Greater detail on

the structure, governance, organization, financing, and legal basis of each can be

found in Annex C.

37

II.2.1 Ministry of Commerce, Science and Technology with Energy

The Ministry of Commerce, Science and Technology with Energy has as its

mission to develop competitiveness by facilitating and stimulating: domestic and

international commerce; cutting edge technology and communications; fair

competition and trade; consumer awareness and protection; and scientific

research.

With respect to telecommunications the Ministry develops and gives policy

direction of a general nature. It has direct responsibility for managing the radio

frequency spectrum (under Section 20 of the Telecommunication Act spectrum

management functions are delegated to the Spectrum Management Authority)

and for issuing carrier, service provider and spectrum usage licences on the

advice of the OUR and SMA, respectively. The Ministry also is responsible for

the designation of universal service providers and determining prescribed

equipment

Within the Ministry, Information and Communications Technologies including

Telecommunications fall under the Science and Technology Division within which

there are three units. (Figure 7). The Post and Telecommunications Unit

overseas the PostCorp (the postal service) and acts as the liaison point in the

Government’s relationship with international organizations including the Universal

Postal Union (UPU), the International Telecommunications Organization (ITU)

and the Caribbean Telecommunications Union (CTU). It serves as the liaison

between the Ministry and the SMA and the Ministry and the OUR. It is

responsible for Jamaica’s participation in international telecommunication

organizations in which it is a member. It also collaborates with the Spectrum

Management Authority and the Office of Utilities Regulation (OUR) on

telecommunications matters and the issuing of telecom licences. The other two

units, The Information Systems Unit and the Science Unit are responsible for

maintaining the Ministry’s internal IT systems, web site and Intranet and for

promoting science-related initiatives and liaising with agencies such as Scientific

Research Council and the National Commission on Science and Technology

(NCST), respectively.

38

Policy for all sectors within the Ministry’s portfolio is developed within the Policy,

Planning and Research Division which has a staff of 6 professionals (The Senior

Director, a Senior Economist, a Corporate Planner, an Economic Analyst, a

Research Officer, a Project Manager) and 2 support staff. In developing policy

this unit seeks advice of technical persons within the Ministry and outside

experts. Once a policy is has been drafted it is circulated and discussed widely.

Amendments are made in accordance with the comments received. The final

document is then submitted to the Cabinet for approval.

The following agencies fall under the portfolio of the Science and Technology

Division: Central Information Technology Office (CITO), which assists with the

Government’s e-Government strategy; Jamaica Intellectual Property Office

(JIPO); The Post and Telecommunications Department (PostCorp); Scientific

Research Council (SRC); Spectrum Management Authority (SMA).

The Ministry also oversees the Fair Trading (anti-monopoly) Commission and the

Consumer Affairs Commission (CAC).

39

Public Relations and CommunicationsCommerce Energy

Human Resource, Management and

Administration

Minister of Commerce, Science and Technology with Energy

LegalFinance

and Accounts

Internal Audit

Permanent Secretary

IADB/ICT Project

Agencies and Departements

Posts and Telecommunications

Unit

Science Unit

Information Systems Unit

Science and Technology

Policy, Planning and

Research

Figure 7 Organization Chart: Ministry of Commerce, Science and Technology with Energy (Shaded areas: all or part of the resources are dedicated to telecommunications)

40

The Minister has authority to appoint:

• the Chairman and members of the Telecommunications Advisory

Council;

• the Commissioners and the Executive Director of the Fair Trading

Commission (FTC);

• the Managing Director and the Members of the Board of the SMA;

• the Postmaster General and the Members of the Board of the Post &

Telecommunications Department (Post & Telecom is responsible for

enforcement of spectrum use under the Radio & Telegraph Control

Act 1970);

• Inspectors under the Post & Telecommunications Act;

• the Telecommunications Appeals Tribunal.

• the head of the Consumers Affairs Commission

Within the Ministry there are several departments headed by Directors. The

Telecommunications Department, headed by Director is supported by of staff 5.

II.2.2 Office of Utilities Regulation (OUR)

The OUR was established as a body corporate under the Office of Utilities

Regulation Act 1995 to regulate the supply and distribution of electricity and

water, public passenger transportation by road, rail and ferry, and the provision of

sewerage and telecommunications services. Its main functions under the OUR

Act are to receive and process license applications, to recommend the awarding

of licenses to the Minister (“having portfolio responsibility for that utility service “),

to promote the interests of consumers “while having due regard to the interests of

carriers and service providers”, to make available information on the sector to the

public, to advise the Minister on matters related to the sector, and to carry out

investigations and generally to regulate the utility service providers with respect

to their license conditions, tariffs and quality of service. It currently reports to the

Minister responsible for Development in the Cabinet Office. The OUR is financed

41

through a cess (tax) on tariffs (= regulatory fees) charged by regulated utilities

and any income which it may earn as a result of its functions.

Its specific regulatory functions pertaining to the telecommunications sector are

described in the Telecommunications Act, 2000. The Office consists of a Director

General and two Deputy Director General’s (one for telecommunications and one

for the other utilities) appointed by the Governor General. Six departments report

to it, each headed by a Director (Figure 8).

Minister of Development

Analysis & Research

Corporate Affairs

OfficeDirector General and 2 Deputy Director Generals

Communications Services

Administration & Human

ResourcesLegalConsumer

Affairs

Figure 8

Organization Chart: Office of Utilities Regulation

The current staff complement is 32.

OUR’s budget, which has to be approved by Cabinet, is public and is submitted

prior to finalization for comment to operators and service providers who are

obliged to contribute to it through the cess. Its 2004/5 (1 April – 31 March) budget

is J $ 177.5 million (= US $ 2.73 million) of which staff related costs (salaries and

benefits) account for about 56 % of the total, training, 6.3 %, office rental, 3.4 %,

and outside consulting, professional and legal fees, 13.1%. The previous year’s

budget was J $ 165 million (= US $ 2.54 million)

42

Current priority areas for the OUR with respect to telecommunications are:

• Study and preparation of a determination on indirect access (equal dialing

access for competing operators, especially for domestic and international

long distance calls). A consultative document was issued in May 2003;

• Evaluation of C&W’s most recent Reference Interconnection Offer (RIO

5). Only the tariff schedule has changed with respect to the previous RIO;

• Mobile call termination. It has determined that each mobile operator is

dominant with respect to the domestic and international voice calls it

terminates on its network. The OUR will, therefore, establish cost based

mobile termination rates to impose on mobile operators. This will be done

in conjunction with the review of RIO 5

• Establish rules and procedures for a fair, non discriminatory, cost-based

toll-free (1-800) service. This is an important issue for Internet Service

Providers who offer dial up access services and need to provide such

services for their customers.

• Automation of central code administration;

• Study of unbundling of local loop (ULL), important in promoting

competitive entry of services such as ADSL, which depend on access to

the local loop;

• Study on and preparation of rules or regulations on collocation in C&WJ’s

cable stations, important in addressing the issue of high prices for leased

circuit capacity.

Chapter IV of this report elaborates on some of these.

II.2.3 Spectrum Management Authority Limited (SMA)

The SMA is a limited liability, share capital company (wholly owned by the

Government of Jamaica) and an agency within the Ministry of Commerce,

Science and Technology established under The Telecommunications Act, 2000

(Section 21) as an advisory body to the Minister. SMA was registered under the

Companies Act in December 1999 with a share capital of J $ 1000 divided into

43

100 shares20. It is governed by a Board of Directors of 11 part time members and

reports to the Minister of Commerce, Science and Technology. Members of the

board have different professional backgrounds and represent government, other

regulatory bodies, academia and the private sector.

Its corporate governance and accountability are subject to the provisions of the

Public Bodies and Management and Accountability Act, 2001, which require the

Board of the SMA to submit to the responsible Minister a corporate plan with an

annual budget and quarterly, half yearly and annual reports including annual

audit financial statements. This Act also requires the establishment of an Audit

Committee and the appointment of an external auditor.

In addition to the Finance and Audit sub-Committee the Board which reviews all

budgets and accounts and reports of the external auditor before they are

submitted to the Board (according to Government guidelines), the SMA has i) a

Human Resources sub-Committee, which deals with staff matters including

salaries and vacancies; and ii) a Technical Operations Committee, which deals

with all technical matters, capital programs, internal management software, and

spectrum management systems and approves licence applications before they

are submitted to the Minister for approval.

While generally higher than those in government, wage levels respect the

guidelines established by the Minister of Finance.

The SMA is responsible for spectrum planning and allocation, spectrum

engineering, spectrum assignments (licensing) and monitoring but it does not

have any enforcement powers, which remain with the Post and

Telecommunications Department (PostCorp) under the so far not repealed

provisions of the Radio and Telegraph Control Act, 1970 which have yet to be

repealed. SMA recommends the issuance of spectrum utilization licenses for all

licensed users of the spectrum. Currently, broadcasters are not required to be

holders of a spectrum licence; once they are licenced by the Broadcasting

20 See Articles of Association and Memorandum of Association of the Spectrum Management Authority Limited, 13 December 1999

44

Commission, they are authorized by the SMA to use the spectrum. In addition,

the SMA provides broadcasters with interference management services The

SMA also prepares the documentation for signature of the Post Master General

with respect to Radio Technicians, Ship Operator and Type Approval Certificates

It also issues radio technicians, ship operator and type approval certificates.

The SMA has four divisions (Figure 9) and a total staff complement of 21

including the Managing Director and Executive Assistant to the Chairman of the

Board. Six positions (of which 4 professional) are currently vacant.

Minister of Commerce, Science and Technology

Managing Director

Board of Directors

Spectrum Engineering Legal Affairs

Policy and Strategic Planning

Finance and Administration

Figure 9

Organization Chart: Spectrum Management Authority

SMA is financed from an annual spectrum regulatory fee imposed on spectrum

users and non refundable fees for processing new license applications and

certificates. The SMA’s budget is approved by the Minister of Commerce,

Science and Technology with Energy (contrary to OUR’s) is not made public. For

FY 2003/04, spectrum users were consulted in relation to the development of the

mechanism for Regulatory fees and the basis on which these were charged.

However, further consultations will only become necessary if there is a major

change in the approach to charging fees. Total budget (capital and recurrent) for

FY 2004/05 is $68.0M. Its operating budget for 2004/5 is J $ 64.674 million (US

$ 1.08 million), of which staff related costs including training account for 73.4 %,

general IT and other expenses, 22.4 %, and consulting and professional fees, 4.2

45

%. The previous year’s operating budget was J $ 58.215 million (US $ 0.97

million).

For the important task of monitoring and enforcing (currently by PostCorp)

spectrum use in Jamaica the SMA relies on only one mobile monitoring unit

which was commissioned in 2001. In addition to upgrading this unit the SMA has

plans to install three fixed monitoring sites and to acquire spectrum management

software (for licencing, billing and band planning) digital maps, a spectrum

analyzer and some other equipment to improve its overall spectrum management

capabilities. For the first phase of these plans, which includes the acquisition of

software and hardware equipment, the SMA has acquired funding of US$1.0M. .

Current priorities of the SMA include studies of: unlicensed spectrum; new

wireless technologies; and spectrum pricing. SMA is involved in a Planning

Institute of Jamaica (PIOJ) in leading a long term planning exercise for the

wireless industry (services and technologies) in Jamaica. This includes

examining visions for the future, the role of government including policy design,

training, and promoting development and the role of industry in meeting the

government’s objectives.

II.2.4 Broadcasting Commission (BC)

The Broadcasting Commission is a statutory body established by the

Broadcasting and Radio Re-Diffusion Amendment Act of 1986 whose role is to

monitor and regulate the electronic media, broadcast radio and television, as well

the subscriber television sub sector. It needs to balance the interests of

consumers, the industries and the creative community in implementing public

policy and law. It replaced the Broadcasting Authority, which was created by the

Broadcasting and Radio Re-Diffusion Act of 1949.

Save for the Cinematographic Authority the Broadcasting Commission is the only

regulator of content in the ICT sector. This role encompasses the development of

codes and programming standards to protect vulnerable audiences from harmful

46

content, particularly children. It also enforces copyright compliance by monitoring

licensing arrangements for the transmission of content by radio, cable and

television.

Members of the Broadcasting Commission are appointed to serve for five years

by the Governor-General, after consultation with the Prime Minister and the

Leader of the Opposition. They meet monthly, or more regularly if necessary, to

discuss and decide on matters relating to the Commission’s mandate.

The responsibilities of the Commission are to:

• administer the Broadcasting and Radio Re-Diffusion Act and the Television

and Sound Broadcasting Regulations, 1996, ensuring that they give structure

and direction to the media the Commission oversees;

• recommend to the Minister of Information which applicants should receive

licences for radio, television and subscriber television (STV) services and

recommend the terms and conditions under which those licences should be

granted and renewed, namely, the programming, technical, and financial

standards and the ability to provide a satisfactory level of service;

• ensure that the operations and programming of the licensees it regulates

meet the standards set out in law and that technical standards set out in the

Regulations are met;

• advise the Minister of Information on matters that are relevant to

broadcasting, specifically on any allocation of time to broadcasting

programmes that are Jamaican in origin, performed by Jamaicans, or which

are particularly relevant or significant to Jamaica; and

• carry out or commission research in all areas relating to the electronic media

in Jamaica. Such information guides the Commission when proposing policy

changes, and formulation of standards for licensees’ operations.

47

As mentioned, the Commission oversees a sector comprised of 18 broadcast

radio licences, 51 subscriber (cable) television service (STV) licences (including

N5’s national wireless/MMDS service) and 3 free-to-air national television

services.

The functions of the Commission are shared among six departments (Figure 10).

Human Resources & Office

Management

Information and Public

RelationsFinance

Minister of Information

Board of Directors

Executive Director

Legal Technical Operations

Complaints, Monitoring, and

Research

Figure 10 Organization Chart: Broadcasting Commission

It currently has a staff of 22 and is financed entirely from an annual licence fee

paid by subscriber television operators. Its budget for 2004/05 is J $ 49,043,647.

(US $ 817,400)

The current priorities of the Broadcasting Commission are to:

1. Develop a new policy framework for the provision of subscriber (cable)

television networks and services in Jamaica. The proposed policy, described

in a consultative policy document entitled, “Open Communication Innovation:

Towards a Policy Framework for Cable Television and Broadband Access to

Media and Information”, is intended to promote the development of cable as

one of many broadband technologies to bring not only media but also

telecommunications and other information services to the home, businesses,

schools, libraries and other institutions. The policy will also address the issue

of universal access and the role that cable can play in extending access to

48

yet unserved areas and opens the possibility of government support through

investment and/or tax incentives. It deals with the convergence between

broadcast and telecommunications networks and the need to ensure

interconnection between them.

2. Develop a re-licencing procedure for subscriber television (STV) operator

licences which expire this year. These were originally issued for 6 years.

Applicants would have to meet minimum quality of service and performance

criteria but would also have to show that they are prepared to adopt and

implement new technologies to expand service offerings to include Internet,

telephone and other information services at affordable rates. The new

licencing procedures would implement the Open Communication Innovation

policy and would also promote Jamaica’s indigenous innovation capabilities.

3. Undertake a study to determine the demand for the cable services in Jamaica

including broadcast television, pay-per-view, telephone, Internet, and other

broadband services, the prices people are willing to pay for these services

and their costs.

In addition the Broadcasting Commission is host this year of the 35th Annual

Conference of the International Institute of Communications in Montego Bay, 11

– 12 October 2004.

II.2.5 Fair Trading Commission (FTC)

The Fair Trading Commission (FTC) is a statutory body established in 1993 to

administer the Fair Competition Act (FCA) which provides for the maintenance

and encouragement of competition in the conduct of trade, business and in the

supply of services in Jamaica and ensures that incentives exist for product

innovation and development.

49

The main functions of the Fair Trading Commission (FTC) are to conduct

investigations into anti-competitive practices in trade and business and take

necessary action in relation to its findings. The Chairman and four

Commissioners who have legal and economic backgrounds and who make up

the Commission, are appointed by the Minister of Commerce, Science &

Technology. The investigative arm is headed by the Executive Director who is

appointed by the Commission and approved by the Minister and is responsible

for the day-to-day operation of the Authority and is required to report on its

expenditures. The FTC is funded in its entirety by the Government of Jamaica

through the Ministry of Commerce Science & Technology.

The Executive Director is supported by an Administrative and a Legal

Department and the Competition Bureau, headed by the General Manager,

Senior Legal Counsel and Competition Chief, respectively (Figure 11).

Commissioners

Executive Director

Administration Department

Legal Department

Competition Bureau

Minister of Commerce, Science and Technology

Figure 11 Organization Chart: Fair Trading Commission

The FTC currently employs twenty persons and its budget for the 2004/5

financial year (1 April – 31 March) is J $ 40.69 million (US $ 6.78 million) of which

staff related costs (salaries and benefits) account for about 85.5% of the total,

office rental and public utilities services, 9.8%; and purchase of other goods and

services, 4.4%. The previous year’s budget was J $ 35.24 million (US $ 5.9

million).

50

II.2.6 Consumer Affairs Commission

Currently the Consumer Affairs Commission (CAC) operates pursuant to the

Trade Act and is limited in its function as an advocate of consumers. A

Consumer Protection Act has been drafted in answer to a need to have

comprehensive legislation for the promotion and protection of consumer interests

in relation to the supply of goods and the provision of services; and in order to

ensure the protection of life, health and safety of the consumer in Jamaica;

however, a reading of the proposed Consumer Protection Act is that the CAC

will, after making a determination that the Act has been contravened, make a

report with recommendations to the Minister as it thinks it fit. The proposed Act

also implies but does not explicitly state that the CAC can take matters before the

Court. [This is not explicitly stated in the Section dealing with the “functions of the

Commission”.] There do not appear to be any provision for the CAC to

“adjudicate” on matters before it. Given that the CAC would have to take its

matters to Court, customers such as telemarketers and businesses, which are

very “telecommunications sensitive” may prefer to have “unfair disconnections”

and other quality of service matters be dealt with by a body that can issue cease

and desist orders or that can deal with the matters expeditiously.

Minister of Commerce, Science and Technology

Board of Directors

Chief Executive Officer

Research, Communication & Information Unit

Field Operations Unit

Finance and Administration Unit

Figure 12

Organization Chart: Consumer Affairs Commission (CAC)

51

III. REFORM OF THE LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK

III.1 Introduction

The OUR has the legal and structural underpinning to effectively regulate the

telecommunications sector in Jamaica but has come under growing criticism by

stakeholders and especially the new entrants who suggest that it reacts too

slowly to the rapidly changing situation sector, has not been giving sufficiently

high priority to telecommunications, is too cautious and that it lacks the will and

determination to take the difficult and sometimes unpopular decisions that are

required to regulate a sector where a powerful incumbent continues to dominate.

Such observations, which may or may not be founded, overlook the many

positive achievements of the OUR in managing the critical first steps in the

liberalization process, in spite of its relative youth and shortage of expert

resources21. The OUR acknowledges that there is a number of factors which are

hampering it from being as effective. Among these are:

- Inadequate human and financial resources needed to regulate effectively;

- Inability under the current Telecommunications Act for it to regulate

certain activities and sub sectors such as interconnection of data

networks, wholesale markets (ex post), anti-competitive agreements or

abuse of dominance in retail markets;

- The confusion resulting from overlapping responsibilities of the Minister

and the OUR, on the one hand, and between the FTC and the OUR22, on

the other;

- The failure of the Government to recognize the needs of the OUR

especially with respect to its financial and human resources requirements.

There is agreement among stakeholders that basically two types of action need

to be taken to consolidate progress achieved so far and to reinforce the

regulatory framework for the sector: 21 The OUR’s well presented and researched consultative documents which are all available on its web site are a testament to its capabilities. 22 OUR, The Respective Roles of the Fair Trading Commission and the Office of Utilities Regulation in telecommunications: The Initial Thoughts of the OUR, 22 March 2000

52

3. The current legal and regulatory framework for the sector should be

reviewed and revised in light of achievements and experiences gained in

the process of sector reform. This includes: i) rewriting the

Telecommunications Act; and ii) taking stock of, reviewing, and making

adjustments to or completing the drafting of essential rules and

regulations;

4. A single sector specific regulator with sufficient autonomy and powers to

be able to effectively regulate the sector should be established to support

of the Government’s ICT strategy. The Minister announced at the

beginning of March 2004 that a single regulatory agency for the

telecommunications sector would be established before the end of this

year and which for the purposes of this report is referred to as the

Telecommunications Authority of Jamaica or simply Authority.

Each of these is examined against the backdrop of the Government’s

Telecommunications Policy, the observations and recommendations for revision

to the current legal, regulatory and institutional framework of the Jamaica

Telecommunications Advisory Council (JTAC)23, the recommendations in the

June 2002 Report of the Telecommunications Policy Reform Project

(“Consultant’s Report”)24 and OUR’s recommendations on a universal

services/access program for Jamaica issued in May 200425, and various

comments on the current arrangements submitted by the various stakeholders

including the OUR and SMA. Additional observations and recommendations on

licencing, interconnection, pricing and universal services resulting from the

present study are also presented.

23 Recommendations from the Jamaica Telecommunications Advisory Council to the Minister of Industry Commerce and Technology, July 2002 24 Report of the Telecommunications Policy Reform Project, InfoCom & Management Consulting Services, Kingston, June 2002 25 Office of Utilities Regulation, Toward Universal Service/Access Obligation for Telecommunication Services in Jamaica: Recommendation of the Office of Utility Regulation to the Minister of Commerce, Science and Technology, Document TEL 2004/07, May 14, 2004

53

III.2 Review and revision of the current legal and regulatory instruments

III.2.1 Recommendations of the JTAC and the Consultants

The Consultant’s Report recommended changes to the Telecommunications Act,

2000, the Broadcasting and Radio Re-diffusion Act and the Radio and Telegraph

Control Act. Specifically with respect to the Telecommunications Act it

recommended that: i) the Authority report to Parliament (instead of the Minister)

and have the power forebear from regulating certain services where there is

adequate competition; ii) the Act should define the roles of the Minister

responsible for the sector and the Authority; iii) the relationship between the FTC

and the Authority should be clearly defined; iv) the Authority should have the

power to decide on the number of licences to be granted and also to have the

power to grant and revoke licences and establish licence fees (powers which the

Minister currently has); and iv) the Act should define the spectrum management

mandate and functions of the Authority. The Report recommends that revisions

with respect to interconnection, universal services, consumer protection, and

international services should be required but does not elaborate on what these

revisions should be. The Report also recommends that various rules be drafted

to give effect to various provisions in the current Act. These are the ones listed in

Table 2 of Chapter I of this report.

JTAC’s recommendations pertained, inter alia, to the respective roles of the

Minister and the regulator, the Telecommunications Appeals Tribunal,

Telecommunications Advisory Council, universal access, interconnection, and

rate rebalancing. Many of these support the recommendations in the

Consultant’s Report. Those relating to the establishing of a single regulator are

discussed in the next section of this report.

54

III.2.2 Telecommunications Policy, 200226

The Telecommunications Policy prepared by the Ministry of Industry, Commerce

and Technology in September, 2002 builds on the recommendations of the JTAC

and the Consultants and presents a broad framework for a liberalized

telecommunications sector in Jamaica, which recognizes the importance of this

sector in the “sustained revitalization of Jamaica’s economy”. Its main objectives

are to extend both wireless and wireline networks to cover the entire territory of

Jamaica, to provide for universal access and innovative, high quality services to

the public and businesses at internationally competitive prices, to stimulate

economic and social development, to ensure domestic and international

connectivity, to ensure the profitability of operating companies, and to provide a

legal and regulatory framework to insure the realization of these objectives. The

underlying principles of the Policy are:

1. The introduction of competition in the local loop using all means available

including copper, cable (coaxial and fiber optic), mobile and fixed wireless infrastructure.

2. The development of a universal access program which includes the

building out of the network to un- and under-served populations in the cities and rural areas, affordability, access to emergency services, access for people with disabilities, and access to public telephones;

3. Technology neutrality including the abolition of any distinction between

voice and data services;

4. Promoting ICT for government, education, health and national security. Inter alia, the Policy provides for:

• The establishment of a single, independent telecommunications regulator

incorporating the “telecommunications functions of the OUR and the regulatory functions of the SMA “, which takes into account convergence in the industry and which will regulate in a transparent, nondiscriminatory, and efficient manner;

• Scope for limiting the number of licenses issued based not only on

scarcity of resources but also on the number of players in the market and the viability of companies in the market;

26 Government of Jamaica, Telecommunications Policy prepared by the Ministry of Industry, Commerce and Technology, 17 September 2002

55

• A transparent, non discriminatory interconnection with provision to

recourse to the regulator and the Telecommunications Appeals Tribunal in case of disputes and disagreements;

• A continued process of rate rebalancing based on periodic reviews,

consultations and availability of accurate costing information;

• A comprehensive spectrum management policy taking into account the needs all sectors;

• A fair, non-discriminatory, cost effective numbering policy which will also

take into account the need for number portability;

• Evolution of JTAC into a voluntary association of operating companies and other independent players in a period of 3 – 5 years;

• Maintenance of the Telecommunications Appeals Tribunal as a

permanent body with administration and source of funding defined in the new Act;

• Development by the regulator of a minimum set of service level

(consumer protection) standards to include but not to be limited to service provision, quality and customer relations;

• Technology neutrality with no distinction between voice and data nor

between wireline and wireless transmissions and limitations on equipment to be designated as Prescribed Equipment;

• Promotion of subscriber (cable) television networks as an alternative to

the local loop (in conjunction with Jampro);

• Active participation in international and regional fora including the WTO, FTAA and CSMA; and

• Appropriate attention directed toward human resources development in

the sector.

III.2.3 Proposals for a universal services/access program

OUR’s May 2004 recommendations to the Minister of Commerce, Science and

Technology on the establishment of a universal services/access program in

Jamaica are summarized in Box 1.

56

III.2.4 Comments from stakeholders

During this review many stakeholders submitted verbal and written comments on

the current legal and regulatory framework. These concern, inter alia, perceived

limitations, contradictions and inconsistencies in the current Telecommunications

Act pertaining to licensing and regulation of certain services entities, limitations

on the powers of the SMA, shortcomings in the spectrum regulations, and the

need to clarify the respective roles of the OUR, the FTC, and the CAC with

respect to their respective roles in regulating competition and protecting

consumers. These comments are based on each one’s experience in dealing

with the current framework. Any revision of the legal, regulatory and institutional

framework needs to take these into account along with all earlier comments

submitted in context of the 2002 Telecommunications Reform Project.

Recommendation. A formal consultative process to revise the legal,

regulatory, and institutional framework for telecommunications should be

implemented to ensure that the opinions of all stakeholders are taken into

account when drafting new legislation and regulations and establishing a

new institutional structure. This can typically be achieved by first inviting

and receiving comment, preparing a first draft of a new Act and key

regulations, submitting them for further comment and then finalizing the

package before submitted it to Parliament for approval. In addition to a new

Telecommunications Act the package should contain at least regulations

for interconnection, pricing, universal services, licencing and spectrum

use. As a hands-on training exercise the consultative process should

involve young professionals from all the relevant agencies.

57

Toward Universal Service/Access Obligation for Telecommunication Services in Jamaica: Recommendations of the OUR to the Minister of

Commerce, Science and Technology* 1. Allow market efficiency** and access gap*** concepts to be developed in the single line

voice telephony market before any further assessment of that market is done. (i.e. March 2005)

2. No need for regulatory intervention in cellular mobile market at this time due to success of prepaid.

3. No need for regulatory intervention in the single line voice telephony market where a technology neutral perspective should prevail.

4. Possible need for regulatory intervention in the provision of public payphone services across the Island with funding from the Universal Service/Access Fund. No need for regulatory intervention in the provision of free access to emergency services at this time.

5. Need for regulatory intervention in the provision of Internet 6. Fund access to public institutions with priority given to schools at the primary and

secondary levels through the provision of computer hardware and software and broadband with a minimum bandwidth of 1.5Mbs download and 384Kbs upload with a flat tariff structure.

7. Use a competitive bidding (minimum subsidy) approach in the selection of potential operators for the provision of universal service/access.

8. Establish of a universal service/access fund to which operators (carriers and service providers) should contribute from their revenues, net of interconnection and/or lease line payments with universal service/access charges made obvious to the customer on their bills.

9. Create an independent and transparent fund administration which would preferably operated as a separate agency/unit from the Ministry and the Authority with the total operating costs not exceeding 5% of the total amount of money collected each year.

10. Give special consideration to the disabled community; no need for regulatory intervention to address disconnection from a network given the widespread availability of prepaid mobile service

11. Funding obligations on operators and service providers of 5% of revenues for the first two years to cover capital infrastructure and equipment costs and a maximum of 2 % or 3 % thereafter.

_______________ * Office of Utilities Regulation, Toward Universal Service/Access Obligation for Telecommunication Services in Jamaica: Recommendation of the Office of Utility Regulation to the Minister of Commerce, Science and Technology, Document TEL 2004/07, May 14, 2004 ** Difference between the level of telephone penetration under monopoly conditions and the level of penetration under optimal or competitive conditions. *** A state where the market for telecommunication services is competitive and fully developed but some consumers are still unable to access telecommunication services as a result of affordability constraints, operators’ refusal to rollout service in uneconomic areas or some other reason.

Box 1 OUR’s Recommendations on the Establishment of a Universal

Services/Access Program in Jamaica

58

III.2.5 IADB’s ICT project for Jamaica

The Inter-American Development Bank’s (IADB’s) ICT project for Jamaica

provides for support for further development of the legal and regulatory reforms

in the telecommunications sector and most particular it provides for financing

technical assistance in the drafting of laws and regulations and for training.

Recommendation. Technical assistance financed through the IADB’s ICT

project should be sought in drafting the new Act and key regulations. The

technical assistance should also be applied to developing and coordinating

the consultative process and defining specific training (to be financed from

the same IADB program) for young professionals in Ministry of Commerce

Science and Technology with Energy, the new regulatory body, the FTC,

the CAC, the CAC, and other agencies and institutions. IADB’s ICT project

funds should be used for this technical assistance.

III.2.6 Additional observations and recommendations

In conjunction with and in addition to the 2002 Telecommunications Policy, the

recommendations of the JTAC and the Consultant and the recommendations of

the OUR on a universal services/access program, the following aspects of the

legislative and regulatory framework are recommended for consideration in

drafting a new act. These pertain to licencing, interconnection, price regulation,

and universal access.

a. Licencing

The regime should be simple, non-discriminatory, transparent and light-handed.

Licences should be required to operate a public telecommunications network27,

provide public telecommunications services28 and use the radio frequency

27 Which can be defined as “a telecommunications network used to provide a public telecommunications service.” 28 Which can be defined as “a telecommunications service, including a public telephone service, offered to members of the general public, whereby one user can communicate with any other user in real time,

59

spectrum. No licences should be required to provide information and value added

services29, which would include access to the Internet, web sites, and on-line

services but not voice services over the Internet, which is a public

telecommunications service. Similarly no licences should be required to establish

and operate private networks other than for the use of the frequencies they may

need. This position differs from that of C&WJ which in its submission to the 2002

Telecommunications Policy Reform Project recommended maintaining all the

existing licencing categories30.

The Act should state the requirements, conditions, rights and obligations of

licence holders including obligations to contribute to the operation of the

Authority, to a universal access program, and to emergency services. There

should also be obligations included to require public telecommunications network

operators and service providers to develop quality of service procedures and

processes for handling of customer complaints and to report regularly to the

Authority on their performance as measured against these indicators. (The

Authority should, in accordance with the Telecommunications Policy, establish a

list of quality of service performance indicators for all licensed services.)

There should be only one licence for each licence holder describing the networks

the licencee can operate, the services the licencee can provide. A list of

authorized frequencies can be appended to the licence eliminating the need to

have separate frequency licences. Licences should be renewable, if the licence

holder has not breached the terms and conditions of the licence.

Licences issued for particular networks or services should be non-discriminatory;

that is, similarly situated providers should have identical licence conditions.

Where a network or service provider is dominant, certain licence provisions

regardless of the technology used to provide such service, but does not include a service that modifies a communication, restructures, adds or supplies, or permits user interaction with, information unless such service is offering a public telephone service.” 29 Which can be defined as “services other than public telecommunications services that modify the form, content, code, protocol or other similar aspect of the communication, restructure, add or supply information or permit user interaction with information. 30 See Appendices of Report of the Telecommunications Policy Reform Project, InfoCom & Management Consulting Services, Kingston, June 2002

60

should apply. These would typically be contained in the dominant operators’

licences31

The basic, fundamental licencing provisions in the Act should be supplemented

by licencing regulations.

b. Interconnection and access to infrastructure

While the current provisions in the Telecommunications Act appear to satisfy the

criteria of a fair, non-discriminatory, transparent and cost based interconnection

regime, it would nevertheless be worthwhile to review them before finalizing the

new framework. These should also be accompanied by enabling interconnection

regulations. There should also be provisions to ensure that new entrants will

have access to technically or commercially essential facilities, and that require

operators (and public utilities) to provide access to their infrastructure (such as

towers, poles, conduits and other facilities) to other operators and service

providers on the basis of fair and non-discriminatory terms and conditions, and

on a timely basis. It should be possible to deny access only for specified reasons,

such as safety, interference or lack of space. Disputes among operators should

be mediated or be subject to arbitration by the Authority. Basic, fundamental

interconnection provisions in the Act should be supplemented by interconnection

regulations.

c. Pricing

The Act should establish the principle that prices for telecommunications

networks and services, in an open and competitive market, will not be regulated

but be freely determined by the principles of supply and demand in the market;

the Authority should, however, be able to regulate prices in the following limited

circumstances: i) where there is only one operator or service provider supplying

a particular facility or service (monopoly supplier); ii) where an operator or 31 See for example: Draft Licence and Frequency Authorization Granted by the Commission under the Telecommunications Act, 2003 to Cable & Wireless (West Indies) Limited for the Establishment and Operation of a Fixed Public Telecommunications Network and the Provision of Certain Public Telecommunications Services and to Use Certain Frequency Bands in Anguilla, Schedule 8 of an Agreement of 11 April 2003 between the Government of Anguilla and Cable & Wireless (West Indies)

61

service provider is in a dominant position as the supplier of the particular facility

or service; iii) where, in the regulator’s opinion, there is no fair and open

competition to establish prices; or where there is evidence of anti-competitive

pricing practices. Again basic provisions in the Act should be accompanied by

enabling regulations.

d. Universal access

Regulations should be drafted establishing a fair, non-discriminatory, and

proportionate formula for determining contributions to universal access for each

licensed public telecommunications network operator and service provider. In the

interest of potential cost savings in administering the universal services/access

program consideration should be given to having this done with in the Authority

instead of establishing a separate body as proposed by the OUR. (See proposed

structure of the Authority below.). Basic, fundamental provisions in the Act should

be supplemented by regulations.

Recommendation. A new Telecommunications Act should be drafted and

submitted to Parliament. At the same time the key enabling regulations

(including interconnection, licencing, price regulation, and universal

services) should be drafted and approved. The new Act should provide a

basic, fundamental legal framework for a liberalized telecommunications

sector in Jamaica with details left for regulations and other agency action.

The new Act should take into account the Government’s Policy for the

sector, the recommendations of the JTAC and the Consultants, the

recommendations of the OUR pertaining to universal services/access, the

above stated observations, comments provided by all stakeholders on the

current framework and recommendations relating to interconnection,

pricing, universal services and licencing.

62

III.3 Establishing a sector specific regulator

This section develops and presents recommendations on the nature, attributes,

functions, organization, establishment and powers of the single, sector specific

regulator

III.3.1 Defining the attributes of the Authority

Answers to the following set of questions will help in defining the attributes of the

Authority including its relationship to the Government, other agencies, operators,

service providers, users and consumers, existing structures and arrangements in

the ICT sector32.

Sectoral responsibilities. Should the Authority be responsible for spectrum

management, broadcasting, posts, in addition to the other public utilities

(including telecommunications) which the OUR now regulates? Should its

responsibilities be for only some of these?

Functional responsibilities. To what extent should the Authority be

responsible for competition policy and consumer protection in addition to

its sector specific responsibilities? What should the sector specific

functions be? What should be the division of responsibilities between the

Government and the regulator? Between the related regulatory

institutions and the Authority?

Composition. Should the Authority be constituted as a single person or as

a collegial body? Should its structure be the same as the OUR’s? If it is a

collegial body, should it be full time, part time or a combination of both?

How should the members of the Authority be appointed? Who has the

power to remove them and for what reasons? What should be the

qualifications and terms of office of the members?

32 The structures of the existing regulatory bodies of relevance to the ICT sector are outlined with respect to these criteria in Annex C.

63

Reporting link. To whom should the Authority report with respect to its

activities and finances? Who should approve its budget?

Funding. How should the Authority be funded?

Measures to avoid conflicts of interest. What should be the measures to

avoid conflicts of interest?

Regulatory process. To what extent should the regulatory process and

information be accessible to the public? Will it be possible to appeal

decisions of the regulator?

III.3.2 Defining the independence of the Authority

In addition to defining the structure, responsibilities, functions, and relationships

of the Authority answers to these questions will help determine the degree to

which the new Authority will have the independence and powers to effectively

regulate the sector; that is to:

- give the necessary assurance and confidence to private sector investors and thereby promote the development of this vital sector of the economy through real and fair competition;

- supervise the proper functioning of the market with impartiality and the ability to avoid any pressure from interested parties;

- arbitrate and resolve conflicts with the full confidence of all interested parties; and

- protect consumers’ rights with impartiality.

Independence of the regulator can be understood in two ways: 1) Independence

from any operator, service provider, and investor in the telecommunications

sector; and 2) independence from the Government. Provisions in the WTO/GATS

Regulatory Principles Reference Paper and Directives in the European Union

define independence with respect to operators and service providers in the

64

market33. CITEL, the Inter-American Telecommunications Commission, defines it

in relation to the government34. While both are important it must be understood

that in no country is the sector specific regulator completely separate from the

government to which it is accountable as an administrative body of that

government. Collaboration between the government (policy maker) and regulator

is important to ensure that the government's policies are properly implemented

and to ensure the realization of the ultimate goal of ICT sector policy, namely, the

creating of better, more and new services through technological developments

and increased efficiency, the lowering of prices through increased competition,

and the promotion of private sector participation.

The regulator has, nevertheless, to be given enough independence to be able to

implement policies without day-to-day influence of interested parties including

industry lobbies, politicians and other operators or service providers be they

private or government-owned. It must be able to take independent decisions

based on technical, economic, social, financial, rather than political

considerations and it must be able to manage its own staff without interference

from the Government.

Regulators with independent legal personalities (e.g. Jordan, Malaysia, Morocco,

Sri Lanka) and those that are public authorities with administrative, financial, and

functional independence from the government (Canada, Colombia, Denmark,

UK) enjoy a greater degree of independence from the political body responsible

for policy making than ones that have closer ties to it; however, this depends also

on a number of other factors including reporting links, degree of transparency of

the regulatory process, financing, and the degree of independence of the

person(s) appointed as regulator, permanency of the regulatory body,

33 The WTO/GATS Regulatory Principles Reference Paper to which Jamaica has committed itself states that “The regulatory body is separate from, and not accountable to, any supplier of basic telecommunications services. The decisions of and the procedures used by regulators shall be impartial with respect to all market participants.” (See Annex to the Fourth Protocol of the General Agreement on Trade in Services, World Trade Organization, February 1997). European Council Directives 95/62/CE and 97/13/CE: define a 'national regulatory authority` as a body or bodies, legally distinct and functionally independent of the telecommunications organizations. 34 CITEL Res. 77 (XI-99) defines independence as “ a regulatory regime that is independent of all operators and free from inappropriate political influence”

65

accountability of regulator, the appeal process and the possibility of overturning a

regulator’s decision.

The Minister and the government should be able to give broad policy direction

but not influence day-to-day decisions of the Authority. This is the case in

Jamaica with the OUR today and in Canada with the Canadian Radio-television

and Telecommunications Commission (CRTC)35.

The degree of independence of a regulator can be measured in terms of36:

i) The degree of structural separation of the regulator from the Ministry

responsible for the sector;

ii) The legal basis for establishing the regulator and the extent to which

the regulator is independent of the government and of industry

players. This includes administrative and financial structure and its

functional responsibilities;

iii) How and by whom is the regulator or are the members of the

regulatory commission appointed and what their terms of office are;

iv) The qualifications of the regulator or members of the commission;

v) How the head of the regulatory body is appointed;

vi) Provisions in the act establishing the regulator to avoid conflict of

interest;

vii) How the regulator(s) can be removed and for what reasons;

viii) How the regulator is financed;

ix) Accountability of the regulator and reporting requirements;

x) The extent to which the regulator is able to enforce its decisions;

xi) Transparency of the regulatory process and scope and process for

appealing decisions of the regulator

35 Section 8 of the 1993 Telecommunications Act in Canada says, “The Governor in Council may, by order, issue to the Commission directions of general application on broad policy matters with respect to the Canadian telecommunications objectives.” 36 Stern, Peter A. Indicadores para medir el grado de independencia del organismo regulador de telecomunicaciones, IV Encuentro del Foro Latinoamericano de Entes Reguladores de Telecomunicaciones, Lago Titicaca, Bolivia, 15-17 de Noviembre de 2001

66

These points have been taken into account in the following sections in

developing recommendations related to the responsibilities, establishment,

structure, organization and functions of the new Authority.

III.3.3 Sectoral responsibilities of the Authority

JTAC in its July 2002 recommendations to the Minister agreed with the

Consultants that the OUR, SMA and Broadcasting Commission should be

merged into a single regulatory body. The underlying rational was that a single,

sector specific regulator would be more efficient and save costs. The Consultants

had suggested that this would diminish, if not eliminate, overlapping

responsibilities and/or duplication of mandates among the three agencies

especially in the area of licensing and monitoring of license conditions, even

though the latter is more a result of today’s different licencing regimes in the

telecommunications, spectrum and broadcast areas, than of the current functions

and responsibilities of the three regulators.

In 2000 when the British Government issued its White Paper proposing a new

framework for regulating communications in the UK it gave as its rationale for

creating a new unified regulator the need to have a body “with vision to see

across these converging industries, to understand the complex dynamics of

competition in both content and the communication networks which carry

services37 “. A convergent regulator was needed to regulate an increasingly

convergent communications industry where telecommunications companies

where acquiring broadcasters or developing the capability to become

broadcasters38. It should not be forgotten that the British White Paper was written

at the height of the frenzy in the communications sector and coincidently with and

in support of the European Commission’s development of a common regulatory

37 The British Government’s White Paper on a framework for communication regulation, A New Future for Communications, Department of Trade and Industry, 2000 38 It is understood that in Jamaica C&WJ has applied for a broadcasting licence.

67

framework for electronic communications networks and services for the

European Union39.

The Office of Communications (OFCOM), the new convergent communications

regulator, which was created at the end of last year in the UK and which resulted

from the merging of the former telecommunications regulator (OFTEL), the

spectrum agency (Radiocommunications Agency) and three broadcasting

regulators, has three main functions:

1. Economic regulation of electronic communications networks;

2. Content regulation; and

3. Spectrum management.

The establishing of the new communications regulator in the UK benefited from

20 years of experience with a liberalized telecommunications market and the

successful functioning of a sector specific telecommunications regulator. The

rational for establishing a convergent telecommunications regulator in Jamaica

should be analyzed in the Jamaican context and most particularly with respect to:

a) the appropriateness of merging regulation of content with the regulation of the

means by which this content is delivered; b) the benefits of putting spectrum

management and the regulation of telecommunications networks and services in

the same entity; c) the relationship between sector specific regulation of

electronic communication networks and services, on the one hand, and

regulation for competition and consumer protection, on the other; d) the objective

of reducing administrative costs and eliminating duplication and/or conflicting

requirements imposed on regulated companies and e) how other sectors

(electricity, water, transportation) which the OUR also regulates today should be

regulated in the future? These issues are analyzed in the following paragraphs.

39 Directive of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services (Framework Directive), PE-CONS 3672/01, Brussels, February, 2002

68

a. Convergence of content and delivery

The UK’s White Paper suggests that a converged regulator is better able to deal

with competition issues which have both network and content implications, as

might arise in an industry with vertically integrated broadcast and telephone

companies or in the mobile market where operators are seeking to add content to

their service offerings as a way of boosting falling revenues.

Currently the Broadcasting Commission (BC) regulates content of radio and

television broadcasting and the means by which this content is delivered. It

regulates carriage by cable and over-the-air obtaining the necessary frequency

assignments from the Spectrum Management Authority and making

recommendations to the Minister (of Information) as to who should be awarded a

broadcasting licence based on its overall evaluation of programming, technical

and financial aspects of the application; however, it regulates content quite

differently from carriage. The difference between the two is fundamental.

JAMPRO and the Broadcasting Commission in their submissions to the

Telecommunications Policy Reform Project in 2002 have quite opposite views on

this. JAMPRO argues for bringing content and carriage regulation into one

regulator because this would reduce bureaucracy and uncertainty and thereby

encourage investment. A situation to be avoided is that which exists today where

subscriber (cable) television operators who are issued broadcast licences by the

Minister responsible for broadcasting under the Broadcasting and Radio Re-

Diffusion Act and telecommunications licences by the Minister responsible for

telecommunications under quite different legislation, the Telecommunications

Act. The BC, on the other hand, suggests that not only content but also the

transmission systems of entities whose primary function is to create or acquire

and deliver content should also be regulated by this same regulator. A system of

transmission of an entity whose primary purpose is not the delivery of content

would be regulated by the telecommunications regulator. BC suggests a

redefinition of “broadcasting” and “telecommunications” to reflect this40. The

40 See Appendices of Report of the Telecommunications Policy Reform Project, InfoCom & Management Consulting Services, Kingston, June 2002

69

difficulty, of course, in a converged world will be to distinguish among entities

whose primary responsibilities are for content and those whose primary

responsibilities are not for content. The distinction between content and carriage

is probably more clear cut.

Regulation of infrastructure such as cable which can be used at the same time

for delivering broadcasting and telecommunications services is a complex issue

which merits further reflection. There is probably no adequate solution or best

practice to which one can turn today at least in countries with democratic

institutions. In France, for example, the situation is very ambiguous and political

because permission to build cable networks is given by the local authorities

(Municipal Government), permission to broadcast by the broadcasting regulator

(Conseil Supérieur de l’Audiovisuel) which regulates content, and permission to

offer a telecommunications service (under a general licence) by the

telecommunications regulator (Agence de Regulation des Telecommunications).

Local authorities are politically motivated. The broadcasting and

telecommunications regulators are both independent. The situation is similar in

Colombia where television (and not radio) broadcasting falls under the

responsibility of a very independent regulator (Comisión Nacional de Televisión)

while telecommunications is regulated by the Comisión de Regulación de

Telecomunicaciones, an entity with less legal independence and which only

regulates but does not control the provision of telecommunications services to

the public.

What are some of the difficulties and drawbacks in bringing content and carriage

regulation together?

In a democracy, which recognizes the freedom of speech, the right to

communicate and the protection of individuals’ privacy, providing citizens the

means to communicate privately is one of the fundamental purposes of

telecommunications networks and services. The Constitution of the International

Telecommunication Union states the obligation of countries to protect the

70

secrecy of communications41. Broadcasting on the other hand, has both political

and social dimensions. Regulating broadcast content means regulating public (as

opposed to private) speech and social behaviour and the protection of society.

Given the differences between the two there are only a very few countries that

have merged content and telecommunications into the same entity. Out of the 29

OECD countries listed in Table 4 only four (Canada, USA, UK, and Japan) have

converged regulators and even in these countries the two areas are often treated

quite differently within the organization42. Among countries with shorter

experiences in regulating in liberalized markets there are Malaysia, Singapore

and South Africa which also have converged ICT regulators.

Broadcasting has by far the much higher profile and is politically more sensitive.

One has only to look at the press where coverage of telecommunications is

generally much more subdued than coverage of broadcasting. Where the two are

combined the regulator’s focus is invariably on broadcasting which in the

Jamaican context would not presently be desirable given the important and

pressing issues that need to be resolved in the rapidly evolving

telecommunications sector. Jamaica’s telecommunications industry will no doubt

favour a sector specific regulator who can devote all of its time and resources to

the task of regulating telecommunications. The converse might, however, also be

true. Resolution of urgent issues in broadcasting might be delayed due to

priorities being given to telecommunications in a converged regulator.

In spite of the fact that in the UK the process of bringing five different regulators

into one took three years to complete and was based on many years of

experience with regulating both telecommunications and broadcasting it is

understood that even today OFCOM acts more like an umbrella over quite

distinct regulators with a separate content board having been established for the

purpose of regulating content. It is unlikely that members of such a board would

41 Article 37 of the ITU Constitution deals with this subject in two provisions: 1) Member States agree to take all possible measures, compatible with the system of telecommunications used, with a view to ensuring the secrecy of international correspondence; and 2) Nevertheless, they reserve the right to communicate such correspondence to the competent authorities in order to ensure the application of their national laws or the execution of international conventions to which they are parties. In Switzerland the secrecy of telecommunications is recognized as a fundamental right in the country’s constitution. 42 OECD, Telecommunications Regulations: Institutional Structures and Responsibilities, Working Party on Telecommunications and Information Services, DSTI/ICCP/TISP(99)15/ Final 25 May 2000

71

also have the competence and the ability to regulate the technical and economic

aspects of infrastructure and spectrum. In Jamaica it would most certainly be a

challenge to constitute a commission of members with the required skills to

regulate both telecommunications and broadcasting. It would, therefore, be more

prudent for the Government for the time being to continue to regulate

broadcasting (content) separately from telecommunications (carriage) even

though the new framework would need to acknowledge the increasing

convergence between the two. This position is consistent with the proposal that

C&WJ made to the Telecommunications Policy Reform Project in 2002, that the

BC should regulate content and the Authority, carriage.

With respect to the technical functions, those that relate specifically to the radio

spectrum for broadcasting could usefully be merged with the spectrum

management functions of the single regulator to ensure efficient coordination of

use of spectrum for both broadcasting and telecommunications. Because the BC

has certain responsibilities to establish and maintain technical standards and

quality of services, it has a technical capability to approve and inspect cable

installations. The Telecommunications Act, 2000 gives the OUR the right to make

rules related to quality of service but the OUR does not approve nor inspect

telecommunications facilities. This specialized function should for the time being

remain with the BC.

The BC suggests cross fertilization of the boards of the BC and the Authority.

Recommendation Regulation of broadcasting content should not be

incorporated into the new single telecommunications Authority at this time;

however, the technical aspects related to the radio spectrum for

broadcasting should be merged with the spectrum management functions

of the single regulator to ensure that there is sufficient coordination of use

of spectrum for both broadcasting and telecommunications. Technical

aspects related to the approval and inspection of cable and broadcasting

installations should remain with the Broadcasting Commission; however,

the provision of any telecommunications services over these facilities

including subscriber television should be regulated by the Authority

72

according to provisions in the Telecommunications Act and enabling

regulations. The merging of content regulation into a converged regulator

at a later stage should be subject for further study and evaluation. Also

consideration should be given to whether the Broadcasting Commission

should have oversight of content matters pertaining, for example, to video

games and the Internet (excluding e-mail and like communications).

73

74

Table 4

Regulatory Institutions in Broadcasting and Telecommunications in the OECD

75

b. Spectrum management

There is no “best practice” with respect to spectrum management, whose prime

functions of planning and allocation, assignment; monitoring, control and

enforcement can be organized independently from regulating the operation of a

network or the provision of a service. The spectrum management function can

generally be realized: i) through a separate agency as was the case in the UK

before the creation of the new regulator, as is the case in France, and as will be

the case in Spain under the new legislation; ii) as part of the ministry responsible

for telecommunications as is the case in Canada, Italy or in Spain today; or iii) as

part of the telecommunications regulatory body as is done in Brazil, Portugal and

the USA. Table 5 indicates the different practices in 10 EU countries.

The UK’s White Paper argues that the spectrum management functions should

be brought into the converged regulator because of the growing importance of

spectrum allocation and assignments for economic growth and competition and

the need for a coherent approach for spectrum management in the UK for non

military uses. The converging uses of frequencies which were previously

allocated either for telecommunications or broadcasting is another reason for

making spectrum management part of the convergent regulator43. Furthermore,

given the growing importance of wireless technologies for delivering

telecommunications services there is benefit to be gained by bringing together

the research and policy development functions of both and in dealing with

competition and bottleneck issues in the wireless area along with similar issues

in the broad telecommunications area. (See Section III.2.2 of this report). Neither

the JTAC nor the Consultants had any particular views on this; however, the

preceding arguments are also valid for Jamaica.

Recommendation. The entire spectrum management functions should be

brought into the new telecommunications Authority along with the

necessary enforcement powers, which are currently with the Posts and

Telecommunications Department (PostCorp). 43 Examples of convergent uses of spectrum are digital broadcasting which will combine traditional image and sound broadcasting with Internet access and interactive applications and 3G mobile systems which can deliver broadcasting signals including live broadcast content.

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c. Competition and consumer protection

Neither the Consultant nor the JTAC recommended the merging of the Fair

Trading Commission into the single regulator, the overriding argument being that

the FTC has a broader mandate regarding competition issues which go beyond

just regulating telecommunications. The UK White Paper proposed giving the

convergent regulator (OFCOM) and the anti-monopoly commission, Office of Fair

Trading (OFT) “concurrent” powers whereby OFCOM would have specific

powers to promote competition in sector specific matters related to consumer

protection, access, and interconnection and the OFT would maintain

responsibility for issues related to monopolies and mergers. OFCOM was given

additional investigative powers in the communications sector and was to be

consulted by OFT with respect to monopolies and mergers in the

communications sector.

JTAC suggested that there was need to clarify the procedure of referrals

between the FTC and the Authority. The exchange of notes between the OUR

and FTC in 2000 is a good basis for this; there is, however, a danger of over

formalizing the relationship between the two. While a certain level of

independence should be maintained between them, flexibility and exchanges of

information on a working level should be encouraged. The suggestion that there

be a Consultative Committee made up of staff of the two agencies should be

further explored and developed.

The proposed Consumer Protection Act will reinforce the powers of the

Consumer Affairs Commission (CAC) which will be given extensive investigative

powers in addition to its acquired skills and capacities in gathering information,

conducting research and processing consumer complaints. The CAC has a well

established complaints unit, consumer education program and a high rate of

resolution of consumer complaints. It is generally perceived by the public as

being the agency which they can trust to defend their rights as consumers and to

which they can address their complaints in the confidence that the CAC will

pursue the complaint. The CAC, it would seem, is the most appropriate body to

assign prime responsibility for protection of consumers of telecommunications

77

services; however, there is a need to ensure close collaboration between the

CAC and the Authority especially in areas where the latter can and must provide

the specialized technical and economic support needed to resolve the particular

complaint.

Recommendations. The functions of neither the Fair Trading Commission

nor the Consumers Affairs Commission should be merged into the

Authority. The relationship between the Authority and these two

Commissions with respect to referrals should be stated in the new Act but

only in general terms in the Act. Informal flexible procedures for dealing

with fair competition and consumer complaints pertaining to

telecommunications should be developed between the FTC and the

Authority, on the one hand, and the CAC and the Authority, on the other.

The concept of consultative committees on competition issues and

consumer protection should be further pursued.

78

Frequency Management

Country Responsible for Sector Policy Planning and Allocation Assignment and

Licencing Monitoring, Control and

Enforcement

Sector Specific (Telecommunications) Regulator; Competition

Authority

Austria Bundesministerium für Verkehr, Innovation und Technologie (Wien)

Bundesministerium für Verkehr, Innovation und Technologie (Wien)

Bundesministerium für Verkehr, Innovation und Technologie (Wien); RTR-GmbH for broadcast frequencies

Bundesministerium für Verkehr, Innovation und Technologie (Wien)

Rundfunk und Telekom Regulierungs-GmbH (RTR-GmbH) (Wien)

Belgium Ministère des Télecommunications (Bruxelles)

Institut belge des services postes et des télécommunications (IBPT) (Bruxelles)

Institut belge des services postes et des télécommunications (IBPT) (Bruxelles)

Institut belge des services postes et des télécommunications (IBPT) (Bruxelles)

Institut belge des services postes et des télécommunications (IBPT) (Bruxelles)

France Ministère de l’Economie, des Finances et de l’Industrie (Paris)

Agence nationale des fréquences (AFNR) (Paris)

Autorité de régulation des télécommunications (ART) for the telecommunications sector ; Conseil supérieur de l’audiovisuel (CSA) for broadcasting (Paris)

Agence nationale des fréquences (AFNR) (Paris)

Autorité de régulation des télécommunications (ART) for the telecommunications sector (Paris)

Germany Bundesministerium für Wirtschaft und Arbeit

Regulierungsbehörde für Telekommunikation und Post (RegTP)

Regulierungsbehörde für Telekommunikation und Post (RegTP)

Regulierungsbehörde für Telekommunikation und Post (RegTP)

Regulierungsbehörde für Telekommunikation und Post (RegTP)

Italy Ministro delle comunicazioni (Roma)

Ministro delle comunicazioni (Roma)

Ministro delle comunicazioni (Roma)

Ministro delle comunicazioni (Roma)

Autorita per el garanzie nelle comunicazioni (AGCOM) (Napoli)

Netherlands

Ministerie van Economische Zacken (Directoraat-Generaal Telecommunicatie en Post) (Den Haag)

Agentschap Telecom (Groeningen)

Agentschap Telecom (Groeningen)

Agentschap Telecom (Groeningen)

Onafhankelijke Post en Telecommunicatie Autoriteit (OPTA) (Den Haag)

Portugal Ministério da Economia Autoridade National de Comunições ICP-ANACOM (Lisboa)

Autoridade National de Comunições ICP-ANACOM (Lisboa)

Autoridade National de Comunições ICP-ANACOM (Lisboa)

Autoridade National de Comunições ICP-ANACOM (Lisboa)

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Frequency Management Country Responsible for

Sector Policy Planning and Allocation Assignment and Licencing

Monitoring, Control and Enforcement

Sector Specific (Telecommunications) Regulator; Competition

Authority

Spain Ministerio de Ciencia y tecnología (Madrid)

Ministerio de Ciencia y tecnología (Madrid)

Ministerio de Ciencia y tecnología (Madrid)

Ministerio de Ciencia y tecnología (Madrid)

Comisión del Mercado de las Telecomunicaciones (CMT) (Madrid)

United Kingdom

Department of Trade & Industry (DTI) (London)

Office of Communications (OFCOM) (London)

Office of Communications (OFCOM) (London)

Office of Communications (OFCOM) (London)

Office of Communications (OFCOM) (London)

Table 5

Management of Spectrum in 10 European Union Countries

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d. Efficiency

Both the consultants and the JTAC have suggested that one of the benefits of a

single regulator is the gain in efficiency through the elimination or at least

reduction of duplicate and/or conflicting requirements imposed on regulated

companies. Efficiencies would be gained by simplifying licencing procedures

whereby applicants would have to submit their requests for operator, service

provider, and spectrum use licences to only one entity. Further efficiency gains

are possible by combining some of the current OUR and SMA resources in the

Engineering (for example R&D), legal, corporate and administrative areas. This

might lead to some cost savings which might however be offset by the need is for

additional resources in some areas such as economic regulation and spectrum

monitoring.

Licence holders may not see appreciable differences because they would have

to continue to finance the Authority for both its operator/service provider and

spectrum management activities in addition to the annual license fees which go

to the Treasury.

Recommendation. The government should consider removing or reducing

any annual license fees which are not used to finance the Authority.

e. Regulation of the other non telecommunications sectors

The Consultants and JTAC differ in their recommendations on whether or not the

Authority should continue to regulate OUR’s current non-telecommunications

activities. The former propose that the other utilities be regulated by the single

regulator but within a separate division. JTAC is not in favour of this but makes

no proposal to establish a separate agency or agencies to regulate these public

utilities. It is certain that the characteristics and dynamics of these other utilities

are sufficiently different from telecommunications that it would merit further

reflection on how each of these should be regulated in the future. Both are also

81

silent on the regulation of posts which currently is the responsibility of the

Minister of Commerce, Science and Technology with Energy.

Postal services and water are currently provided by public monopolies

throughout Jamaica. The electricity sector has recently been liberalized is subject

to the issues which are quite different from telecommunications. It is understood,

furthermore, that the government is reviewing the organization of these three

utility sectors. It would consequently be prudent if these were left in the OUR until

completion of this review and a decision by the government on the most

appropriate way of regulating these sectors.

Recommendation. Regulation of non-telecommunications public utilities

should not be assigned to the new telecommunications Authority;

however, a study should be undertaken to determine the most appropriate

way to regulate these other utilities, which the OUR should continue to

regulate for the time being. Consideration should be given to the possible

future need to regulate postal services, responsibility for which should in

the intervening period remain with the Post and Telecommunications

Department in the Ministry of Communications, Science and Technology

with Energy

III.3.4 Policy and regulatory functions

Under the new arrangements the Minister responsible for the sector would

develop sector policy, prepare legislation (seeking the advice of the Authority,

where appropriate) and represent the international interests of Jamaica. The

Minister should give broad policy direction to the Authority including advising the

Authority of any changes in Government policy related to the sector. The Minister

should not be able to interfere with the functions committed by legislation to the

Authority, including the Authority’s decision-making powers as they relate to the

supervision and regulation of the telecommunications sector in Jamaica.

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The Authority under the new arrangements would combine the current

telecommunications-related functions of the OUR and the SMA and assume

certain functions such as administration of the universal services program, which

are currently the responsibility of the Ministry. Its functions would include:

• implementing the Government’s policy for the sector;

• receiving and processing operator and service provider licence

applications and recommending the awarding of such licenses to the Minister responsible for the sector;

• receiving and processing spectrum utilization licence applications for all

uses except for the military and public security and recommending the awarding of such licenses to the Minister responsible for the sector;

• collecting licence and spectrum usage fees,

• ensuring compliance with terms and conditions of licences and authorizations and enforcing these;

• managing the radio frequency spectrum including spectrum planning and

allocation, spectrum engineering, spectrum assignments (licensing), monitoring and enforcement;

• working in conjunction with the Broadcasting Commission to ensure that

there are enough frequencies available for broadcasting and that frequency licence holders for broadcasting respect the conditions of their licences;

• administering numbers and other scarce resources for the sector;

• promoting the interests of consumers while having due regard to the

interests of operators and service providers;

• helping resolve disputes involving operators, service providers and consumers;

• making available information on the sector to the public and advising the Minister on matters related to the sector;

• carrying out investigations and generally regulating licencees with respect to conditions of their licenses including tariffs and quality of service;

• (in conjunction with the Fair Trading Commission and the Consumer

Affairs Commission) enforcing competition rules for the sector, protecting consumers, including the regulation of prices, where this is necessary;

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• monitoring compliance with and, where necessary, establishing standards for telecommunications services and equipment,

• ensuring that universal service obligations are met and that Jamaicans have easy and ready access to emergency communications, and

• (in conjunction with the Minister) ensuring that Jamaica’s international obligations with respect to the sector are met.

Recommendation. The functions of the Minister responsible for ICT should

continue to be the development of sector policy, the preparation of drafting

instructions for legislation, and representation of Jamaica’s interests

internationally. The functions of the Authority should include the points

listed above.

III.3.5 Structure and composition

This section elaborates on the governance, appointment of members, the terms

and conditions of their office, their professional qualifications, and the

appointment of the head of the Authority.

a. Governance

The OUR today is composed of a Director General and two Deputy Directors

General (The Office) reports to the Minister responsible for Development in the

Cabinet Office. The Office has functional staff reporting to it resulting in an

arrangement, which resembles models adopted in the UK, Finland, Denmark,

and Bolivia. This has not presented any particular problems; however, a collegial

body (such as those of the Broadcasting Commission and the FTC) probably

gives greater assurance of independence than a single person regulator. While

the latter can probably act more quickly and decisively, collegial bodies provide

checks and balances and the opportunity to debate and consider issues more

profoundly. They also give the opportunity for a wider cross section of internal

views to be presented in the decision making process and are probably less

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susceptible to capture by regulated companies44. Many other countries have

collegial structures usually with an odd number of members giving the president

of the regulatory body the tie-breaking vote. Generally collegial bodies have less

than 10 people.

The independence of the regulator is strengthened by the diversity of its

members, who should to the extent possible have the different educational and

work backgrounds required to regulate the sector. To the extent feasible they

should also represent different political, industry and community interests;

however, their prime qualifications for the position should be their skills and

experiences as they relate to the mandate and functions of the Authority. They

may, for example, be appointed by different branches of government and

therefore represent different political views. They may also represent different

constituents and different geographical regions of the country. Generally though,

it is preferable that the regulator or members of the regulatory body be

individuals of high integrity from different walks of life and with the required

technical expertise, rather than representing different constituencies.

A collegial structure can be either permanent or part-time. The latter has the

advantage that it includes people whose prime duties lie outside of the regulator

in the private sector, government, academia, and with consumers. They are able

to represent the view from outside the regulator and are perhaps better prepared

to judge the impact of the regulator’s actions on society. Also if they come from

diverse enough backgrounds in society they are able to assure a certain degree

of independence of the regulator from both the government and any of the other

stakeholders. The disadvantage of a non permanent arrangement is that its

members often have many other priorities and are not able to dedicate the time

and effort necessary to properly manage the regulator. Part time members may

also find it difficult to keep up to date on the current issues before the regulator.

Members of the Trinidad and Tobago Telecommunications Regulatory Authority

are non permanent and represent the private sector, academia, the government,

and NGOs. In Switzerland all members of ComCom, one of the two 44 World Bank, Telecommunications Regulation Handbook, edited by H. Intven, 2000

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telecommunications regulators, are part time. In Canada there are 13 permanent

and up to 6 part-time members. The latter represent mainly the different

geographical regions of the country. In Colombia the commission is made up of

three full time professionals and three part time members. The latter represent

the government (The Minister), the anti-monopoly commission and the regulatory

body responsible for controlling the sector. In Ecuador the only member of the

collegial body that is full time is the head of the regulatory body. France, Brazil,

the USA, and Mexico all have full time members.

The BC, CAC, FTC and SMA are all governed by part time collegial bodies with

members representing a cross section of society. With the exception of the SMA

all have been constituted as body corporates by specific acts, which also

describe their functions, powers, composition, accountability, reporting

mechanism, etc. The SMA was established under the Telecommunications Act,

2000 as a limited liability, share capital company subject to the terms and

conditions described in the Public Bodies Management and Accountability Act,

2001.

While the reporting and other conditions and obligations imposed on the SMA by

this Act are appropriate for the Authority, these conditions and obligations are

better set out in the new Act along with the attributes of the Authority as

discussed below.

It is suggested that for the Authority a collegial body of no more than 5 or 7

members (including the chairman) would make for a more efficiently run and

effective governance structure. The Authority should meet at least once a month

and more often if required by the urgency of the matter.

Recommendation. The Authority should be constituted as a collegial body

(The Board) with five or seven full time (professional) members including

the Chairman of the Authority. The establishment, composition, functions

and powers, appointment of members and Chairman, the terms and

conditions of office, qualifications of members, financing, reporting

procedures, and conditions for avoiding conflicts of interest should be

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described in the new Act and should take into account the

recommendations that follow.

b. Appointment of members of the Authority

Members of the Board of the Authority need to know and understand the points

of view of all stakeholders and take these into account when developing opinions

and taking decisions that will affect each of these stakeholders in different ways.

The regulator’s ability to do this is in part a function of the extent to which it is

representative of all stakeholders. This in turn is a function of how members of

the regulatory authority are appointed and who appoints them.

In most countries the regulator or members of the collegial body are appointed by

the executive branch of government (the Head of State, the government, or the

Minister responsible for the Sector). In Brazil, Colombia, and Mexico they are

appointed by the Head of State (President). In Canada, Jordan, Spain, and

Switzerland the Cabinet appoints them. In Ecuador where the regulatory

commission includes representatives of the military, the industry and the

broadcast regulator some members are appointed by the President of the

Republic and at least one, by the Congress which may be led by a party which is

not necessarily that of the President. In France three of 5 members of the

Agence de Regulation des Telecommunications (ART) are appointed by the

President of the Republic, one, by the President of the National Assembly

(Parliament) and one, by the President of the Senate.

Generally there is no stated requirement for the government or the person

appointing the regulator(s) to consult with the industry on appointments;

however, such consultations can be beneficial and can reinforce the perception

of that the professional competence of the people appointed prevailed over

political or other considerations.

Recommendation. Members of the Board of the Authority should be

appointed through a recommendation of the Cabinet.

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c. Terms and conditions of office

Fixed term appointments with clearly defined renewal conditions assure a greater

degree independence from potential political interference. The term of office of

the regulator should not be subject to and coincidental with changes in

government.

Staggering appointments to a collegial body helps ensures continuity and

promotes the entry of fresh ideas and different perspectives. The principle of

staggered appointments has been implemented in Brazil, Argentina, Canada,

and France. In France appointments are for once only and are not renewable. In

other countries appointments are for fixed periods independent of the term of the

government (Spain, 6 years; Canada, up to 5 years renewable; Colombia, 3

years, renewable; Jordan, 4 years, renewable; Malaysia, 2 to 5 years, renewable

once).

The Office of Utilities Regulation Act, 1995 in this respect provides that the

appointment of the Director General and Deputy Directors General of the OUR

“shall be for a period of not less than three nor more than seven years and each

person so appointed shall be eligible for reappointment.” (Second Schedule,

Sections 2(2) and 3(2))

In other countries the terms of office are not defined and in the USA and Sri

Lanka commissioners change with the government.

Recommendation. Members of the Board of the Authority should be

appointed for renewable fixed 5-year periods. Appointments should be

staggered. This should be stated in the new Act.

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d. Professional qualifications

Regulation of the rapidly evolving high technology ICT sector requires

specialised skills which have to be equal to or exceed those of staff of the

companies being regulated.

The legislation in many countries states that appointments are to be based on

the professional qualifications of the candidates. To ensure the highest level of

professional integrity in regulating this key sector of the economy it is important

that the people appointed have the necessary technical, legal, economic,

financial, and administrative skills. This is often stated in the legislation as it is in

the Office of Utilities Regulation Act, 1995. This does not, however, always

ensure that such appointments are not politically motivated.

The legislation in France, Morocco, and Sri Lanka states that members of the

regulatory body are appointed on the basis of their professional competence in

the legal, technical, economic and financial areas. In Mexico, COFETEL, the

regulator, has in addition to its president (who casts the deciding vote) one

commissioner who has a legal background, one with a technical background and

one with an economic background.

Recommendation. Members of the Board should be appointed on the basis

of their professional competence in the legal, technical, economic and

financial areas. This should be stated in the new Act.

e. Head of the Authority and his or her appointment

The head of the regulatory body must have authority to represent the regulator

before the public, the industry and the Government. He or she must have a well

founded understanding of the sector and must, in addition, also have the required

skills to manage a diverse, highly qualified professional and support staff.

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The appointment of the head of the regulatory body could have bearing on the

independence of his or her actions. This depends on both the person making the

appointment and the person appointed. If the priority of the former is to

strengthen the independence of the regulator and promote development of the

sector through real and effective competition than he or she appoints a head who

will act accordingly and not be subject to political and other influence. If he or she

appoints someone to pay off a political debt, there is great risk that the

independence of the regulator could be jeopardized. It is also important that the

person appointed as head has the attributes and personality required to act

independently.

In Colombia the administrative head of the regulatory agency rotates every year

among the three permanent Commission members, who themselves are

appointed for renewable 2-year terms by the President of the country. In

Singapore, Denmark, Hungary, the Czech Republic, Ireland, Netherlands, the

UK, and Sri Lanka the Minister appoints the Chairman of the regulatory authority.

In Brazil, Cameroon, France, Finland, Germany, Mexico, Korea, and the USA

(subject to confirmation by the Senate) the Head of State appoints the head of

the regulatory body. In Canada the Chairman and two vice chairmen (one for

telecommunications and one for broadcasting) of the CRTC are appointed by the

cabinet. In Jordan the Director General of the Telecommunications Regulatory

Commission is appointed by the Council of Ministers. In Spain, also, the

government designates the head of the regulatory body.

In Jamaica the Director General of the OUR is appointed by the Governor

General on the recommendation of the Prime Minister and the Deputy Directors

General are appointed by the Prime Minister on the recommendation of the

Minister. (The Office of Utilities Regulation Act, 1995, Second Schedule, Sections

2(1) and 3(1))

Recommendation. The Chairman of the Authority should be appointed

through a recommendation of Cabinet from among the part time

(professional) members of the Board of the Authority. An alternative which

might be considered is the Colombian model (which is also used to

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designate the head of the government in Switzerland); that is, to rotate the

position of Chairman of the Authority among the members of the Board.

The term of office (rotation) in the latter case should be 2 or 3 years. This

should be stated in the new Act.

III.3.6 Internal structure of the new Authority

A functional structure with 6 departments (Engineering/Technical, Spectrum

Management, Economic Regulation, Policy, research and international relations,

Corporate Affairs, and Legal Affairs is suggested for the Authority. The

responsibilities for each of these departments are described below. Within the

permanent structure of the Authority each of these departments would be headed

by a department head who would report to one of three Vice Presidents who in

turn would report to the President of the Authority.

The main functions of each department would be the following:

The Engineering/Technical Department plans and administers the national

numbering plan, and to the extent necessary technical plans, signaling point

codes, and technical standards; provides technical support matters related to

regulating interconnection; carries out terminal and network equipment type

approval; and provides technical support in evaluating applications for

licenses.

The Spectrum Management Department facilitates and organizes the use of

the radio frequency spectrum in the national interest; ensures that adequate

spectrum is available both in the short and long term for public and private

(including commercial) use, for telecommunications broadcasting, public

safety, transportation, crime prevention and law enforcement, national

security, education, conservation of national resources, and scientific

research; and provides an orderly method of planning and allocating

frequencies, authorizing and recording frequency users, establishing

regulations and standards to govern spectrum use, resolving spectrum

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conflict, and representing Jamaica’s interests in international fora dealing with

spectrum issues.

The spectrum management function can be sub divided into five general

areas, namely, planning and allocation; assignment and licensing;

enforcement and monitoring; spectrum engineering; and spectrum

coordination.

The Economic Regulation Department conducts cost and economic studies,

and is responsible for tariff regulation of dominant operators; monitors and

enforces compliance of licensed operators with the terms of their licenses,

and with their obligations under interconnection and other regulations; in

conjunction with the Fair Trading Commission promotes and enforces

competition in the market, from licensing through interconnection and dispute

resolution; in conjunction with the Consumer Affairs Commission coordinates

the resolution of consumer complaints related to the telecommunications

sector ensuring protection of telecommunications users’ rights.

The Policy, Research and International Relations Department is responsible

for conducting and coordinating multidisciplinary research into

telecommunications policy and industry development, and for promoting

growth, innovation, and expansion in the sector generally and anticipating the

changing role of the Authority in the rapidly evolving sector. It would be

responsible for representing the Authority in international regulatory

organizations and for administering the Universal Services Program and

Fund. It works closely with the Engineering/Technical Department sections

studying and analyzing the evolution of technology and is responsible for

providing advice to the policy unit in the Ministry.

The Corporate Affairs Department administers and manages the Authority’s

corporate activities and ensure that the Authority performs as a successful

regulatory agency; provide appropriate work conditions and resources for all

the Authority’s departments; maintains an updated information management

system with public access (via the Authority’s web site) to the Authority’s

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activities and decisions and to sector information and data. This department

would typically be divided into the following units or sections: administration,

which would administer and manage the Authority’s corporate offices;

finance, which would manage the authority’s revenues and expenses; human

resources and training; and information management.

The Legal Affairs Department is the clearing house for all legal decisions,

proceedings, advice, and enforcement responsibilities of the Authority. It acts

as an internal consultative entity for all levels of the Authority (All actions that

require specific legal opinion or input would referred to this department.) and

for the Board in their increased role with the public.

The main legal activities can be divided into two key types of functions: 1)

administrative which includes representing of the Authority in cases brought

before the courts; drafting and negotiating contracts and agreements; and

providing legal opinions to the Authority; and 2) telecommunications legal

functions which includes drafting and/or providing legal opinions on new and

modified legislation pertaining to the sector, drafting rules, regulations,

orders, and decisions; preparing Authority papers having legal implications;

interpreting statutes; and conducts public hearings related to resolution of

disputes.

Recommendation. There should be an internal structure with 6 functional

departments each reporting to one of 3 Vice Presidents of the Authority.

(Figure 13). The functions of each of the 6 departments should be as

described above. The 3 Vice Presidents should report to the President of

the Authority

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Corporate Affairs Legal

President

Engineering/Technical

Spectrum Management

Economic Regulation

Policy, Research and International

Affairs

Parliament

Minister responsible for the Information and Communication Technology (ICT) Sector

Telecommunications Regulatory Authority of Jamaica

Vice President Vice President Vice President

Board of the Authority (5 or 7 part time Members including the

Chairman)

Figure 13

Organization of the Proposed New Telecommunications Regulatory Authority of Jamaica

III.3.7 Accountability and measures to reinforce the Authority’s independence

a. Financial and operating independence

Independent budget and hiring practices help ensure financial and operating

autonomy. Many regulators depend on their own financial resources (license

fees, spectrum usage fees, percentage of regulated operators' revenues, and

other sources, including fines and the sale of information) rather than on the

Treasury even though their budgets may be reported as part of the State’s

budget.

It is important that the regulator have sufficient funds to carry out its functions

properly. This includes paying its staff wages, which are equivalent to what they

could earn elsewhere in the industry and providing for adequate training.

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The Authority should also be able to hire and dismiss staff without any political

influence. It should also be able to hire temporary staff and consultants when

needed. The Authority should be able to participate and contribute to

international organizations where such participation will enhance its functional

capabilities. High priority should be given to regional cooperation among

regulators in the Caribbean.

In Brazil, Cameroon, Canada, Colombia, France, Jordan, Morocco, Spain,

Sweden, Sri Lanka, UK, the regulator is financed through its own revenues (user

fees, license fees, percentage of regulated companies' revenues or operating

costs, fines, gifts, legs, rental income, sale of documents). In Mexico COFETEL

is financed through the Treasury. In France, USA, Jordan, and the UK there is

provision for additional financing to be obtained if necessary through the

Treasury.

Generally two types of fees are imposed on operators, service providers and

users, namely, i) fees which defray the cost of regulation and which are

incumbent on those that are regulated including fees for licensing, resolving

disputes, and any other administrative process which the regulator is required to

fulfil by law, and ii) fees for the right to use a scarce resources such as

frequencies and numbers. The latter often do not go to the regulator but are used

to fund the Treasury.

Recommendation. The Authority should be financed out of regulatory fees

imposed on regulated companies in the sector and these should

correspond to the budgetary requirements of the Authority and should be

proportional to the relative revenues of the regulated activities of each of

these companies. The Authority should be able to contribute to

international organizations in which its participation is beneficial to its

functions, without need for the Government’s approval beyond that which

is indicated in its budget and annual activity plan. The Authority should

give high priority to establishing and maintaining regional cooperative

arrangements in the Caribbean.

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b. Accountability and reporting mechanism

As a public administration the regulator has to answer to both the public and the

stakeholders of the industry which is being regulated. In most cases it reports to

someone or a body within the government. This may be the executive or the

legislative branch. It is also important that the regulator present a financial report

related to its activities, which indicates to those who are obliged to contribute to

the functioning of the regulator the use of funds they have to remit. Seeking

comment from stakeholders who contribute to funding the regulator and taking

comments received into account will enhance the credibility of the regulator in the

industry.

Generally, regulators report by means of annual reports submitted to the Minister

responsible for the sector or the government. Most of the time, but not always,

the regulators' annual reports are made public. Some regulators have no specific

reporting requirements but do nevertheless produce an annual report.

The most effective means of ensuring that the regulator reports to its constituents

is to make its day to day activities and processes as transparent as possible.

This can be done by a well organized and maintained web site.

When the regulator reports to parliament or to the head of state or both it general

does so through the Minister responsible for the sector (Brazil, Canada,

Colombia, Malaysia, and UK). In France and Spain the regulator reports to

parliament. In France the ART also reports to the government. In Morocco the

regulator reports to the Prime Minister and in Denmark he reports to the Minister

who presents his report to users. The Danish regulator is subject to a

performance contract, which he signs with the government and on which he has

to report progress.

Given that the regulator serves the public and that it is the industry that funds its

operation, its finances should be open to public scrutiny.

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Recommendation. The Authority should report to the Minister responsible

for the Information and Communications Technology (ICT) sector

(presently the Minister of Commerce, Science and Technology with Energy)

and annually to Cabinet by means of annual reports submitted through the

Minister. These reports should made be public. Companies, which are

required to fund the Authority through regulatory fees, should be given the

opportunity to comment on the Authority’s draft annual budget which the

Authority should be obliged to into account before finalizing and

submitting its budget to Cabinet (through the Minister) for approval. The

report should summarize activities for the year being reported upon,

current and planned activities and detailed accounts of the Authority’s

expenditures. Details of activity and budget planning and reporting

requirements should be stated in the new Act.

c. Conflict of interest rules

The clearer and stronger the conflict of interest provisions in the legislation, the

greater the scope for the regulator to be able to act independently. It is probably

easier to implement conflict of interest provisions when members of the

regulatory body are full time in their functions.

In some countries it is specifically stated that members of the regulatory authority

may have no direct or indirect financial interest in the sector which they regulate

(e.g. Canada, Jordan, Spain, and Morocco). In other countries members cannot

hold any other position (Spain, France, and Brazil) and not even an elected

position (France). In Brazil the only other position which is compatible with being

a member of Anatel, the regulator, is a university professor.

In other cases there is simply the obligation for members of the regulatory body

to declare their interests in regulated companies and to abstain from participating

in decisions related to their interests (Trinidad & Tobago, OECS).

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The legislation sometimes states that the regulators may not use privileged

information (Brazil, Malaysia) or that a regulator may not represent anyone

before the regulatory body for a certain time after leaving office (Brazil, USA).

The head of the regulator for the Organisation of Eastern Caribbean States

(OECS) has to be full time and cannot have any direct or indirect interest in any

company in the sector. The Second Schedule of the OUR Act (Section 4(1))

disqualifies any elected person, civil servant or person with financial interest in a

regulated company to be appointed as Director General or Deputy Director

General.

Recommendation. Strong conflict of interest provisions should be included

in the new Act to govern the selection and appointment of members of the

Board of the Authority.

d. Justification for removing the regulator

Strict and well-defined rules establishing the causes and process to remove the

regulator help ensure the regulator’s independence. The reasons for which the

regulator can be removed from office should be clearly and unambiguously

defined in the law. The better the guarantee of the term of office of members of

the authority, the more independently they will be able to act.

In France, the members of the regulatory body, who are appointed for fixed, non-

renewable terms, cannot be removed from office. In Brazil, Spain, and the UK the

regulator(s) can be removed if they are incapacitated, if they misbehave, commit

a crime or for disciplinary reasons. In Brazil, Malaysia and Spain the regulator(s)

can also be removed for not implementing policy or in the case of Malaysia for no

reasons at all.

In Jamaica the Director General and/or Deputy Directors General can be

removed by the person appointing them if they are “guilty of neglect of duty,

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inefficiency, incompetence, misconduct or malfeasance.” (OUR Act, Second

Schedule, Sections 2(3) and 3(3))

Recommendation. The reasons justifying the removal of a member of the

Board of the Authority should be stated clearly and unambiguously in the

new Act.

e. Who has the power to remove members of the Authority?

The person or body who can remove the regulator needs also to be subject to

public scrutiny to ensure that the removal if necessary is justified, according to

the law, and not politically motivated.

In many countries it is generally the person or organ, that appointed the

regulator(s), that also has the power to remove him or her from office; however

the reasons justifying removal are not always stated in the legislation (e.g.

Canada, Colombia, Denmark, Jordan, Sri Lanka). In some countries they can be

removed through a court ruling.

Recommendation. The person or persons with the power to appoint

members of the Authority should also have the power to remove them but

only for the reasons stated in the Act. Members of the staff of the Authority

should be hired and dismissed only by the management of the Authority.

The President of the Authority should be selected by the Board with his or

her appointment approved by the Cabinet.

III.4 The regulatory process

The regulatory process can be considered in terms of its transparency, the scope

for appealing (and eventually overturning) decisions of the regulator and the

degree to which the regulator is empowered to carry out his or her functions.

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III.4.1 Transparency

This is one of the most important indicators of the degree of independence of the

regulator. The greater the transparency, the greater the possibility that the

regulator is independent and acts with integrity. Transparency is important to

secure independent decision-making and chances are better that decisions of the

regulator, which are based on merit rather than political and other influence, will

be directed toward the ultimate objective of regulation and promoting

development of and competition in the sector, promoting efficiency, and ensuring

consumers benefit.

In many countries the regulator’s proceedings are open to the public.

Participation through consultation in the decision making process of the regulator

is encouraged and indeed promoted. The USA and Canada have well

established procedures to allow the public to participate in all stages of the

regulatory decision making process. Many regulators post consultative

documents, decisions, rules, regulations on their web sites.

Recommendation. The Authority should develop comprehensive

procedures defining the regulatory process which should be transparent.

Adequate resources should be made available in the Authority’s budget to

develop and maintain a comprehensive up-to-date web site containing

information on all of the Authority’s current and past regulatory

proceedings, as well as easy decisions, regulations, consultations, and

other data and statistics for the sector.

III.4.2 Who can overturn decisions of the regulator?

An important aspect of the regulatory process is the possibility for persons

affected by decisions of the regulator to have access to a place where they can

appeal the decision. There has to be assurance that the appeal will be heard by

an unbiased body and that the process is independent and transparent.

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In Canada a decision by the regulator (CRTC) can be overturned by the regulator

itself, by the Federal Cabinet or by the Federal Court of Appeal on petition;

however, the latter can only overturn decisions on questions of law and

jurisdiction. In France decisions can be overturned on appeal by the Court of

Appeals of Paris or by the State Council. In Spain, Finland, Austria, Germany,

Italy, Netherlands, Portugal, Sweden, Switzerland and the UK only the courts can

overturn a decision by the regulator. In the USA Congress (Parliament) can

overturn decisions of the FCC. In Mexico and Hungary the Minister can overturn

a decision by the regulator.

Sections 60 and 61 of the Telecommunications Act, 2000 provide for appeal of

decisions by the Office before the Office itself and before the

Telecommunications Appeal Tribunal, respectively.

Recommendation. There should be provisions in the new Act to appeal

decisions of the Authority in front of the Telecommunications Appeal

Tribunal. In the first instance, however, any decision should be appealed

with the Authority itself and only subsequently in front of the Tribunal.

III.4.3 Empowering the regulator

The effectiveness of the regulatory process is very much dependent on the

extent to which the regulator has been empowered to carry out his or her duties.

The regulator must be given the possibility to strengthen its own powers and

through it the regulatory process through the following types of actions:

• Getting to know each stakeholder (Government officials, operators and

service providers, users, academics, consumers and the media) and

understanding his or her concerns. This will enhance the regulator’s

ability to deal with each of these concerns;

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• Encourage the formation of and maintaining a continued dialogue with

special interest groups such as user and other industry associations,

associations of ISPs, service providers and operators, consumer groups,

etc. The regulator needs to gain the confidence of each interest group,

understand what the concerns of each are and encourage them to

actively participate in the regulatory process;

• Empower the staff of the regulator by giving them full responsibility to

investigate, research and, if need be, resolve certain files under their own

initiative;

• Learning to use the media to the regulator’s advantage to effectively

present the regulator’s point of view to other stakeholders and to the

public.

Recommendation. The Authority should be encouraged to undertake

actions such as the ones described above to strengthen the regulatory

process and its effectiveness in regulating the telecommunications sector

in Jamaica.

III.5 Jamaica’s regional and international obligations

The Policy encourages active participation by Jamaica in regional and

international fora including the WTO, the Caribbean Single Market and Economy

(CSME) and the FTAA. A report prepared for the IADB on promoting investment

in ICT in the Caribbean elaborates three reasons why countries in the region

should not ignore the WTO’s Doha Round Negotiations. These are

• The Doha Round is providing trade negotiators, telecommunications

policy makers, and regulators the same opportunity to reflect on today’s

“leading edge” issues for the sector as their counterparts that participated

in the Negotiating Group on Basic Telecommunications (NGBT) had

between 1994 and 1997.

102

• The Doha Round issues and indeed the structure of negotiations and

potential agreement have a bearing on negotiations for a Free Trade Area

in the Americas (FTAA) and the process of achieving the CARICOM

Single Market and Economy (CSME). By familiarizing themselves with the

Doha Round issues trade negotiators, telecommunications policy makers

and regulators will gain a better understanding of the issues and be able

to participate in the debates relating to them.

• While it may not be necessary that Jamaica, which has already

implemented a legal and regulatory framework that removes most of the

limitations contained in its 1997 WTO commitments, improves on these or

makes new commitments, it may nevertheless find it worthwhile to

confirm in an international treaty the significant progress it has made in

reforming its telecommunications sector since 1997. This would give

additional proof to potential investors that Jamaica now has the sort of

stable, predictable, and transparent regulatory framework which they

seek. Furthermore, trade negotiators may find that they can leverage

such improved commitments to obtain concessions in other areas in the

current process of Doha Round requests and offers45.

Annex D summarizes the Doha Round issues of concern telecommunications

policy makers and regulators and to trade negotiators.

The following actions might possibly be considered in support of Jamaica’s

national goals with respect to these free trade negotiations:

1. Create a dialogue among national policy makers, regulators,

operators, and users to examine issues bearing on

telecommunications services trade such as market access,

competition, and regulation and to develop national positions on

these; 45 Stern, Peter A., Action Plan: Promoting Investment in Information and Communications Technologies in the Caribbean, Report to the IADB, April 2004

103

2. Organize training seminars and workshops to provide more in-depth

analyses of telecommunications trade issues including

interconnection, pricing, and universal service obligation, IT and e-

commerce and convergence of telecommunications and information

services and develop procedures for the various international and

regional trade negotiations and generally to improve negotiating skills.

This might include the development of a case study model and a

reference handbook to assist in negotiating and preparing

commitments;

3. Establish a data base of information on key trade agreements, official

texts, documents and other authoritative material on

telecommunications, ICT strategies, policies, trade, technologies and

applications with links to relevant sites of international organizations

and national governments;

Jamaica should seek to do the second and third of these in cooperation with

other countries in the Caribbean possibly with the assistance of the Caribbean

Telecommunications Union.

Recommendation. The Government should with the support of the

regulator undertake the three actions proposed as a means to satisfy the

Policy objectives of encouraging active participation in regional and

international fora. It should seek to develop activities along the lines of the

second and third points jointly with other countries in the Caribbean

possibly under the ambit of the Caribbean Telecommunications Union.

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105

IV. REGULATORY ISSUES OF IMMEDIATE CONCERN IV.1 Introduction

A landmark study by the World Bank in 1996 identified the high price of

telecommunications as a major barrier to the development of a services export

market in the Caribbean. It referred to not only the high prices that consumers

pay for their telecommunications services such as international calling but also

prices the corporations have to pay for leasing of circuit capacity necessary for

their international businesses.

In 1996 there was only one country in the Caribbean that had introduced

competition. That was the Dominican Republic. Since then most countries and

territories in the Caribbean have liberalized their telecommunications markets;

however, this has not had a significant impact on prices.

This chapter examines barriers which continue to impede significant decreases in

retail and wholesale prices in the sector and suggests some action which might

be undertaken in the immediate and longer term to address these barriers.

IV.2 The bandwidth squeeze

In spite of now having a fully liberalized telecommunications market like in most

of the rest of the Caribbean Jamaica continues to suffer from excessively high

costs for bandwidth. This has a direct impact on the prices that consumers must

pay for goods and services that depend on telecommunications as a factor of

production.

IV.2.1 Internet access

Jamaicans pay significantly more than people living in competitive markets for

Internet access services as Tables 6 and 7 show. These compare consumer

prices for dial up and high speed Internet access in several countries and

Jamaica.

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C&WJ’s Unlimited Voyageur Flat Rate plan is a dial up service which costs about

double that of similar plans (but generally with more features) in North America

and Europe for similar plans. Competitors such as Infochannel and Kasnet offer

competing plans at about the same prices as C&WJ.

Similarly C&WJ offers an entry level ADSL (high speed) service with 128 Mbps

down-link/ 64 Mbps up-link speeds for US $ 66/month plus a one time US $ 57

set up charge. (The modem has to be purchased separately.) N5 (wireless) and

Infochannel (ADSL) offer a 256 Mbps down-link/ 128 Mbps up-link service for

less than US $ 60/month about 2/3 of the price C&WJ charges for the same

service. By way of comparison Bell Canada, the incumbent telephone company

in Ontario and Quebec offers a high speed ADSL service with up to 3,000 Mbps

down-link/800 Mbps up-link speeds priced at US $ 33/month plus US $ 7 for

rental of the modem. There is no set up charge and lower prices can be

negotiated. Vidéotron, a cable television company, which is a competitor to Bell,

offers high speed cable access with up to 4,500 Mbps down-link/ 900 Mbps up-

link at US $ 44/month plus a one time set up charge of US $ 73.

The scope for C&WJ’s competitors’ offering services at prices much below those

of C&WJ is limited because of the high cost of:

i) the local loop (The downstream bottleneck);

ii) connecting to the Internet (The upstream bottleneck); and

iii) acquiring incoming local telephone lines (channelized T1s) and toll

free (1-800) numbers necessary to offer dial up Internet services46.

If not the only supplier of these facilities and services, C&WJ is dominant in all

three.

46 A channelized T1 costs J $ 30,000/month (US $ 500/month). ISPs maintain that the channelized T1s offered to them cost more than the same service offered to non ISP users and that its use is restricted by C&WJ to Internet dial-up access services

107

Country Service Provider Name of service

Monthly charge (US $)

Set up charge (US $)

Comment

Dominican Republic Verizon 8.00 4.25 Argentina Ciudad Ciudad Premium 10.30 0

Canada Sprint Canada Basic Unlimited 14.00 Cheaper if bundled with long distance

services Jamaica Cybervale Unlimited 16.39 12.30 Canada Bell Canada Unlimited Plan 17.00 0 Canada Videotron Acces téléphonique 17.00 0 3 users/account; 5 Mb web storage included

Canada Primus Unlimited plan 17.00 0 Cdn $ 3 cheaper if bundled with long distance services; 20 Mb web storage included

USA Sprint 17.00 Jamaica emoquad Dialup 17.00 Jamaica Anngel Unlimited 20.70 9.43

USA (Washington D.C.) Verizon 23.00 10.00

France Neuf Telecom Internet Illimité 24.00 Unlimited no. of e-mail addresses

Barbados C&W 30.00 Argentina Telecom Arnet Premium fam. 33.00 0

Jamaica C&W Voyageur flat rate 35.00 ? Requires J $ 2000 = US $ 33 deposit; 1 user/account

Jamaica Infochan Marathon Accelerator 35.00

Jamaica Infochan Sprint pak 35.00 per pack of 40 hours Jamaica Kasnet Unlimited 37.00 40.00

Trinidad & Tobago TSTT Dial up access 56.00 18.75 1 user/account Trinidad & Tobago TSTT Dial up access 130.00 18.75 3 users/account

Table 6

Comparison of Internet Dial up Access Prices (shown in ascending order of monthly charge)

108

Country Service Provider

Name of service

Access techn.

down-link

speed (Kbps)

Up-link speed (Kbps)

Monthly charge (US $)

Set up charge (US $)

Modem/router Comment

Dominican Republic Tricom Residencial # 1 Cable 128 64 8 0 68 (purchase) Dominican Republic Tricom Negocio # 1 Cable 128 64 17 0 68 (purchase)

France Cegetel ADSL 512 ADSL 512 128 18 Dominican Republic Tricom Residencial # 4 Cable 512 128 23 0 68 (purchase)

France Neuf Telecom Haut Débit 512 ADSL 512 128 24 0 2.40/month

Unlimited addresses; anti-virus; telephone calling option

Argentina Ciudad Flash Cable 512 128 27 0

Canada Videotron Haut Vitesse (Cable) Cable 4,100 820 28 73 117 (purchase)

Argentina Telefonica Speedy ADSL 256 64 28 20 France Cegetel ADSL 2000 ADSL 2,000 256 30

Argentina Fibertel Pus access Cable 256 128 30 0 Canada Primus ADSL 3,000 384 33 117 (purchase)

Canada Bell Canada Sympatico High Speed ADSL 3,000 800 33 0 7 (monthly rental)

USA Verizon ADSL 35

Bahamas Coralwave Lite Cable 512 128 35 0 50 (purchase) 3 addresses; 10 Mb web space

UK BT Broadband basic ADSL 512 128 36 Switzerland Swisscom Broadway 100 ADSL 100 200 38 116 76 (purchase)

France Neuf Telecom Tres Haut Débit 2 Méga ADSL 2,024 256 39 0 2.40/month

Unlimited addresses; anti-virus; telephone calling option

Canada Videotron Haut vitesse extreme Cable 4,500 900 44 73 117 (purchase)

Spain Telefonica ADSL 256 ADSL 128 256 47 0 UK BT Broadband 1Mb ADSL 1,000 256 48

Switzerland Swisscom Broadway 1200 ADSL 1,200 200 53 116 76 (purchase) Dominican Republic Tricom Residencial # 6 Cable 1,536 128 53 0 68 (purchase) Dominican Republic Tricom Negocio # 4 Cable 512 128 53 0 68 (purchase)

Bahamas Coralwave Groove Cable 1,000 384 55 0 50 (purchase) 6 addresses; 15 Mb web space; roaming

Jamaica N5 Wireless MMDS 256 128 55 300 incl. Jamaica Infochan ADSL NightSurfer ADSL 256 128 59 150 not incl.

Trinidad & Tobago TSTT High Speed ADSL 128 64 65 78 0 4 addresses, firewall Jamaica C&W Ultra ADSL 128 64 66 50 not incl.

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Country Service Provider

Name of service

Access techn.

down-link

speed (Kbps)

Up-link speed (Kbps)

Monthly charge (US $)

Set up charge (US $)

Modem/router Comment

Bahamas Coralwave Rock Cable 2,000 512 70 0 50 (purchase) 6 addresses; 20 Mb web space; roaming

USA Speakeasy ADSL 1,500 256 70 0 0 8 static addresses

USA Speakeasy ADSL 1,500 256 70 0 0 8 addresses, web hosting for $ 30/m

Barbados C&W ADSL 256 ADSL 256 64 72 97 Jamaica Kasnet Residential Silver MMDS 256 128 75 300-400 included

Switzerland Swisscom Broadway 2400 ADSL 2,400 200 77 116 76 (purchase) Dominican Republic Tricom Negocio # 6 Cable 1,536 128 77 0 68 (purchase)

USA Speakeasy ADSL 1,500 384 80 0 0 8 addresses, web hosting for $ 30/m

Barbados C&W ADSL 768 ADSL 768 128 87 97 Argentina Ciudad Flash Cable 1,000 256 87 12 Jamaica C&W Select ADSL 256 128 93 50 not incl. Jamaica Kasnet Residential Gold MMDS 384 128 100 300-401 included Barbados C&W ADSL 1544 ADSL 1,544 256 109 97

USA Speakeasy ADSL 6,000 768 120 0 0 8 addresses, web hosting for $ 30/m

Jamaica C&W Premium ADSL 768 256 129 50 not incl. Spain Telefonica ADSL 1 Mbps ADSL 1,000 300 143 0

Argentina Fibertel Fibertel 2 megas Cable 2,000 512 170 63 Trinidad & Tobago TSTT Business 1 ADSL 128 64 187 142 0 4 addresses, firewall

Jamaica Kasnet Residential Platinum MMDS 512 256 200 300-402 included

Trinidad & Tobago TSTT Business 2 ADSL 256 64 291 142 0 4 addresses, firewall Jamaica Infochan Corporate Light ADSL 1,000 256 390 150 not incl.

Jamaica Infochan UltraNet CORPORATE ADSL 1,514 256 670 150 not incl.

Table 7 Comparison of High Speed Internet Access Prices (shown in ascending order of monthly charge)

110

IV.2.2 Downstream: Bottlenecks in the local loop

Jamaica’s household pentration rate is in the order of 45 % and 40 % of homes

have no access to a fixed telephone line either in their house or at a neighbour’s.

Currently the only alternative to C&WJ’s copper wire local loops are Gotel’s

nascent fixed wireless access service (FWA) which according to the OUR serves

less than 1 % of the population and Kasnet’s and N5’s MMDS47 wireless access

network in the Kingston area.

While cable television penetration is high48 and in many areas consumers can

choose between two providers, Subscriber Television (STV) Operators do not

currently offer an alternative to telephone or high speed Internet access because

of the fragmented nature of this market and this industry’s lack of capital and

expertise in building and operating telecommunications networks49.

A number of technologies have or are being developed as complements to or

alternatives to copper in the local loop. All these which are listed here are

capable of offering high speed (broadband) access.

Among the wireline technologies there are: 1) the various versions of digital

subscriber line (DSL) technologies which can provide speeds up to 52 Mbit per

second but in a more common and economic version (ADSL-Lite) support down

link speeds of up to 1.5 Mbps and up link speeds of up to 384 Mbps; 2) coaxial

cable systems, which when built with Data over Cable Service Interface

Specification (DOCSIS), can support speeds of up to 30 Mbps; 3) fiber optic

cable systems, which in addition to having superior quality when compared with

coaxial cables (no crosstalk, no electromagnetic or radio interference, cheaper

maintenance), support speeds in the Tbps range; and 4) Power Line

Communications (PLC) which uses the existing low (120 – 240 volt) and medium

voltage (< 69 Kvolt) electrical power transmission lines to transmit voice and data 47 “Multi-point, multi channel distribution” system used predominantly for the provision of one way and/or two-way, local broadband access services in digital, fixed, point-to-multipoint configurations, operating in the 2.4 GHz band. Originally developed for pay TV applications in the USA. 48 Exact subscriber numbers are not easily available because licence fees paid by these cable operators are function of the number of subscribers they have and operators are reluctant to provide numbers. 49 It is understood that one TV cable television company started to offer Internet access services but has closed down the service.

111

and can provide connections at speeds similar to ADSL. PLC is still in

experimental stages of development.

Among wireless local access systems that are available or being developed there

are: 1) various radio-in-the-loop (RLL) systems which in their Third Generation

(3G) version supports speeds of up to 2 Mbps; 2) line-of-sight multichannel,

multipoint (MMDS), local multipoint (LMDS) distribution systems, and spread

spectrum systems which can support speeds of up to 38 Mbps downlink and 10

Mbps up links; 3) geostationary and low earth orbit satellite systems (up to 2

Mbps down link, 384 Kbps up link); and 4) various recent and new wireless short

and longer range technologies which operate in licenced and unlicenced

frequency bands. WiFi and WiMAX are the best known of these.

We will elaborate on the last two of these wireless technologies.

a. Satellites

Satellites can provide both backhaul (backbone) and local loop facilities. Satellite

operators offer up-stream connectivity to the Internet to ISPs and others either

through two way links which includes IP Transit or through a one way link,

typically with the return (higher capacity) via satellite.As backhaul the maximum

capacity that a satellite transponder offers is typically 36 MHz of bandwidth

(approximately 18 E1s); however, newer satellite systems can offer up to 72 MHz

of bandwidth50.

The same satellite operators also offer high speed local services directly to end

users. For example, Hispasat, the Spanish satellite operator, offers a bi-

directional Internet access service with down-link speeds of 2,048 Mbps and up-

link speeds of 256 Kbps to up to 50 terminals, each connected to one or several

PC’s via local wired or wireless (e.g. WiFi) links at about US $43,000 a month or

50 Hispasat 1 D Will offer bandwidth capacities of 33, 36, 48, 50, 54, and 72MHz

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about US $ 861/terminal51. The onetime purchase price of a terminal is about

$2,500. While relatively expensive such satellite based solutions present certain

advantages in the rural areas where there are no other wireline or wireless

alternatives.

b. License exempt technologies

New wireless technologies and applications have increased the demand for

spectrum dramatically over the past few years. Cellular mobile services, where

global subscriber numbers have now exceeded fixed, are often cited as an

example of this52. The ITU reported that it has been advised of more frequency

assignments in the last ten years than in the whole preceding period from the

start of radio53. The scarcity of spectrum especially in the desirable range

between 350 to 6,000 MHz is becoming more acute in spite of the fact that the

usable spectrum is today 5,000 times wider than it was at the beginning of the

radio era in the late 1920s54. The need for ever more spectrum and

computerization are leading to the development of new ways to transmit and

receive signals over the air and to manage the radio frequency spectrum.

Computerized radios (“smart radios”) can identify not only a particular frequency

or frequency band but also the time of day, the angle of arrival, the physical

location of the transmitter and receiver, and specific codes that have been added

to signals. Several signals can therefore be transmitted at the same time over the

same band of frequencies. Following are some of the newer technologies which

have been or are being developed:

i) Under spread spectrum technology coded signals which are

transmitted over a wide frequency band are recognized by a receiver

which can distinguish them one from among many others and decode

51 An alternative service offered by Hispasat is a 2048 Kbps/512 Kbps down/up link for up to 100 terminals at US $ 53,700 or US $ 537/terminal. 52 The total number of cellular subscriber numbers world wide is currently in the order of 1.35 billion. 53 Lie, Eric, Background Paper: Radio Spectrum Management for a Converging World, Workshop on Radio Spectrum Management for a Converging World, International Telecommunication Union, Geneva, 16 - 18 February, 2004. 54 Werbach, Kevin, Radio Revolution: The Becoming of the Age of Unlicenced Wireless, New America Foundation.

113

them. The wider the frequency band, the greater the number of

separately coded signals that can be sent at any one time. Code

Division Multiple Access (CDMA), the cellular mobile technology

which is based on spread spectrum technology uses a channel

bandwidth of 200 KHz. WiFi and WiMAX also use spread spectrum

technologies. Ultra Wide Band (UWB), a newer technology based on

spread spectrum currently under development, is designed to operate

over a very large band with very low power; that is, just below the

noise floor so as not to interfere with other signals which may also be

using the same frequency band but with signal strengths well above

the noise floor. UWB uses the spectrum very efficiently and offers

good transmission qualities because it eliminates multipath signal

distortion and can easily penetrate walls55.

ii) Smart antennas can determine where signals are coming from. They

are also good at suppressing interference and multipath signal

distortion. As an example, devices are being developed that can

distinguish two signals depending on the angle of arrival allowing

satellite and terrestrial systems to operate at the same time in the

same frequency band.

iii) Agile or cognitive radios identify frequencies, which are not being

used at a particular moment in time, use these frequencies to transmit

signals as long as they remain unused and then when they sense that

another radio is trying to use this particular frequency hop to another

unused frequency.

iv) Software defined radios (SDR) are multimode, multi-band devices that

can work with different technologies and at different frequency bands.

An example is a mobile radio that operates equally in a GSM or a

CDMA environment irrespective of the frequency at which each may

55 The FCC has authorized UWB above 3.5 GHz in 2002. See also Reynolds, Taylor, Background Paper: Advanced Wireless Technologies and Spectrum Management, Workshop on Radio Spectrum Management for a Converging World, International Telecommunication Union, Geneva, 16 - 18 February, 2004.

114

operate. Another example of SDR are the GSM/WiFi devices which

are currently being developed and deployed56.

The result of these technologies has been to effectively increase the amount of

spectrum available for various fixed and mobile applications including broadband

local access. At the same time these technology developments are inciting policy

makers to reflect on new, more efficient ways of managing the radio frequency

spectrum. Among these the practice of allocating increasing quantities of licence-

exempt spectrum has primarily two objectives in mind:

• To acknowledge the potential of the new technologies, which permit

different signals to use the same frequencies at the same time with

manageable or no interference.

• To promote innovation in all sorts of wireless applications from sensing

devices, garage door openers, and cordless telephones to the various

wireless access devices such as WiFi, WiMAX and UWB.

Indeed, some observers have been suggesting that the traditional way of

managing the spectrum by allocating, assigning it to a particular user or users,

and controlling it according to frequency blocks (“command and control”) should

be revised. Among them is Kevin Werbach of the New America Foundation who

has suggested that, in addition to the tradititional exclusive rights, a revised

regime should include the following spectrum use options: i) dedicated

unlicenced; ii) shared unlicenced; and iii) opportunistic unlicenced57.

Dedicated unlicenced spectrum currently exists and has been allocated primarily

in the 2.4 and 5.0 GHz bands58. WiFi and cordless telephones which operate in

both of these bands as unlicenced devices are, however, subject to certain

conditions such as output power limits, common protocol and etiquette rules,

56 Motorola (MP) and Nokia (Communicator 9500) are dual mode GSM/WiFi handsets. SonyEricsson is also understood to be developing multimode devices which incorporate WiFi. 57 Werbach, Kevin, Radio Revolution: The Becoming of the Age Of Unlicenced Wireless, New America Foundation 58 5,150 – 5,350 MHz and 5,725 – 5,875 MHz. The 2003 World Radio Conference (WRC) agreed to allocate 455 MHz of spectrum in the bands 5.15 to 5.35 GHz and 5.47 to 5.725 GHz for wireless access systems.

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geographical and other location limits (e.g. only for indoor use).” The spectacular

development of license-exempt devices such as R-LANs59, W-MANs60, cordless

telephones, home security systems, inventory control systems, and electronic

toys has been in part due to open standards promoted by industry associations

such as the WiFi Alliance61 and the WiMAX Forum62. UWB is an example of

shared unlicenced use, while SDRs facilitate opportunistic unlicenced spectrum

use.

Table 8 indicates the characteristics of some of the newer licenced and

unlicenced terrestrial based wireless technologies which are currently being used

or developed for broadband wireless access.

Not all policymakers and regulators are keen to offer frequencies for unlicenced

uses. Besides being concerned about potential abuse and uncontrolled use of

the spectrum leading to congestion, they may also be reluctant to part with a

good generator of revenue. Others, however, see the potential benefits for their

communications industries and citizens through the mass market that can be

created by the development and production of open standard, licenced-exempt

devices.

The industrial benefits of policies that promote the development and use of

licence-exempt devices in Jamaica and the Caribbean may be less than they are

in countries in North America and Europe and even Brazil, which have the

capacity to produce these devices; however, policymakers and regulators in

Jamaica must recognize the potential of this technology to provide cheaper and

more accessible broadband local access. Policies and regulations for the use of

licence-exempt spectrum in Jamaica should therefore build on developments in

the USA, Canada and Europe while at the same time ensuring that entry of

equipment into Jamaica is not be hindered so long as it has been type approved

in North America and/or Europe.

59 Radio Local Area Networks, also referred to as W-LAN, Wireless Local Area Networks 60 Wireless Metropolitan Area Networks 61 See: http://www.wi-fi.org/OpenSection/index.asp 62 See: http://www.wimaxforum.org/home

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Technology Standard Frequency Band and Technology Range Capacity Remarks

Radio Local Area Networks (R-LAN) 802.11 (WiFi)

2.4 GHz (802.11b,g) 5 GHz (802.11a)

802.11b based on direct

sequence spread spectrum (DSSS)

technology

802.11a based on orthogonal frequency division multiplexing (OFDM) technology

50 -100 m

up to 11 Mbps

(802.11b) up to 54

Mbps (802.11a,g)

WiFi (Wireless Fidelity) is a wireless local area network (WLAN) technology based on the IEEE’s 802.11 wireless interface standard. IEEE 802.11a operates in the 5 GHz band (between 5.725 and 5.850 GHz) and can support data transmission speeds of up to 54 Mbps. IEEE 802.11b operates in the 2.4 GHz band (2.4 to 2.4835 GHz) and can support data transmission speeds up to 11 Mbps in a range of up to about 300m. It is a low power spread spectrum technology operating 10 dB above noise floor. More intense use raises the noise floor and creates the potential for congestion and interference and eventual degradation in service quality. Its range can be extended through mesh networking. The main activity for licence-exempt devices is in the 2.4 GHz band. In North America R-LAN (WiFi) also operates in the 5725-5825 MHz band. In Canada the bottom part of 5 GHz band (5150 – 5300) Band is reserved for indoor use. The main issues concern: 1) the power level permitted; 2) the technical specifications; and 3) whether they are for indoor or outdoor use.

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Technology Standard Frequency Band and Technology Range Capacity Remarks

Wireless Metropolitan Area Networks (W-MAN), fixed or for nomadic applications

802.16, 802.16a 802.16e (WiMAX)

10-66 GHz (802.16) 2-10 GHz (802.16a)

line of sight (802.16)

not line of sight (802.16a)

50 km 70 Mbps

WiMAX is a wireless metropolitan network (MAN) technology that will provide broadband wireless (BWA) for fixed and mobile applications. WiMAX is based on the IEEE 802.16 wireless interface standard. The original version of 802.16 adopted in 2001 was a point-to-multipoint line-of-sight technology operating in the frequency range 10 to 66 GHz. The more recent version, IEEE 802.16a, is designed for fixed applications, operates in the frequency range 2 - 11 GHz and does not require that there be a line-of-sight between the base station and the user. 802.16a offers a range of up to 50km with typical cell radii of 6 to 10 km. and will offer variable channel sizes from 1.5 to 20 MHz. IEEE 802.16e which is currently being developed will allow for limited mobility (20 to 100 kph) and will operate in licenced bands in the 2 – 6 GHz range. A proposed 802.20 standard will permit greater mobility (up to 250 kph) and will operate in the licenced bands below 3.5 GHz. Scope for agreement in the standard setting forums (IEEE, ITU) is excellent. Therefore chances are good that this technology will take off. In North America it is foreseen that WiMAX will be used mainly for rural applications because of the relatively high power requirements. The FCC is currently seeking comments in a NPRM to allocate the sub band 3650-3700 MHz for licence-exempt broadband use particularly in rural applications, where the higher power requirements are less of a problem (ET Docket No. 04-151). It is also foreseen to implement WiMAX using multi-band systems which can automatically select among 2.4, 3.5 and 5 GHz bands.

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Technology Standard Frequency Band and Technology Range Capacity Remarks

Wideband mobile 802.20 (MobileFi) 3.5 GHz 15 km 1 Mbps

There appears to be wide agreement on a standard in the different standard setting forums (IEEE, ITU). There are good chances, therefore, that this technology will take off.

Various short range devices (SRD) operating in the ISM bands

802.15.1 (Bluetooth) 802.15.4 (Zigbee) Others

World wide allocation (ISM)

902 – 928 MHz 2400 – 2483.5 MHz 5725 – 5850 MHz

75 – 100 m.

250 – 1000 Kbps

Sensors, home security devices, electronic toys, garage door openers, inventory control systems, etc. The 902 – 928 MHz Band was allocated to primary mobile uses. This was changed at WRC ’03 (SP 5150) opening the possibility for use of licence-exempt devices operating with dynamic frequency selection (DFS) technologies.

Family Radio Services (FRS); General Mobile Radio Service (GMRS)

462/467 MHz

These are mass market, consumer based radios for outdoor recreational and work related use such as walkie talkies. A certain number of frequencies in these sub-bands have been declared licence-exempt in Canada and USA and more recently for GMRS (operating at 2 watts ERP) which is a higher power version of FRS. Requires that licenced land mobile devices operating in these frequencies (above 30 watts ERP) be moved.

Multi-point, multi channel distribution” system (MMDS or MCS)

2.4 GHz

Demand for frequencies in this band for MMDS (MCS) type systems is high in North America. Consequently the FCC (USA) and Industry Canada have used auctions to assign these frequencies.

Wireless Communications Services (WCS)

2.5 GHz Auctions were used in Canada and the USA to assign these frequencies. Secondary trading is permitted in these countries.

Fixed Wireless Access (FWA) 3.5 GHz

Auctions were used in Canada and the USA to assign these frequencies. Secondary trading is permitted in these countries.

Ultra Wide Band (UWB) 5 GHz

Very wide band spread spectrum technology operating just below the noise floor. UWB is effective in penetrating walls and does not suffer from multipath signal distortion. Disagreements among manufacturers (Motorola vs. the rest) will result in delays in agreeing a standard for this technology

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Technology Standard Frequency Band and Technology Range Capacity Remarks

Local Multi Point Distribution System (LMDS)

26 GHz Problems with attenuation due to rain in this frequency band; limits the scope for licencing

Table 8

Some Broadband Wireless Technologies Operating in Licenced and Unlicenced Frequency Bands

120

In July, 2003 the United Nations ICT Task Force organized a special conference

in New York on Wireless Internet Opportunities for Developing Countries. At this

conference the task force proposed a number of guidelines for countries to

promote the deployment of broadband wireless Internet. While the emphasis was

on wireless access technologies, the guidelines are equally applicable to wireline

infrastructure. Inter alia, the task force suggested that governments:

• adopt minimum regulations (in the case of wireless, for unlicenced

spectrum) and promote competition;

• identify available resources and promote cooperation among

stakeholders;

• support experimentation in new technologies and services;

• promote cooperation among governments and regulators for sharing of

experiences and best practices63.

This suggests UN guidelines might well be considered within the long term PIOJ

planning exercise that SMA is currently participating in. Reflections on the future

direction of spectrum policy in Jamaica must also take into account the

development of new wireless technologies discussed in the previous paragraphs.

The proposed action discussed in Section III.3.1 of this report to develop a

comprehensive national wireless broadband strategy along with the

establishment of mechanisms for regional collaboration, training and resources

and information sharing will favour the development and deployment of

alternatives to existing local loop technologies in Jamaica and remove barriers to

private investment in building and operating the most appropriate access facilities

for the particular circumstance.

63 See: United Nations ICT Task Force, InfoDev, Wireless Internet Institute, The Wireless Internet Opportunity for Developing Countries, November 2003

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IV.2.2 Upstream: The high cost of backbone capacity

ISPs, private companies and competing telecommunications operators all need

backbone to build their communications networks.

Private companies lease transmission facilities (circuits) to connect branches and

other operations domestically and internationally. For example, a bank with

branches throughout the island will build a network to connect these branches

and its central processing facilities to provide various on-line banking services.

The bank will also need international connectivity for processing credit card

information and effecting international transactions. Usually a bank will want to

lease the broadband which it requires. Required capacities normally vary

between 128 Kbps and 1.544 Mpbs (T1). Most banks will not want to build and

operate their own facilities.

Cellular mobile operators need high speed backbone facilities to connect their

network of base stations, network and switching subsystems, and operation and

support subsystem. An operator such as Digicel which has already installed over

500 base stations in Jamaica will need typically 4 STM-1's (4 x 126 Mbps) links

between main switches (in different cities) and 1 x 126 Mbps links between

switches in the same city. It will also need international connectivity if it offers

international services over its own facilities and connect with its other operations

in the Caribbean. An operator such as Digicel may construct its own network

entirely or partly and lease the rest.

Internet Service Providers (ISPs) need wideband backbone facilities connect to

the Internet which invariably is in the USA. With the exception of a VSAT, ISPs

will generally not own backbone facilities and will therefore rely on facilities based

operators to lease them the capacity necessary to offer a service. They will often

bundle of facilities the required circuit capacity and connection to the Internet,

referred to as IP Transit.

Unless they are prepared to build their own networks, these users have little

choice beyond those of C&WJ’s domestic and international leased capacity

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offerings. Satellite provides an alternative; however, because of the latency,

inferior throughput offered by satellite and generally higher prices ISPs prefer

fiber optic cable connections. Sometimes a more cost effective option is to use

cable for the uplink and satellite for the return. A unidirectional link of this type of

arrangement via satellite can cost in the order of US $10,000/month.

Prices charged by C&WJ for domestic and international leases and for IP Transit

services are shown in Table III.3. a one time installation charge for a domestic

lease costs in the range of US $ 400 – 500.

Speed (Kbps) Currency

Domestic Lease

(wholesale prices)

International Lease (e.g. Jamaica - Florida)

IP Transit

J $ 22,610 357,000US $ 377 5,950 0

J $ 30,828 555,600US $ 514 9,260 0

J $ 50,968 688,080 240,000US $ 849 11,468 4,000

J $ 75,228 1,198,800US $ 1,254 19,980 0

1,544

128

256

512

Source C&WJ

Table 9

Prices for Leasing Fibre Optic Circuit Capacity and IP Transit (12 month leases)

Prices for international leases using fibre optic cable routes are substantially

higher in Jamaica (and indeed in the rest of the Caribbean). For example, the

price for a lease of an E1 circuit in Europe over a distance roughly equal to the

distance between Jamaica and Miami (as the crow flies in both cases) is in the

order of US $ 500 per month, less than 1/25th of the price of a Jamaica – Miami

lease when compared on a per Mbps basis (Table 10). This does not include the

one time installation charge is in the order of US $ 6,000 for a T1.

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Capacity/Speed Avg. price/month Route Distance*

(km) Type Mbps per circuit

per Mbps

Sydney – Los Angeles 12,049 E1 2.048 5,117 2,499 Hong Kong – Los Angeles 11,640 E1 2.048 2,595 1,267 Hong Kong – London 9,740 E1 2.048 4,267 2,083 Tokyo – Los Angeles 8,815 E1 2.048 2,334 1,140 New York – London 5,585 E1 2.048 945 461 Amsterdam – Madrid 1,477 E1 2.048 1,152 563 Frankfurt - Madrid 1,434 E1 2.048 1,047 511 London - Madrid 1,261 E1 2.048 966 472 Frankfurt – London 634 E1 2.048 721 352 Trinidad & Tobago – Miami 2,602 T1 1.544 11,000 7,124 Barbados – Miami 2,584 T1 1.544 10,000 6,477 Kingston – Miami (on Maya 1) 932 T1 1.544 10,500* 6,800 Kingston – Miami (on TCS 1) 932 T1 1.544 19,980* 12,940

* prices include national extension

Table 10 Comparison of Lease Prices for T1/E1 Capacity Circuits

in the Caribbean and on Selected Routes

Leased circuit prices for larger capacity circuits are substantially cheaper as

Table 11 shows64.

Capacity/Speed Avg. price/month

Route Distance* (km) Type Mbps per

circuit per Mbps

Sydney – Los Angeles 12,049 STM-1 155.520 80,185 516 Hong Kong – Los Angeles 11,640 STM-1 155.520 29,144 187 Hong Kong – London 9,740 STM-1 155.520 47,883 308 New York – London 5,585 STM-1 155.520 4,732 30 London - Madrid 1,261 STM-1 155.520 6,702 43 Trinidad & Tobago – Miami 2,602 T1 1.544 11,000 7,124 Barbados – Miami 2,584 T1 1.544 10,000 6,477 Kingston – Miami (Maya 1) 932 T1 1.544 10,500 6,800 Kingston – Miami (TCS 1) 932 T1 1.544 19,980 12,940

Table 11 Actual Lease Prices for Larger Capacity Circuits on Selected Routes

Between 1998 and 2001 the price in the USA for leasing a domestic 300 km E1

circuit decreased from about US 1,400/month to US $ 660/month. At about the

same time Reuters, the news agency, was paying about US $ 65/month in the

UK and a little over US 200/month in the USA for a local E1 lease (distance

64 A STM-1or OC-3 circuit has the equivalent of 2,016 equivalent 64 Kbps circuits or the equivalent of about 76 E1s (2.048 Mbps). A T1 has the equivalent of twenty-four 64 Kbps circuits.

124

between the operator’s technical centre and the customer’s premises estimated

to be on the average 3 km)65.

The high international leased circuit prices can be attributed to the limited fiber

optic cable circuits available to users in Jamaica where there are presently just

two undersea fiber optic cables which land in Jamaica, The Trans-Caribbean

Cable System (TCS-1) and the Cayman - Jamaica Fiber System (See Table 12)

and Figures 14 and 15. On the Jamaican side C&WJ controls both.

The former was built in 1991 at cost of about US $ 220 million by a consortium of

operators including AT&T, MCI, Sprint, CANTV Venezuela, Telecom of

Colombia, CODETEL of the Dominican Republic and, of course, C&WJ, which is

the landing party. C&W Barbados and TSTT Trinidad and Tobago also have

ownership shares.

This cable has been upgraded to its full potential capacity, which is the

equivalent of 3 DS 3s (140 Mbps or about 65 E1 circuits). It is understood that all

of these circuits are currently being used except for a minimal number which are

being offered for sale at astronomical prices. There are rumors that this cable is

nearing the end of its operational life and will be taken out of service soon.

CJFS which is privately owned by Cable and Wireless connects Cayman Islands

to Jamaica and loops around the island touching at Montego Bay, Ocho Rios,

Port Antonio before ending at Kingston. It is a newer system operating since

1996 with a total capacity of 5 Gbps (equal to 2,681 E1s). It is unrepeatered

which means it can be upgraded to virtually any desired capacity.

65 OECD, Broadband Access for Business, Working Party on Telecommunication and Information Services Policies, Committee for Information, Computer and Communications Policy, DSTI/ICCP/TISP(2002)3/Final, 04 Dec 2002

125

System Jamaican Landing Points

Caribbean Landing Points

Landing Points in Countries

outside Region

Interconnection with Other

Cable Systems Ownership

Capacity (Minimum – potential)

Topology and technology Year Interface

(Bandwidth)

Cayman Jamaica

Fibre System (CJFS)

Kingston, Montego Bay,

Ocho Rios, Port Antonio

Cayman Is. (Grand

Cayman, Cayman

Brac)

None MAC, TCS-1, Maya-1

Private C & W (Cayman Islands); C&W

(Jamaica)

2.5 – 10 Gbps

SDH Unrepeatered 1996

STM-1 (units of

E1s)

Trans Caribbean

System (TCS-1)

Kingston

Puerto Rico,

Dominican Republic

USA (West Palm Beach FL); Colombia

(Barranquilla)

Americas-2, Colombus-2,

Arcos-1, Antillas-2, Taino-Carib, Pan American,

CJFS

Consortium of Operators

140 – 280 Mbps;

Segment G3 (Kingston –

Santo Domingo)

has a capacity of 140 Mbps.

PDH Repeatered 1991 E4

Table 12

Undersea Fibre Optic Cable Systems in Jamaica

126

Source: Global Telecom Facilities Directory

Figure 14 Cayman Jamaica Fibre System (1996)

Owners at Construction Cayman Islands C&W (Cayman Island) Jamaica C&W (Jamaica)

127

Source: Global Telecom Facilities Directory

Figure 15

TCS-1

Owners at Construction

Barbados BET Colombia TELECOM Dominican Republic AAC&R Dominican Republic CODETEL Haiti TDH Jamaica C&W Trinidad/Tobago TEXTEL U. K. C&W U. S. A. AT&T U. S. A. AT&T-PR U. S. A. MCII U. S. A. PRTC U. S. A. RCA GLOBCOM U. S. A. SPRINT U. S. A. TLDI U. S. A. WORLDCOM Venezuela CANTV

128

Landing licenses for both systems belong to C&WJ, owner and operator of the

cable stations in Kingston, Montego Bay, Ocho Rios and Port Antonio.

While the joint owners of the Dominican Republic-Kingston segment of TCS-1.

own capacity up to the cable landing station in Kingston, they have no means of

breaking out this capacity and bringing it to a potential client on the island. They

would need to make arrangements with C&WJ, install multiplexers, and other

equipment in C&WJ’s cable station and then find a means to connect to the local

customer through the domestic network. Collocation is a thorny issue, which in

some jurisdictions has been forced on reticent incumbents by the regulator with

varying success. The process is often long and invariably involves disputes over

prices to be paid by the operator seeking to collocate. The issue of collocation

may not be relevant with respect to the CJFS system which is 100 % owned by

C&W.

At least four projects to build new submarine cables into Jamaica have been

announced.

• The Trans-Caribbean Cable Network ("TCCN") is a project of Trans-

Caribbean Cable Company ("TCCC") which proposes to build, operate,

and maintain a cable system with a current configuration connecting

Kingston with the Cayman Islands and the Dominican Republic at Santo

Domingo where it would connect to existing systems and at least one of

the planned Eastern Caribbean cables (the Eastern Caribbean–1 and

Win–1 systems66, Figure 16). TCCC would own and/or control each

landing station guaranteeing each subscriber of leased capacity equal

access to cable facilities in each station.

• More recently Caribbean Crossings (http://www.caribbeancrossings.com)

announced its intention to extend its Bahamas Internet Cable System

(BICS) with a fully protected design running through the Bahamas’ island 66 See Stern, Peter A., Action Plan: Promoting Investment in Information and Communications Technologies in the Caribbean, Report to the IADB, April 2004. It is understood that there may also be separate plan to extend the Win-1 system from Puerto Rico to Jamaica.

129

chain to Jamaica. This would provide connectivity to the USA through the

BICS system with two landings in Boca Raton, Florida (Figure 17).

Caribbean Crossings indicated its interest in also building a land based

fiber optic network joining the major centers on the island and connected

to the proposed Jamaica – Bahamas cable and in supporting the

development of the presently fragmented cable TV sector.

• The promoters of the eastern Caribbean Win-1 cable system are also

proposing an extension to Jamaica from Puerto Rico.

• Separately a consortium which includes Digicel and Jamaica Network

Access Point (JNAP) has announced its intention to build a cable

between Jamaica and Florida67.

67 “MOU next week on fibre-optic line proposed by Digicel” Business Observer, Kingston, Wednesday June 9, 2004

130

Source: http://www.trans-caribbeancable.com/index.html

Figure 16 Proposed Trans-Caribbean Cable Network

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Source Caribbean Crossings

Figure 17 Proposed Bahamas – Jamaica Fibre Optic Cable System

Port Antonio,Jamaica

MatthewsTown, Inauga

Clarence Town,Long Island

George Town,Exuma

Landfall Point,Crooked Island

Bannerman TownEleuthera

Fresh Creek,Andros

Current,Eleuthera

NassauNew Providence

Sandy Point,Abaco

Freeport,Grand Bahama

Boca Raton,Florida

Existing BICS Networkwith Proposed Extension to

Southern Bahamas andJamaica

BICS Existing

Proposed Extension

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IV.3 Proposed action to overcome the bandwidth squeeze

Policy makers and regulators in Jamaica can address the issue of high leased

circuit costs by: i) developing a national strategy to promote deployment of the

most appropriate broadband wireless access technology for the particular

circumstance; ii) promoting competition in the provision of domestic and

international backbone capacity; and where competition is lacking or insufficient

to impact prices, and iii) regulating the monopoly’s or the dominant operators’

prices for such capacity.

IV.3.1 Develop a national broadband wireless strategy

In addition to participating in the PIOJ led study on the wireless industry in

Jamaica the SMA is planning to undertake three important studies. These are

related to licence-exempt spectrum, new wireless technologies, and spectrum

pricing. The outcome of these studies should be used to develop a

comprehensive policy for Jamaica for promoting the development of broadband

wireless local access which might include a combination of the most appropriate

and cost effective technologies for each geographic, economic, and social

circumstance. The objective of this policy would be to encourage private

investment to construct high speed local loops. The policy should also address

universal services aspects of using wireless technologies to provide local access.

To be more effective and to the extent possible regional collaboration should be

sought in conducting these studies.

Recommendation. The SMA together with OUR and BC should develop a

comprehensive national wireless broadband policy with the objective of

promoting the construction of high speed local loop facilities using the

best and most cost effective new and existing technologies using both

licenced and unlicenced spectrum. To the extent feasible regional

collaboration should be sought in carrying out these studies and in

developing such strategies.

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IV.3.2 Promoting competition through the development of alternative infrastructure

Jamaica has an open telecommunications market since March 2003. The

emphasis therefore needs to be put on encouraging and promoting investment in

alternative infrastructure such as the submarine fiber optic cable systems which

are being proposed. The Government should ensure that no unnecessary

barriers are raise to investors prepared to invest in such infrastructure. While

obtaining a telecommunications licence may not present any particular problems,

there are other requirements such as an environmental assessment and

obtaining rights of way (for landing the cable and running it along polls or through

ducts after it lands) which may result in unnecessary delays. An environmental

impact study would typically assess the impact of the proposed cable on the

ocean floor and on the fish habitat along the cable route and near and at the

landing site. The Government can ensure that all necessary permits are obtained

expeditiously and that all departments and agencies coordinate their efforts in

support of these projects. Much time can be saved by bringing in environmental

and fishing groups through a consultative process early in the planning cycle and

by preparing and delivering to these and other interest groups a specially

designed education program.

The Ministry is contemplating offering “exclusivity” to a new investor for a

investors secure financing for the project. This appears to being consistent with

the Policy which says that there will be competition in all areas of

telecommunications but that the number of licenses awarded can be limited by

market conditions, limitations in natural resources and taking into account the

viability of the business. Limiting the number of licenses would not contravene

Jamaica’s WTO commitment, which currently reserves the supply of international

facilities to one operator, C&WJ.

The Government might, furthermore, consider offering tax incentives and

facilitate the lease or purchase of land and the establishing of contacts among

stakeholders including local operators, service providers, users, local and foreign

investors, and investment and/or development banks. The Government should

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also establish a point of coordination along with a special web site to assist

potential investors with all their administrative transactions.

Recommendation. The Ministry, OUR and JAMPRO should develop and

implement a strategy to promote the construction of alternative backbone

facilities in Jamaica and internationally. This strategy might consist of a

combination of initiatives including offering tax and other incentives to

investors, creating a point for information and coordination for potential

investors, and facilitating the acquisition of required land and rights of

way. Access to cable facilities landing in Jamaica should be provided to all

licenced operators and service providers on a non-discriminatory basis.

The Ministry should assist in obtaining the necessary environmental

permits by coordinating with the ministry and agencies responsible for the

environment in Jamaica and concerned environmental and fishing groups.

If necessary the Government should lend its support to potential investors

in the latter’s discussions with authorities in the countries of the far end

landing points.

IV.3.3 Regulating the dominant supplier’s wholesale prices

Regulations to mandate local loop unbundling (LLU), collocation and

benchmarking have been used especially in developed markets as a means of

putting pressure on incumbent operators’ high wholesale prices.

a. Collocation

In jurisdictions where provisions for collocation have been imposed on the

incumbent, competing operators are permitted under certain conditions to install,

operate and maintain their equipment in the cable landing and switching facilities

of the latter. Obtaining satisfactory collocation arrangements is not easy as the

incumbent will have many arguments (some valid, some not) to delay any

decision mandating collocation. There will inevitably be differences of opinion on

compensation that the new entrants will be required to pay the incumbent in

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exchange for being allowed to access its facilities. In 1998 when Columbia

liberalized its long distance market, new entrant Empresa de

Telecomunicaciones de Bogotá (ETB) acquired capacity in the Pan American

Fiber Optic Cable System which lands in the Barranquilla Cable Station, owned

and operated by Telecom, the Colombian landing party for this cable and

incumbent long distance operator. Collocation was mandated by the Colombian

Colombian telecommunications regulator, Comisión de Regulación de

Telecomunicaciones (CRT) in 1998; however, the ETB was not able to connect

with its own equipment in the Baranquilla Cable Station until almost 2 years later

when a dispute between the two operators related to costs was finally resolved

despite the persistence and continued intervention of the regulator.

b. Promoting the expansion of local access through infrastructure sharing: Local loop unbundling

In terms of the local loop unbundling two situations can be considered: (1) where

there is insufficient or no access facilities available and (2) where facilities are

available but in insufficient quantities for LLU to bring the desired effects of lower

prices, better quality of service and customer choice.

In countries with high telephone and cable TV penetration rates, policy makers

and regulators have been implementing measures to unbundle the local loop

(LLU). This is includes: leasing of the entire loop, sharing of the same loop

through frequency or time division multiplexing techniques, co-location, or a

combination of these. In 2000 the European Commission mandated that access

to the local loop be provided to all potential competitors in the countries of the

European Union, “under transparent, fair, and non-discriminatory conditions”68

LLU initiatives in Europe and North America were seen as a way of introducing

competition into local access while at the same time avoiding the unnecessary

duplication of expensive infrastructure. They were also seen as a way of making

high speed access to the Internet available to a larger number of people. While

68 See: Regulation of the European Parliament and of the Council on Unbundled Access to the Local Loop, Com (2000), 394 final, Brussels 12.7.2000

136

initially not very successful, LLU has more recently resulted in giving consumers

competitive alternatives over the incumbents’ facilities in both of these regions,

as the example from France shows (Table 7).

LLU has been controversial with proponents (generally new entrants and

regulators) arguing that LLU: i) promotes service-based competition which

benefit the consumer who is given choice, lower prices, and better quality of

service; ii) encourages sharing of costs for facilities; iii) encourages use of

unused plant, where this exists; and iv) promotes early introduction of wide band

access services

Opponents (generally the incumbent) argue that LLU: i) encourages new entrants

to concentrate on the more profitable business segments of the market and does

nothing to promote development of access and service provision in poorer and

rural areas; and ii) discourages investment in new infrastructure when prices

imposed for sharing, leasing or otherwise using someone else’s facilities do not

result in an adequate return on capital invested69.

In Jamaica and the Caribbean telephone penetration rates are lower than in

North America and Europe and most people do not have narrow band (dial-up)

let alone wide band access to the Internet. Here the priority of policy makers and

regulators must be to promote expansion of the network rather than to encourage

competition over the same network facility. The Government should therefore

emphasize building of access facilities in areas where they are inadequate or not

yet available.

This is not to say that LLU unbundling should be ignored. It would be beneficial if

the regulator undertake a study in the intermediate or longer term to determine

possible alternatives for encouraging the development of local access in Jamaica

and making it available at affordable prices to the widest cross section of the 69 See Robert Bruce & Rory Macmillan, Regulation and Investment: Perspectives of the Financial Sector on Potential Impediments to Investment in the Telecommunications Sector at a Time of Financial Crisis; Javier Nadal, El Futuro desde la perspective del operator: Reconocer el nuevo entorno y las nuevas demandas regulatorias. V Cumbre de Reguladores y Operadores, Punta Cana, Republica Dominicana, 11-12 de Julio de 2002. and Javier Nadal, Convergencia Tecnológica: Oportunidades para la implantación de la SI: Retos regulatorios, standardización y normalización, Reunion Ministerial Union Europea-América Latina y Caribe Sobre Sociedad de la Información, Sevilla, Spain, 26 de Abril de 2002.

137

population. The study would be carried out in light of experience in other parts of

the world and could usefully be undertaken as a collaborative effort of all the

regulators in the Caribbean under arrangements which are being proposed for

this type of action70.

Box 2 indicates aspects which might be considered in such a study.

Study on Local Loop Unbundling (ULL) for Jamaica

A study on local loop unbundling might consider the following aspects for Jamaica:

• the potential for LLU to make access more easily available and affordable;

• the particularities of Jamaica which distinguish it from other countries;

• the existing alternatives for local access (copper, coaxial and fibre optic cable,

and fixed and mobile wireless);

• the drawbacks of mandated LLU including the impact of imposed prices on investment in local infrastructure;

• possible formulae to determine prices for local loop elements which reflect

costs in the region; • options for facility sharing which do not require price controls;

• options for sharing the construction, operation and maintenance of new

facilities (fibre optic cable sharing agreements may serve as an example).

The study might, for example, compare the different options for local access, discuss the advantages and disadvantages of each, compare costs, examine regulatory impediments which exist and suggest measures to overcome these. It should also elaborate on any country-specific particularities.

Box 2 Points to Consider for a Study on Local Loop Unbundling

c. Benchmarking

With respect to the high prices for wholesale services such as domestic and

international bandwidth capacity the OUR should ensure that the prices charged

70 See Stern, Peter A., Action Plan: Promoting Investment in Information and Communications Technologies in the Caribbean, Report to the IADB, April 2004

138

for these are as required by the Telecommunications Act and the GATS

Telecommunications Annex71. The OUR should invite C&WJ, which controls the

only undersea cables coming into Jamaica presently, to show why the prices it

charges should not be lower and more in line with international benchmarks.

Issuing of licences to land competing submarine cables as the as discussed

above will also help.

Recommendation: Of the three possible actions for putting pressure on the

incumbent operator’s high wholesale prices (forced collocation, provisions

for local loop unbundling, and benchmarking) priority should be given to

benchmarking and negotiations with the incumbent using these

benchmarks as a reference. In developing benchmarks oUR should seek to

collaborate with other regulators and especially in the Caribbean. At the

same time the OUR should proceed with its study on local loop

unbundling.

IV.4 International facilities based competition in Jamaica

IV.4.1 Introduction

Since the market for international facilities based operators was opened to

competition at the start of Phase III of the transition, 59 international carrier

licences have been issued (in addition to C&WJ whose licence already permitted

it to be an international operator). This licence permits a licencee to operate an

international gateway and to act as a transit point for international incoming and

outgoing telecommunications traffic in Jamaica.

In August 2002, seven months before the start of Phase III OUR proposed that

an initial Access Deficit Contribution (ADC) of J $ 3.50 (US $ 0.033) be applied to

voice traffic originating outside of Jamaica and delivered to a fixed line carrier72.

71 This also means that in Jamaica, which scheduled no limitations on market access (or national treatment) for Internet and Internet access, Internet Service Providers must be given access to leased circuit capacity on reasonable and non-discriminatory terms and conditions, namely, under the same terms and conditions which Cable & Wireless offers its ISP affiliate. 72 OUR, Modifications to C&WJ’s Price Cap Plan and Proposed Rules for International Telecommunication Services, Consultative Document, August 31, 2002. The ADC was meant to partly compensate C&WJ’s

139

The amount was to be adjusted each year for inflation but was to be phased out

over a six-year period by which time OUR expected C&WJ’s prices to customers

to be fully rebalanced. The ADC was to be applied only to traffic terminating on

fixed (and not mobile) networks because the OUR estimated that there were no

subsidies from mobile to fixed operators. ADC has been abandoned.

In January, 2004 OUR set minimum rates which international operators in

Jamaica could charge correspondent international operators in foreign countries

for terminating calls in Jamaica. These minima were US $ 0.082/min and US $

0.169 for calls terminating on fixed and mobile networks, respectively. At the

same time OUR set a maximum that domestic fixed and mobile operators could

charge the Jamaican international operator to deliver and terminate incoming

international calls at the destination subscriber on their networks. The maxima

were US $ 0.05/min and 0.138/min, respectively, for fixed and mobile

terminations. The difference, US $ 0.031, in each case, was considered by OUR

to be enough to cover international operators’ costs73. The termination rates

reflect price estimates submitted to OUR by C&WJ and the two other mobile

operators.

Table 13 summarizes the OUR approved rates of January 2004 and compares

them with current market based international settlements rates for traffic

terminating in Jamaica.

type of termination fixed mobile Termination rates OUR approved termination rate 0.050 0.138

OUR mandated minimum settlement rate 0.081 0.169

prevalent circuit switched rates 0.100 0.150 Settlement rates

Voice over IP (VoIP) rates 0.060 0.120

Table 13 OUR Approved Termination and Settlement Rates Compared with Current Market Settlement Rates

access deficit in areas where its rates are still unbalanced. The remainder of the compensation to C&W was to be achieved through adjustments to C&WJ’s Price Cap formula. 73 Later estimated to be closer to US $ 0.008, See OUR, Proposed Decision on Settlement Rates and Termination Charges: A Notice of Proposed Decision, Doc. TEL 2004/05, April 20, 2004

140

At the same time OUR ordered international gateway operators to submit to it

price, volume, and other terms of their contracts with correspondent foreign

operators so it can control eventual predatory pricing and other anti-competitive

practices74.

International operators are arguing that they are being squeezed between

continually decreasing settlement payments on the one hand and the fixed

termination rates they have to pay, on the other. Those that are receiving

incoming Voice over IP (VoIP) traffic at the going rates are clearly

disadvantaged. Given the strong opposition to the imposed rates, OUR rescinded

its decision in April effectively deregulating international settlement rates

completely and leaving a decision on termination rates for incoming international

calls on fixed and mobile networks for a later date75. This was confirmed in a

further decision by OUR on June 9, 2004. Rates for terminating calls on fixed and

mobile networks will henceforth be those negotiated between the international

operator and the operators of the fixed and mobile networks. To this will be

added a US $ 0.035/min contribution to the Universal Services Fund levied by

the Ministry of Commerce, Science and Technology76.

The following section presents a brief overview of how the international

telecommunications system functions and how international accounts for

international traffic are settled. This should provide a better understanding of the

importance and impact of international telecommunications in Jamaica’s newly

liberalized telecommunications market.

IV.4.2 The International telecommunications system

For international incoming traffic Jamaica’s international facilities based

operators terminate the foreign originated calls either on their own networks (if

the destination subscriber happens to be one of their own) or on the networks of

74 Such as “whipsawing” whereby a dominant foreign operator plays one Jamaican international operator off against another. 75 OUR, Decision on Settlement Rates as of May 8, 2004, Doc. 2004/06 76 OUR, Termination Charges for Incoming International Calls, Decision of June 9, 2004, Doc. 2004/08

141

one of the other mobile or fixed operators, for which they pay a termination

charge. In the case of C&WJ termination charges are presented in its Reference

Interconnection Offer (RIO) and approved by OUR77. For the other (non-

dominant) operators the termination charge is determined through negotiations.

In most, if not all, cases the international gateway operators do not have a direct

connection with latter and must, therefore, transit via C&WJ’s domestic network

for which the latter receives an OUR approved transit fee78.

The other mobile operators are for the time being not considered to be dominant;

however, OUR has concluded that there is no competition in the mobile call

termination market and that therefore termination charges for all mobile operators

should be regulated. is currently looking into dominance for domestic and

international originated fixed-to-mobile and for domestic originated mobile-to-

mobile terminations79. This conclusion is basically correct because an

interconnecting operator has no choice over the network over which the call will

be routed to the destination subscriber.

International operators in Jamaica receive payment from correspondent foreign

operators and service providers based on the amount of traffic they receive and a

negotiated rate per minute for this traffic.

For overseas calls originating in Jamaica licenced international gateway

operators will receive traffic at their gateway switch and route this traffic to the

country of destination via their own circuits or via arrangements with international

wholesale operators who will terminate the calls in any country in the world80.

They will pay the destination, transit or a wholesale operator on a per minute

basis for call.

Increasingly, however, calls are being routed via the Internet and bypassing the

traditional circuit-switched arrangements, which are described below. For 77 As a dominant operator C&WJ has to issue a Reference Interconnection Offer according to the Telecommunications Act (Section 32). 78 Also prescribed in the RIO. 79 OUR Assessment of Dominance in Mobile Call Termination: Supplementary Consultative Document, Doc. TEL 2004/03 30 March 2004 80 This is often the preferred arrangement for new and small operators who do not have the resources to negotiate international traffic agreements with a multitude of international operators around the world.

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domestic originating international calls the international gateway operator must

arrange to have the call routed to its gateway through C&WJ’s and/or another

operators’ networks if the call does not originate on its own network. The

originating operator pays a per minute charge for having the call delivered to a

foreign destination. The latter keeps the difference between what it has to pay

the correspondent foreign operator and what it receives from the Jamaican

originating operator.

The issue for the international operator is how to attract international outgoing

calls to its gateway. It can do this either by making arrangements with the

originating operator or by enticing individuals making international calls through

their gateway. There are two ways that the later can be done: i) A caller can

chose on a call-by-call basis selecting the best deal for the particular destination

and time of day (referred to as “call-by-call selection” and ii) A caller can pre-

select an international operator (“carrier pre-selection”). The issue that arises

with respect to the former is one of dialing parity; that is, the subscriber is more

likely to select an international gateway operator for which he or she does not

have to dial additional access numbers. OUR’s consultative document indirect

access (equal access) addresses this issue and proposes rules for the

implementation and operation of carrier pres election and call-by-call selection in

Jamaica81. OUR is presently seeking to have rules developed for indirect access

with the help of international consultants.

Both out and inbound international telephone traffic has been profitable for

C&WJ. A 1999 study by the OUR estimated that international inbound and

international outbound calls accounted for, respectively, 110 % and 10 % of

C&WJ’s profits and largely offsets the combined 55 % negative impact of losses

on access lines and local calls (intra- Parish)82.

81 OUR, Indirect Access, Consultative Document, Doc. No. TEL 2003/02 May 30, 2003 82 OUR, A Strategy for Rebalancing Telephone Prices, Second Consultative Document Abridged Version, June 1999 and Myers, Geoffrey, Squaring the Circle: Rebalancing Tariffs Whilst Promoting Universal services in Jamaica, Paper presented at the 27th Telecommunications Policy Research Conference, 25 – 27 September 1999

143

While overall traffic volumes have increased and continue to do so, net

settlement payments from international carriers to C&WJ have been decreasing

after reaching a peak in 1998 and 1999. There are basically two reasons for this:

1) The significant decrease in the rate per minute used by international operators

to settle international traffic accounts (accounting rates); and 2) The increasing

scope for bypassing the traditional settlement arrangements, which is explained

in the next section.

IV.4.3 Methods for settling international traffic accounts

The traditional method for completing an international connection between

international gateway operators in the origin and destination countries is to route

the call over a mutually agreed route which may be direct or pass a transit point.

The originating operator compensates the destination operator by means of a

negotiated rate per minute of traffic. The most common way of doing this has

been the accounting revenue or accounting rate method, an agreed international

standard developed and agreed upon under the aegis of the International

Telecommunication Union and under which the value of traffic in each direction

between two corresponding international carriers is multiplied by a mutually

agreed tariff or “accounting rate” to give an accounting revenue, which is in

principle, shared equally between the (carriers) of the terminal countries in

respect of each traffic direction.

The accounting rate system has come under pressure during the past ten or a

dozen years because of technological changes in telecommunications and

because it is not well suited to a liberalized telecommunication market with

multiple international operators and service providers in each country. As a result

alternative settlement arrangements have evolved. A short description of these

follows. Annex D provides more detail.

International Simple Resale (ISR) or Direct Interconnection allows alternate

international operators to lease circuits to an operator in the destination country

and negotiate settlement rates directly with them without having to go through

144

another international gateway operator in the country of origin. This arrangement

has been facilitated by deregulation of international leased circuits, which in

many countries are now allowed to be connected to the public switched

telecommunication network (PSTN) at both ends. The advantage for the operator

that sends traffic is that the termination rates of the local exchange carrier in the

destination country are generally much less than the official international

settlement rates.

Refile and hubbing are arrangements whereby traffic is routed without the

knowledge or agreement of the destination country international operator via a

third (transit) country to take advantage of this country’s lower settlement rates

with this international operator. Refile and hubbing may or may not be permitted

in the destination country. TeleGeography estimates that between 15 % and 20

% of the world’s international telephone traffic in 2002 was refiled or hubbed.

Voice over the Internet (VoIP). An international call is routed from a customer to

an operator’s or service provider’s packets switch, where is converted into

Internet Protocol (packets) format and then transmitted over the Internet to the

destination country. Here it is depacketized and converted back into analog form

at the incoming operator’s or service provider’s switch and then routed through

the domestic PSTN to the destination subscriber. No international settlements

are paid by the originating operator and sometimes no termination fees are paid,

if the receiving caller sends the call through the PSTN as a domestic originated

call. TeleGeography estimates that about 11 % of the world’s international traffic

in 2002 was transmitted in this way.

IV.4.4 Settlement rates

In addition to the reasons mentioned the accounting rate arrangements have

come under pressure because of regulatory intervention of the FCC which

imposed a maximum (referred to as a “benchmark”) which USA international

carriers are allowed to pay foreign operators to terminate USA originating

145

traffic83. This has been particularly significant for Jamaica because of the large

amount of telephone traffic that flows between the two countries. Figure 18

shows the decrease in the international settlement rate for traffic from the USA to

Jamaica between 1985 and 2003 when it dropped below the FCC mandated

(benchmark) rate of US $ 0.19/minute84. Current wholesale rates for traffic

terminating in Jamaica are in the order of US $ 0.10/minute for terminations on

the fixed network (PSTN) and US $ 0.15/minute for terminations on one of the

mobile networks (Table 14) and rates for VoIP traffic are understood to be even

lower ranging in the order of US $ 0.06/minute for fixed terminations and US $

0.12/minute for mobile terminations.

.

0.00

0.20

0.40

0.60

0.80

1.00

19851987

19891991

19931995

19971999

20012003

US

$

Figure 18

Evolution of International Settlement Rate for Traffic from the USA to Jamaica

83 FCC, In the Matter of International Settlement Rates, IB Docket No. 96-261, Report and Order, FCC 97-280 August 1997 84 The FCC does not require carriers to report their accounting rates after may have fallen below the benchmark.

146

Country Detail Rate Jamaica Mobile - All Carriers 0.145 Jamaica Mobile - Centennial 0.155 Jamaica Mobile - CWJ 0.155 Jamaica Mobile - Digicell 0.1475Jamaica Premium 0.95 Jamaica Proper 0.0965

Source: MJ Scheel International Spot Rates

Table 14 Prevailing Wholesale Settlement Rates

for Telephone Traffic to Jamaica

IV.4.5 Obligation to interconnect

C&WJ has argued that it should not be obliged to interconnect with international

operators and service providers because under the Telecommunications Act the

obligation to interconnect is restricted to international operators and service

providers that have customers85. Since these do or may not, strictly speaking,

have their own customers C&WJ suggests it is not covered by the obligation to

offer them cost based interconnection86. This is a somewhat disingenuous

argument but does point to the need to clarify provisions related to

interconnection in the Act and accompanying regulations.

IV.4.6 Interconnection charges

Other than for termination of international originated calls interconnection rates in

Jamaica appear to be in line with international benchmarks. Table 15 shows

rates from C&WJ’s RIO 5 for fixed and mobile termination and for transit for

domestic and internationally originated calls. These are compared with rates

offered by C&W (Barbados) last year. The latter does not distinguish between

origin of the call, time of day or geographic location of the called party. C&WJ’s

85 Section 29 (2) a) of the Act says that “any-to any connectivity shall be granted in such manner as to enable customers of each public voice network to complete calls to customers of another public voice network or to obtain services from such other network”, even though section 29 (2) b) says that “end-to end operability shall be maintained in order to facilitate the provision of services by an interconnecting carrier to the customer notwithstanding that the customer is directly connected to a different network.” 86 OUR, Decision on Settlement Rates as of May 8, 2004, Doc. 2004/06

147

rates appear to be in line with international benchmarks as Figures 19 and 20

taken from the European Commission’s Ninth Report on the Implementation of

the Telecommunications Regulatory Package87.

Source: European Commission

Figure 19

Evolution of Fixed Termination Charges in the European Union for Local, and Single and Double Transit Calls88

87 Commission of the European Communities, Ninth Report on the Implementation of the Telecommunications Regulatory Package, Technical Annexes, SEC(2003)1342, Brussels, 19.11.2003. The difference between charges for SMP and non SMP operators is due to the increased number of SMP operators (accounting for 45 % of all European subscribers) and because of the cost orientation requirements imposed on SMP operators. 88 Amounts in 2003 correspond to US $ 0.02, 0.0116, and 0.0075, respectively.

148

country Jamaica Barbados origin national international anywhere

component call set up per minute call set up per minute call set up per minute fixed termination 0.0020 - 0.0103 0.0038 - 0.0161 0.0500 0.0300 0.0111 mobile termination 0.0683 - 0.1070 0.1380 0.0305 0.0105 transit 0.0020 - 0.0079 0.0026 - 0.0072 0.0020 - .0079 0.0026 - 0.0072 0.0250 0.0090

Source: C&WJ RIO 5 (Jamaica) and C&W (Barbados) RIO Phase 1 v 1.0

Table 15 Call Termination Services in Jamaica and Barbados (in US $)

(Rates in Jamaica vary with time and distance; Jamaica has CPP, Barbados has RPP for mobile service)

149

Source: European Commission

Figure 20 Evolution of Fixed-to Mobile Termination Charges

in the European Union for SMP (dominant) and non SMP Mobile Operators89

IV.4.7 Conclusions

Promoting a competitive market in international telecommunications in Jamaica

has been one of OUR’s main preoccupations since the beginning of

liberalization. This is not surprising given the importance of this market segment.

Following are some conclusions which can be drawn based on this brief analysis.

• There is no justification for having different termination charges applied to

calls originating outside Jamaica and from within because the costs are

the same;

89 Amounts in 2003 correspond to US $ 0.23 and 0.195, respectively. The weighted average for 50 European mobile operators is US $ 0.21.)

150

• The OUR has correctly concluded that it is impossible to regulate the

rates (settlement rates) which foreign international operators are prepared

to pay to have calls that they originate terminate in Jamaica;

• International incoming calls are therefore not the right instrument for

imposing and access deficit contribution (ADC). In the absence of fully

rebalanced domestic rates for telephone services other mechanisms

must, therefore, be found to subsidize access deficits and universal

services;

• The OUR needs to implement rules or regulations to ensure equal access

for outgoing international calls. The proposed rules in its consultative

document, “Assessment of Dominance in Mobile Call Termination:

Supplementary Consultative Document” are a good basis for doing this.

• The obligation for C&WJ or any dominant operator to interconnect with

any international operator or service provider needs to be clearly and

unambiguously stated in the new Act and interconnection regulations.

Recommendations. Termination charges for calls originating from outside

Jamaica should not be treated differently from termination charges for calls

originating in Jamaica. Other mechanisms should be developed to subsidize

access deficits and universal services (possibly within a comprehensive universal

services/access program in Jamaica). Regulations for equal access (indirect

access) should be implemented as quickly as possible. The new Act should

clearly indicate the obligation for every operator and service provider to make

direct and indirect interconnection available to the public telecommunications

networks and public telecommunications services of other operators and service

providers.

151

BIBLIOGRAPHY AND INFORMATION SOURCES Legislation of Jamaica The Office of Utilities Regulation Act, 1995 The Television and Sound Broadcasting Regulations, 1996 The Telecommunications Act, 2000 The Broadcasting and Re-Diffusion Act, 1949 (including amendments of May 2001) The Radio and Telegraph Control Act The proposed Fair Competition Act, 2004 The Post Office Act, 1941 Jamaica Contracts and Agreements Articles of Association and Memorandum of Association of the Spectrum Management Authority Limited, 13 December 1999 Heads of Agreement between the Government of Jamaica and Cable and Wireless Jamaica Limited, 30 Sept. 1999 Government of Jamaica Policies, Strategies and Consultations Broadcasting Commission, Open Communication Innovation: Towards a Policy Framework for Cable Television and Broadband Access to Media and Information, May 11, 2004 Cabinet Office, Government at your Service: Public Sector Modernization Vision and Strategy 2002 – 2012, ministry Paper No. 56, September 2002 Government of Jamaica, A Five-Year Strategic Information Plan for Jamaica, Revised March 2002 Government of Jamaica, Telecommunications Policy prepared by the Ministry of Industry, Commerce and Technology, 17 September 2002 InfoCom & Management Consulting Services, Report of the Telecommunications Policy Reform Project prepared for the Ministry of Industry, Commerce & Technology and the Jamaica Telecommunications Advisory Council, Kingston, June 2002 (“Consultant’s Report”) Jamaica Telecommunications Advisory Council, Recommendations from the Jamaica Telecommunications Advisory Council to the Minister of Industry Commerce and Technology, Kingston, July 2002 (“JTAC’s Recommendations”)

152

Ministry of Commerce and Technology, Telecommunications Policy Framework, October 1998 Ministry of Industry, Commerce and Technology, National Strategic Information Technology Plan for Jamaica, March 2002 OUR Consultations and Decisions Office of Utilities Regulation, A Strategy for Rebalancing Telephone Prices, Second Consultative Document Abridged Version, June 1999 Office of Utilities Regulation, The Respective Roles of the Fair Trading Commission and the Office of Utilities Regulation in Telecommunications: The Initial Thoughts of the OUR, 22 March 2000 and response of the FTC Office of Utilities Regulation, Modifications to C&WJ’s Price Cap Plan and Proposed Rules for International Telecommunication Services, Consultative Document, August 31, 2002. Office of Utilities Regulation, Indirect Access, Consultative Document, Doc. No. TEL 2003/02 May 30, 2003 Office of Utilities Regulation, Dominant Public Voice Carriers, Supplementary Consultative Document: Market Definition for Telephony Access, Document Tel 2003/05, 18 July 2003 Office of Utilities Regulation, Assessment of Dominance in Mobile Call Termination: Supplementary Consultative Document, Doc. TEL 2004/03 30 March 2004 Office of Utilities Regulation, Proposed Decision on Settlement Rates and Termination Charges: A Notice of Proposed Decision, Doc. TEL 2004/05, April 20, 2004 Office of Utilities Regulation, Decision on Settlement Rates as of May 8, 2004, Doc. 2004/06 Office of Utilities Regulation, Decision on Termination Charges for Incoming International Calls, Doc. 2004/08, June 9, 2004 Policies and Legislation of other Countries and Organizations Anguilla, PUC Act 2003 and Telecommunications Act 2003, Schedules 5 and 6 of the Agreement of 11 April 2003 between the Government of Anguilla and Cable & Wireless (West Indies) Anguilla, Draft Licence and Frequency Authorization Granted by the Commission under the Telecommunications Act, 2003 to Cable & Wireless (West Indies) Limited for the Establishment and Operation of a Fixed Public Telecommunications Network and the Provision of Certain Public Telecommunications Services and to Use Certain Frequency

153

Bands in Anguilla, Schedule 8 of the Agreement of 11 April 2003 between the Government of Anguilla and Cable & Wireless (West Indies) Canada, Canadian Radio-television and Telecommunications Commission Act, 1974-75-76 c, 49 Canada, Telecommunications Act, Bill C-62, 23 June 1993 European Parliament and Council, Directive on a common regulatory framework for electronic communications networks and services (Framework Directive), PE-CONS 3672/01, Brussels, February, 2002 International Telecommunication Union, Constitution Trinidad & Tobago, The Telecommunications Act, 2001 United Nations ICT Task Force, InfoDev, Wireless Internet Institute, The Wireless Internet Opportunity for Developing Countries, November 2003 United Kingdom, White Paper on a Framework for Communication Regulation, A New Future for Communications, Department of Trade and Industry, 2000 World Trade Organization, Annex to the Fourth Protocol of the General Agreement on Trade in Services, Geneva, February 1997 Papers and Other Background Documents Barth, Gustave, Spectrum for Mobile Communications in the World, October 2003 (http://pirp.harvard.edu/pubs_pdf/barth/barth-draft-03.pdf ) Brown, Franklin Anthony, Telecommunications Liberalization in Jamaica, International Journal of Regulation and Governance, 2(2) 107 -127, December 2002 Cable & Wireless (Barbados), Reference Interconnection Offer for Phase 1 of the Barbados Liberalization Timetable, 22 August 2003 Cable & Wireless (Jamaica), Reference Interconnection Offer 5 CITEL, Guidelines and Practices for Interconnection Regulation, PCC.I/Res 77 (XI-99), June 1999 Commission of the European Communities, Ninth Report on the Implementation of the Telecommunications Regulatory Package, Technical Annexes, SEC(2003)1342, Brussels, 19.11.2003. Department of Trade and Industry, A New Future for Communications, White Paper on a framework for communication regulation, London, 2000 Dunn, Hopeton S, and Winston S. Gooden, Telecommunications in Jamaica, 25 November 2001

154

European Parliament and Council, Regulation of the European Parliament and of the Council on Unbundled Access to the Local Loop, Com (2000), 394 final, Brussels 12.7.2000 European Union, Recommendation of the European Parliament and of the Council on Unbundled Access to the Local Loop, Com (2000), 394 final, Brussels 12.7.2000 FCC, In the Matter of International Settlement Rates, IB Docket No. 96-261, Report and Order, FCC 97-280 August 1997 Foga, Nicole, Delreo Neuman, The Liberalization of the Telecommunications Industry in Caricom: Case Study Jamaica and Dominica, 2002 (?) Hay, Winston C., Regulatory Directions in Caribbean Telecommunications Markets: Regulatory Independence, 17th Annual CANTO Conference, San Juan Puerto Rico, 27-30 May 2001 International Telecommunication Union, Botswana Mini-Case Study: Recent Experiences in Interconnection Disputes, 2003 Lie, Eric, Background Paper: Radio Spectrum Management for a Converging World, Workshop on Radio Spectrum Management for a Converging World, International Telecommunication Union, Geneva, 16 - 18 February, 2004. Lodge, Martin, Lindsay Stirton, Globalization and Regulatory Autonomy in Small Developing States: The Case of Jamaican Telecommunications Reform, Centre on Regulation and Competition, Working Paper Series, Institute for Development Policy and Management, University of Manchester, January 2002 Morgan, Paul J., The Transition from Monopoly to Competition in Telecommunications Services, An Overview of the Jamaican Experience, Presentation at Adam smith Institute Workshop, Trinidad & Tobago, September 2003 Mullings, Beverly, Telecommunications Restructuring and the Development of Export Information Processing in Jamaica, Myers, Geoffrey, Squaring the Circle: Rebalancing Tariffs Whilst Promoting Universal services in Jamaica, Paper presented at the 27th Telecommunications Policy Research Conference, 25 – 27 September 1999 OECD, Broadband Access for Business, Working Party on Telecommunication and Information Services Policies, Committee for Information, Computer and Communications Policy, DSTI/ICCP/TISP(2002)3/Final, 04 Dec 2002 OECD, Broadband Access for Business, Working Party on Telecommunication and Information Services Policies, Committee for Information, Computer and Communications Policy, DSTI/ICCP/TISP(2002)3/Final, 04 Dec 2002

155

OECD, Telecommunications Regulations: Institutional Structures and Responsibilities, Working Party on Telecommunications and Information Services, DSTI/ICCP/TISP(99)15/ Final 25 May 2000 Pipe, G. Russell, Guide to Telecommunications Trade Principles, WTO Commitments and DOHA Round Negotiations, prepared for the Asia-Pacific Telecommunity, October 2003 Reynolds, Taylor, Background Paper: Advanced Wireless Technologies and Spectrum Management, Workshop on Radio Spectrum Management for a Converging World, International Telecommunication Union, Geneva, 16 - 18 February, 2004. Schware, Robert, Susan Hume, Prospects for Information Service Exports from the English-Speaking Caribbean, The World Bank, Latin America and Caribbean Region, March 1996 Stern, Peter A. Indicadores para medir el grado de independencia del organismo regulador de telecomunicaciones, IV Encuentro del Foro Latinoamericano de Entes Reguladores de Telecomunicaciones, Lago Titicaca, Bolivia, 15-17 de Noviembre de 2001 Stern, Peter A. Liberalization and Reform of the International Telecommunication Settlement Arrangements, Primera Conferencia Internacional de Telecomunicaciones, “El Reto de la Apertura, Santa Fé de Bogotá, 16-18 April 1997 Stern, Peter A., Action Plan: Promoting Investment in Information and Communications Technologies in the Caribbean, Report to the IADB, April 2004 TeleGeography 2004, Primetrica Inc., Washington, D.C. World Bank, Telecommunications Regulations Handbook, edited by H. Intven, 2000

156

157

Annexes

158

Annex A

159

Terms of reference of the project

Objectives

To provide analysis to policy makers on alternatives to improve the legal, institutional and regulatory framework for telecommunications. Specifically: to review progress and achievements in reform of the telecommunications sector in Jamaica and the recommendations of the Consultant and JTAC in light of current status of sector reform.

Activities

1. Evaluate the telecommunications sector during the period immediately before liberalization, during the three-year transition period and examine options for the future. The evaluation should include the following areas: legislation, institutional arrangements, impact/results of liberalization, prices, convergence in technology and leased line cost for the international circuit.

2. Evaluate the current legal and regulatory framework and propose options for the

new liberalized market environment. The review will include various submissions on the issue among them:

• The Consultant’s report and JTAC’s recommendations for a Single

Regulator • The report submitted by a team of technical persons drawn from the

Office of Utilities Regulation (OUR), the Spectrum Management Authority (SMA) and the Broadcasting Commission

• Submissions made by the Fair Trading Commission and • Submissions by other industry stakeholders including representatives of

the public and private sectors

The report should examine best practices including the OFCOM model (UK Regulator). Special attention should be given to an appropriate institutional capacity to inform the training component of the Information and Communication Technology Project No. 1438/OC-JA.

3. Analyze issues related to access to the international gateway and make

recommendations on how to reduce charges.

4. Analyze spectrum-licensing policy and determine scope for increasing unlicensed spectrum to promote broadband connectivity.

Annex A

160

5. In a review mission to Jamaica meet with stakeholders (government, regulators, operators, service providers, users, industry groups) to determine their views on progress in sector reform and on remaining issues which need to be resolved.

6. Prepare report for Cabinet subcommittee and make a presentation.

Deliverables

1. Submit a copy of the draft report to MCST and the IDB

2. Use comments given by the MCST team and IDB to revise the draft report

3. Make a presentation to the MCST and the IDB

4. Collaborate with the MCST in a presentation to the Development Council of Cabinet on June 9, 2004. (Please note that the Development Council is a Sub – Committee of the Cabinet chaired by the Most Honorable Prime Minister).

5. Submit final report to MCST and the IDB. (This would incorporate the inputs from

the Development Council)

Annex A

161

INTER-AMERICAN DEVELOPMENT BANK Kingston, Jamaica

Strengthening Telecommunications Regulation Program

Identification Mission

April 26 – 30, 2004

SCHEDULE OF APPOINTMENTS

TIME ACTIVITY VENUE

MONDAY, APRIL 26, 2004

08:00 a.m. Briefing with Country Office Representative IDB Office 08:30 a.m.

Briefing at MCST with Dr. Jean Dixon, Mr. Richard Gordon and Ms. Charmaine Patterson

MCST 36 Trafalgar Road

10:30 a.m.

Mr. Hugh Campbell – CEO/Managing Director

Emoquad Internet Services 48 Lords Road (Tel. 920-0182)

01:00 p.m.

Meeting with Ms. Charmaine Patterson and joint agencies legal team

MCST 36 Trafalgar Road

02:00 p.m.

Ambassador Anthony Hylton

Office of the Prime Minister 2 Devon Road (Tel. 927-9625)

03:30 p.m.

Mr. Gary Barrows – President

Cable & Wireless Jamaica Ltd. 2-6 Carlton Crescent (Tel. 936-2457)

TUESDAY, APRIL 27, 2004

09:00 a.m.

Messrs. Colin Campbell, Ernest Smith and Ms. Dianne Edwards-Davis

Spectrum Management Authority 26 Belmont Road (Tel. 929-8550)

10:30 a.m.

Mr. Craig McBurnett – Chief Executive Officer

Oceanic Digital Ja. Ltd. 30-36 Knutsford Blvd. (Tel. 754-1319)

12:00 p.m.

01:30 p.m.

Dr. Hopeton Dunn – Former Chairman of Telecommunications Advisory Council

Creative Productions Training Centre 37 Arnold Road (Tel. 967-1399)

03:30 p.m.

Mrs. Dolcie Allen – Chief Executive Officer

Consumer Affairs Commission 1B Holborn Road (Tel. 926-1650/2)

WEDNESDAY, APRIL 28, 2004

09:00 a.m.

Mrs. Rosemarie Piliner – Senior General Manager, Operations and Services Delivery

The Bank of Nova Scotia Ja. Ltd. Duke Street (Tel. 922-1000)

10:30 a.m.

Mr. Courtney Jackson – Deputy Director General

Office of Utilities Regulations 36 Trafalgar Road (Tel. 968-

Annex A

162

Mr. Maurice Charvis – Director, Research & Analyst Department

6053)

12:00 p.m.

Mr. Patrick Terrelonge – Executive Chairman Mr. Michael Alexander – Chief Technical Officer

InfoChannel Limited, 3rd Floor 30 Knutsford Blvd. (Tel. 968-4073)

01:30 p.m.

Mrs. Barbara Lee – Executive Director Mr. David Miller – General Manager

Fair Trading Commission 52 Grenada Crescent (Tel. 960-0120)

03:30 p.m.

Mr. Barry Raglan – Manager

N 5 Systems Limited 19 Windsor Avenue (Tel. 978-3739)

04:30 p.m.

Mr. Michael Hylton – Solicitor General

Min. of National Security – 2nd Fl. N.T., 2 Oxford Road (Tel. 906-1678/9)

THURSDAY, APRIL 29, 2004

08:30 a.m. Ms. Nicole Foga – Former Advisor to the MCST Foga, Daley & Co. 7 Stanton Terrace (Tel. 927-4371/3)

10:00 a.m.

Interview with The Hon. Philip Paulwell, Dr. Jean Dixon, Mr. Richard Gordon, Ms. Charmaine Patterson and Ms. Minette Palmer

Ministry of Commerce, Science and Technology PCJ Building, 36 Trafalgar Road

11:30 a.m. Wrap-up meeting with the Planning Institute of Jamaica

PIOJ 10-16 Grenada Way

11:30 a.m. Mr. Richard Humphreys – Group MIS Manager Grace Kennedy & Co. Ltd. 73 Harbour Street (Tel. 922-3440/1)

02:00 p.m. Mr. Cordell Green – Chairman Broadcasting Commission VMBS Bldg., 53 Knutsford Blvd. (Tel. 929-1998)

04:30 p.m. Mr. Dominic Lechevin - Consultant PIOJ 10 – 16 Grenada Way (Tel. 906-4463 Ext. 4252)

FRIDAY, APRIL 30, 2004

08:15 a.m. Mr. Maurice McNaughton – CTO Jamaica Public Service Co. Ltd. 6 Knutsford Blvd. (Tel. 926-3664)

09:30 a.m. Mr. Andrew Gordon – Digicel Ja. Ltd. IDB Office

11:00 a.m. Mr. Courtney Jackson – Deputy Director General IDB Office

12:30 p.m.

Mr. Dennis Morrison – Chief Technical Director, Development Unit Mr. Ryan Evans – Senior Policy & Project Officer, Cabinet Office

Breakfast Room Office of the Prime Minister 2 Devon Road (Enter from Hope Rd.) (Tel. 968-6533)

02:00 p.m. Dr. Elaine Wallace – Advisor to the MCST IDB Office

03:30 p.m. Mr. George Briggs – Head, Public Sector Reform Unit

Breakfast Room - Office of the Prime Minister, 2 Devon Road (Enter from Hope Road) (Tel. 927-9941/3)

04:30 p.m. Ms. Charmaine Patterson and local legal team MCST

Annex A

163

Inter-American Development Bank

Country Office Jamaica

Schedule of Appointments for Strengthening Telecommunications Regulations Program

FOLLOW-UP ASSESSMENT MISSION June 7-9, 2004

TIME PARTICIPANTS VENUE

MONDAY, JUNE 7, 2004

2:00 p.m. CONFIRMED 3:30 p.m. CONFIRMED

Broadcasting Commission Cordel Green - Chairman Office of Utilities Regulations Courtney Jackson – Deputy Director General

Broadcasting Commission 5th Floor, VMBS Building 53 Knutsford Boulevard Kingston 5 Tel: 929-1998 Contact: Angela Reid, Secretary 36 Trafalgar Road Kingston 10 Tel: 968-6053

TUESDAY, JUNE 8, 2004

9:00 p.m. CONFIRMED 4:00 p.m. CONFIRMED

Digicel Seamus Lynch - Chief Executive Officer Lawrence Hickey – Director of Finance (Had telephone discussion (Stern/Hickey) @ 8:45 a.m. – will make further contact) Infochannel Patrick Terrelonge – Executive Chairman

RKA Building 10 Grenada Way Kingston 5 Tel: 511-5186 Contact: Ann-marie Jones, Secretary Tel: 511-5216 (L. Hickey) 3rd Floor 30 Knutsford Boulevard Kingston 5 Tel: 968-4073 Contact: Judith Lim, Secretary

Annex A

164

WEDNESDAY, JUNE 8, 2004

10:00 a.m. CONFIRMED 11:15 a.m. CONFIRMED

Cable & Wireless Rochelle Cameron – Legal Advisor Melesia Sutherland Campbell – Legal Advisory & Regulatory Department Spectrum Management Authority Ernest Smith - Managing Director

2-6 Carlton Crescent Kingston 10 Tel: 936-2864 Contact: Rockel Coleman or Nadine Smith, Secretary 26 Belmont Road Kingston 5 Tel: 929-8550

Annex B

165

Annex B

Resource Persons

Annex B

166

Annex B

167

Resource persons

Government and regulatory bodies

Name Title Company / Organization Address Telephone e-mail/www Comments

Hillary Alexander Modernisation Programme Integrator

Public Service Reform Unit,

Cabinet Office

2A Devon Rd., Kingston 6 929 3143

[email protected]

om

Dolsie Allen Chief Executive Officer

Consumer Affairs Commission

1B Holborn Road Kingston 10 926-1650-2

[email protected].

jm

Henry Batson Director, Spectrum Engineering

Spectrum Management

Authority

26 Belmont Road Kingston 5 (876) 929-8550 [email protected]

ov.jm

George Briggs Special Advisor Cabinet Office 2A Devon Rd. Kingston 6 926 1851

caboff-gab@cwjamaica.

com

Colin Campbell Chairman Spectrum

Management Authority

26 Belmont Road Kingston 5 (876) 929-8550

Evona Channer Economist Fair Trading Commission

52-60 Grenada Crescent

Kingston 5 960-0120-4 ftcecon@cwjama

ica.com

Maurice Charvis Director – Research & Analysis

Office of Utilities Regulation

P.O. Box 593, 36 Trafalgar

Road, Kingston 10

(876) 968-6053 [email protected]

Hon. Carlton E. Davis Cabinet Secretary Cabinet Office 2A Devon Rd.

Kingston 6 926 1851 caboff-

[email protected]

Jean Dixon Permanent Secretary

Ministry of Commerce, Science and Technology

36 Trafalgar Rd., Kingston 10 (876) 929 8990 [email protected]

m

Annex B

168

Resource persons Government and regulatory bodies

Name Title Company / Organization Address Telephone e-mail/www Comments

Dianne Edwards-Davis

Director-Legal Affairs

Spectrum Management

Authority

26 Belmont Road Kingston 5 (876) 929-8550

[email protected]

m

Ryan Evans Senior Policy and Project Officer Cabinet Office 2A Devon Rd.,

Kingston 6 827-9976 [email protected]

Keith E. Evans Representative IADB 40-46 Knutsford Boul, Kingston 5 926-2342 [email protected]

Karlene Francis System Analyst IADB 40-46 Knutsford Boul, Kingston 5 926-2342 [email protected]

g

Pash Fuller Director, Western Region

Consumer Affairs Commission

1B Holborn Road Kingston 10 926-1650-2

[email protected]

ov.jm

Lisamae Gordon Attorney-at-Law Fair Trading Commission

52-60 Grenada Crescent

Kingston 5 960-0120-4 ftclegal@cwjamai

ca.com

Cordell Green Executive Director Broadcasting Commission

Knutsford Boul, Kingston 5 929-1998 cgreen@broadco

m.org broadcast regulator

St. Michael Hylton Solicitor General Government of Jamaica

North Tower, 2 Oxford St. Kingston 5

906 2407 [email protected]

Courtney Jackson Deputy Director General

Office of Utilities Regulation

P.O. Box 593, 36 Trafalgar

Road, Kingston 10

(876) 968-6053 [email protected]

Marjorie Johnson Project Officer Public Services

Reform Unit, Cabinet Office

2A Devon Rd., Kingston 6 929 3143 marjorieb@cwja

maica.com

Barbara Lee Executive Director Fair Trading Commission

52-60 Grenada Crescent, Kingston 5

960-0120 [email protected]

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169

Resource persons Government and regulatory bodies

Name Title Company / Organization Address Telephone e-mail/www Comments

Tanike McClarthy Director, Field Operations

Consumer Affairs Commission

1B Holborn Road Kingston 10 926-1650-2

dir_fops@consumeraffairsjamaic

a.gov.jm

David Miller General Manager Fair Trading Commission

52-60 Grenada Crescent, Kingston 5

960-0120 [email protected]

Dennis E. Morrison Chairman Jamaica Tourist Board

64 Knutsford Boul., Kingston 5 929-9200 dmorrison@opm.

gov.jm

Charmaine Patterson Senior Legal Officer

Ministry of Commerce, Science and Technology

36 Trafalgar Rd., Kingston 10 (876) 929 8990 cpatterson@mct.

gov.jm

Raymond Pryce Director, Research,

Information & Communication

Consumer Affairs Commission

1B Holborn Road Kingston 10 (876) 926-1650-2

Dir_ric@consumeraffairsjamaica.

gov.jm

Ernest W. Smith Managing Director Spectrum

Management Authority

26 Belmont Road Kingston 5 (876) 929-8550 [email protected]

ov.jm

Michelle Thomas Attorney Spectrum

Management Authority

26 Belmont Road Kingston 5 (876) 929-8550 mthomas@sma.

gov.jm

Kwan Wilson Engineer Spectrum

Management Authority

26 Belmont Road Kingston 5 (876) 929-8550 [email protected]

v.jm

Annex B

170

Annex B

171

Resource persons Operators and service providers

Country / Territory Name Title Company /

Organization Address Telephone e-mail/www Comments

Michael G. Alexander Chief Technology Officer InfoChannel Ltd.

Suite 106 85 Hope Road

Kingston 6 (876) 978-2960 m.alexander@m

ail.infochan.com New entrant, ISP

Gary M. Barrow President Cable & Wireless Jamaica Ltd.

2-6 Carlton Crescent

Kingston 10 (876) 936-2457 gary.barrow@cw

amaica.com Incumbent

Rochelle Cameron Legal & Regulatory Advisor

Cable & Wireless Jamaica Ltd.

2-6 Carlton Crescent

Kingston 10 (876) 936-2869

[email protected]

m Incumbent

Hugh Campbell CEO emoquad Internet services

48 Lords Rd., Kingston 5 908-0228 hccampbell@em

oquad.com ISP

Breck Craig Founder WIN – 1 8648 Coors St.,

Arvada, CO, USA

(303) 466-6040 [email protected] Proponent of a new submarine cable

Lorraine Earle Attorney N5 Systems 19 Windsor Ave, Kingston 5 (876) 978 3739 ISP

Camille Facey Senior Vice President

Cable & Wireless Jamaica Ltd.

2-6 Carlton Crescent

Kingston 10 (876) 926-9631 camille.facey@c

wjm.cwplc.com Incumbent

Natacha Francis-Cunningham

Regulatory Affairs Manager Digicel Jamaica 10-16 Grenada

Way, Kingston 5 511-5184 natasha.cunningham@digiceljam

aica.com mobile operator

Andrew Gorton Regulatory Manager Digicel Jamaica 10-16 Grenada Way, Kingston 5 511-5000

[email protected]

m mobile operator

Craig McBurnett CEO Oceanic Digital Jamaica

30-36 Knutsford Boul, Kingston 5 (876) 754 1319 cmcburnett@odcj

a.com mobile operator

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172

Resource persons Operators and service providers

Country / Territory Name Title Company /

Organization Address Telephone e-mail/www Comments

Diego Molano Director, Regulatory

and Government Affairs

BellSouth International

1100 Peachtree Street, NE, Atlanta, GA

(404) 249-6717 [email protected]

Former regulator in Colombia

Rick Pardy President & CEO Caribbean Crossings Ltd.

Nassau Bahamas (242) 356-8988 RICK@CableBah

amas.com Owner and operator of

CableBahamas

Barry Raglan President N5 Systems 19 Windsor Ave, Kingston 5 (876) 978 3739 [email protected]

.jm ISP

Melesia Sutherland Campbell Regulatory Advisor Cable & Wireless

Jamaica Ltd.

2-6 Carlton Crescent

Kingston 10 (876) 936-2860

Melesia.sutherland-

[email protected]

Incumbent

Patrick A. Terrelonge Executive Chairman InfoChannel Ltd. Suite 106

85 Hope Road Kingston 6

(876) 978-2960 [email protected] New entrant, ISP

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173

Resource persons Users, academia, attorneys, consultants, suppliers, etc

Country / Territory Name Title Company /

Organization Address Telephone e-mail/www Comments

Juan Belt Senior Economist Inter-American Development

Bank

1300 New York Ave. NW,

Washington (202) 623-3811 [email protected] Project coordinator

Robert Bruce Lawyer Debevoise & Plimpton Hanover, NH (603) 643 3302 rrbruce@debevoise

.com Attorney former chief council of the FCC

Jean-Pierre Chamoux Professor Univ. de Paris Paris +33 (1) 44 14 45 67 [email protected] academic

Hopeton Dunn Chairman and CEO CPTC 37 Arnold Rd, Kingston 5 (876) 967 1399 hdunn@cwjamaica.

com Former chairman of

JTAC

Nicole Foga Managing Partner Foga Daley & Co.

7 Stanton Terrace,

Kingston 8 927 4371 [email protected]

m Attorney

Karlene Francis System Analyst Inter-American Development

Bank

40-46 Knutsford Boul, Kingston 5 (876) 926 2342 [email protected] Project coordinator

John Graham Vice President It International Telecom Kirkland, Quebec (514) 695 2993 jgraham@ittelecom

.com Submarine cable

contractor

Donovan Hanson Senior Manager Scotiabank Jamaica

Cnr. Duke & Port Royal Streets P.O. Box 709,

Kingston

(876) 922-1000-9 User

Richard Humphries Manager, Group MIS

Grace Kennedy & Co.

69 ½ Harbour St., Kingston 922-3440 richard.humphries

@gkco.com User

Michel Lecavalier Consultant Michlec Montreal, Quebec (514) 721 6796 michel.lecavalier@

videotron.ca

Consultant in tariffs, interconnection pricing and mobile licencing

Jacques Levesque President It International Telecom Kirkland, Quebec (514) 695 2993 jlevesque@itteleco

m.com Submarine cable

contractor

Annex B

174

Resource persons Users, academia, attorneys, consultants, suppliers, etc

Country / Territory Name Title Company /

Organization Address Telephone e-mail/www Comments

Maurice McNaughton Director, Information Systems

Jamaica Public Service

Company (JPS)

6 Knutsford Boul., Kingston 5 926-3664 mmcnaughton@jps

co.com privatized electricity

company

Minett Palmer Attorney-at-Law Palmer & Walters 30-36 Knutsford Rd. Kingston 5 968 6021 minett@palmerand

walters.com Legal advisor to MCIT

Rosemarie A Pilliner Senior General Manager

Scotiabank Jamaica

Cnr. Duke & Port Royal Streets P.O. Box 709,

Kingston

(876) 932-0504 [email protected] User

Iwan Sewberath Misser Country Coordinator Inter-American Development

Bank

1300 New York Ave. NW,

Washington (202) 623 1757 [email protected] Project coordinator

Elaine Wallace Consultant

InfoCom & Management

Consulting Services

42 Golding Circle, Kingston

7 977-1606 elainew@cwjamaic

a.com Consultant

Annex C

175

Annex C

Structure, governance, financing, legal basis, etc. of regulatory agencies

involved in the sector

Broadcasting Commission (BC) Consumer Affairs Commission (CAC)

Fair Trading Commission (FTC) Office of Utilities Regulation (OUR)

Spectrum Management Authority (SMA)

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Annex C

177

Broadcasting Commission (BC)

Establishment and organization of the regulatory body

Legal basis for its establishment Broadcasting and Radio ReDiffusion Act, 1949 (amended in 1986)

Establishment, legal structure Body corporate

Composition Commission of 9 members appointed for renewable 5-year terms. Internal structure (See below) Main sectoral and sub-sectoral responsibilities Broadcasting and subscriber television (cable TV)

Mandate Regulatory functions Related functions of other agencies

Link to government; degree of independence

Who designates the regulator(s)? Parliament

Who has the power to remove regulator(s) and for what reasons?

Parliament The Broadcasting and Radio Re-diffusion Act is silent on grounds that could give rise to dissolution of the Commission.

Who can overturn decisions of the regulator?

The Administrative (Full) Court, for decisions relating to breaches of content standards.

How is the regulator financed?

Licence fees from subscriber television services and subvention from the government

Reporting link The Broadcasting Commission reports to Parliament through the Minister of Information

Measures to avoid conflicts of interest

Eligibility restrictions in the Broadcasting and Radio Re-diffusion Act do not permit the appointment of the following persons to the Commission: - Members of Parliament and former MPs - members of any local authority - persons who have run for office in the general or the local government during a period of seven years immediately prior to their proposed appointment to the Commission

Responsibility To which organism is the regulator responsible with respect to its administration?

While the Broadcasting Commission is an independent, statutory body, it activities fall under portfolio of the Minister of Information, which is located in the Office of the Prime Minister.

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To which organism does the regulator present its financial report?

The Minister of Information

The regulatory process

General description of the regulatory process

Persons interested in providing subscriber television or broadcast radio or television services must apply to the Minister of Information through the Broadcasting Commission for operating licences. Licensed media are required to comply with provisions contained in the Broadcasting and Radio Re-diffusion Act, the Television and Sound Broadcasting Regulations, as well as conditions in their licences. The Commission determines whether licensees are complying with programming, technical and other service standards by monitoring licensees’ operations and investigating complaints from subscribers and audiences. When the Commission detects any instance of contravention, it must notify the licensee and the Minister of Information. The Commission may direct the licensee to take action to remedy the breach. Where the licensee refuses or fails to comply with a directive given by the Commission in relation to a breach, the Commission may recommend that action be taken against the licence by the Minister of Information – suspension of licence in the first instance and revocation as the last resort. Where necessary, the Commission may issue directives with respect to any matter to which the Act and Regulations relate. The Commission also ensures that all operators of radio, television and subscriber television in Jamaica are licensed. It confirms by way of investigations whether reports of illegal operations are valid and assists the police in shutting down these services.

To what extent does the public have access to the regulatory process?

Members of the public may lodge complaints against any media service licensed under the Act. Such complaints are often are the bases of investigations by the Commission to determine whether breaches of the Act, Regulations or licences of the relevant entities have occurred.

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To what extent does the public have access to information?

Opportunities for the public to access information that resides with the Commission are varied. 1. In addition to its annual report, the Commission publishes a quarterly Complaints Report, which is a public document. This document includes reports on initiatives undertaken by the Commission which affect licensed media; provides a summary of the types of information requested by the public and provides details on breaches committed by licensed media. 2. The Commission maintains a customer service department that responds to requests for information from members of the public. An Information Officer also assists with handling such requests. 3. Where complaints result in investigations, complainants are formally advised by the Commission of the findings. 4. The Commission provides electronic access to a range of information materials pertaining to the licensed media via its website

Appeals process

A person aggrieved by the decision of the Minister of Information to refuse to grant or renew a licence may appeal to the Appeal Tribunal appointed by the Minister. Where the Minister’s decision is necessary in the national interest, appeal to the Appeal Tribunal is not possible. An appeal shall lie from the Appeal Tribunal to the Court of Appeal on a point of law.

Internal structure of the Broadcasting Commission

Human Resources & Office

Management

Information and Public

RelationsFinance

Minister of Information

Board of Directors

Executive Director

Legal Technical Operations

Complaints, Monitoring, and

Research

The Executive Director is responsible for the overall management of the Commission and for the administration of the Secretariat and for recommending and implementing Commission policies and strategies. He is supported by an Assistant Director.

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The Information and Public Relations Department is responsible for public education and information to ensure that the Commission’s corporate objectives are effectively pursued. It has a staff of one. The Legal Department provides legal advice to the Commission and Secretariat staff. It is responsible for preparing, reviewing, and advising on drafts of all contracts, licenses and undertakings of the Commission and overseeing the receipt and processing of complaints and providing legal advice on action to be taken in accordance with the Act and Regulations. This department supports the work of the Commission’s Legislation and Policy committee. There is one lawyer on staff. The Human Resources & Office Management Department formulates, implements and reviews the administrative and human resources deployment and utilization in the Commission. It is responsible for training and development for staff, compensation, staff performance management, human resource information systems, staff welfare, and industrial relations. The Department has one manager and 3 staff including the manager’s secretary. This department supports the work of the Commission’s Finance and Administrative Committee. The Finance Department is responsible for overseeing the accounting functions of the Commission, ensuring that proper accounting records are maintained, financial goals are attained and for providing input for the development and implementation of policies as they relate to revenue collection and other matters with financial implications. In addition to a Finance Officer there is one accountant and an accounting clerk. This department supports the work of the Commission’s Finance and Administrative Committee. The Technical Operations Department provides technical expertise to the Commission. It inspects all Commission licensees (broadcast TV/Radio, cable TV) to check compliance with technical and operational standards; investigates alleged illegal broadcast and cable TV operations. It investigates complaints received by the Commission, which involve field tests; monitors and tests broadcast and cable standards to ensure compliance with the Regulations. The department also supports the Technical Committee of the Commission in its evaluation of licence applications. The head of department is supported by three technicians and one administrator (shared with the Complaints Department). The Complaints, Monitoring, and Research Department coordinates the investigation of all complaints that come to the attention of the Commission. It verifies licensees’ compliance with the relevant laws, provides information to the public on STV and broadcast issues by responding to queries and requests as well as properly documenting complaints received to facilitate their timely investigation. It is also responsible for administrative support and liaison with members of the Technical Committee and the Monitoring, Compliance and Content Committee. The Complaints Officer is the head of this department. She is supported by 2 customer service officers and an administrator.

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181

Consumer Affairs Commission (CAC)

Establishment and organization of the regulatory body

Legal basis for its establishment

The CAC was established in 1992 by Cabinet Decision # 12. Its precursor, Prices Commission, was established under the Trade Act, 1955 (amended in 1970). However, the enactment of the proposed Consumer Protection Act will give the CAC enforcement power to enable it to perform regulatory functions. Presently moral suasion is the main approach adopted in resolving disputes between businesses and consumers. In executing its functions on a day-to-day basis, reference is frequently made to the Sale of Goods Act and the Hire Purchase Act. At the policy level, the Commission frequently refers to the 1955 UN Guidelines on Consumer Protection.

Establishment

Composition

The CAC is currently composed of: • A Board of Directors including a Chairman & Deputy Chairman

(12 members) • The Chief Executive Officer • 27 positions under three major categories:

Field Operations–including Complaints Resolution Research, Information & Communication Finance & Administration

Internal structure See below

Main sectoral and sub-sectoral responsibilities

• Resolution of complaints – which includes seeking redress • on behalf of consumers • Consumer education • Conduct of surveys

Mandate

The CAC has responsibility for Consumer Protection, Consumer Education/Sensitization, Complaint Resolution and Consumer Representation.

• The specific mandate is to sensitize and educate consumers on targeted consumer issues and resolve the complaints made by consumers against providers of goods and services, which includes securing redress.

• To provide technical support to affiliate international and regional organizations.

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Regulatory functions

The Commission in its present form seeks to regulate the commercial sector – mainly vendors/providers of goods and services and consumers. It is committed to fostering ethical relationships between providers and users of goods and services and the resolution of marketplace disputes. Presently the Commission uses moral suasion, which is very effective in resolving disputes. We look forward to the Consumer Protection Act (which was recently tabled in Parliament) that will grant enforcement power to the Commission to enable us to more effectively perform the regulatory function.

Related functions of other agencies

The Commission has forged alliances with a number of other Government and non-Government Agencies, including the Bureau of Standards, Fair Trading Commission, Registrar General Department, Registrar of Companies and the Office of Utilities Regulation. There is also very close working relationship with the National Consumers League and Consumers International.

Link to government; degree of independence

Who designates the regulator(s)?

The regulator is designated by the Board, who reports directly to the Minister of Commerce, Science & Technology.

Who has the power to remove regulator(s) and for what reasons?

The Minister, through the Cabinet – for gross incompetence, mismanagement, corruption/fraud, etc.

Who can overturn decisions of the regulator?

The Minister, through the Cabinet and the Courts.

How is the regulator financed?

The Commission is presently being financed by the Government through the Consolidated Funds. However, when the CPA is passed, legal fees will be collected to assist in offsetting costs; also fees that will be collected with the establishment of the Documentation Centre.

Reporting link The Commission/CEO reports directly to the Board of Directors, who reports to the Minister of Commerce, Science & Technology.

Measures to avoid conflicts of interest

The Commission follows the guidelines set out in the Government’s Staff Order and Regulations in force from time to time. The Commission does not accept gifts or favours which may lead to perceived compromise.

Responsibility To which organism is the regulator responsible with respect to its

The Commission is governed by the Board of Directors, which reports to the Ministry of Commerce, Science & Technology – Monthly, Quarterly and Annual reports are submitted to the Board and the portfolio Ministry.

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administration? To which organism does the regulator present its financial report?

As above.

The regulatory process

General description of the regulatory process

The Commission ensures that Terms and Conditions as outlined in contracts between suppliers of goods and services and consumers are adhered to. Where there are breaches, the Commission seeks redress on behalf of the consumer.

To what extent does the public have access to the regulatory process?

The Commission interfaces with the public on a daily basis through - visits to the office - visits to our website - telephone contacts - letters - mass media – print and electronic - exhibitions and presentations

The Commission also adheres to the Access to Information Act. To what extent does the public have access to information?

Appeals process

Internal structure of the Consumer Affairs Commission

Minister of Commerce, Science and Technology

Board of Directors

Chief Executive Officer

Research, Communication & Information Unit

Field Operations Unit

Finance and Administration Unit

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Annex C

185

Fair Trading Commission (FTC)

Establishment and organization of the regulatory body

Legal basis for its establishment Fair Competition Act, 1993

Establishment Body Corporate

Composition The FTC has five part-time Commissioners, including a Chairman. In addition, the Executive Director is ex-officio a Commissioner

Internal structure

The FTC is headed by an Executive Director who has three senior managers who report to her, a senior legal counsel, a senior economist, and a general manager. In addition there is technical and support staff. (See below)

Main sectoral and sub-sectoral responsibilities

With respect to telecommunications the FTC is responsible for only competition regulation and consumer protection.

Mandate

To provide for the maintenance and encouragement of competition in the conduct of trade, business and in the supply of services in Jamaica, with a view to providing consumers with competitive prices and product choices.

Regulatory functions

With respect to telecommunications the FTC: i. Regulates competition among operators and service providers;

and ii. Protects the interests of consumers.

Related functions of other agencies

Section 4(1)(f) gives the OUR the mandate to promote competition in the telecommunications sector

Link to government; degree of independence

Who designates the regulator(s)? The Minister of Commerce, Science and Technology with Energy

Who has the power to remove regulator(s) and for what reasons?

The Minister of Commerce, Science and Technology with Energy may dismiss any member of the Commission if the commissioner:

i. becomes of unsound mind; ii. is permanently unable to perform his functions due to ill health;iii. If he is convicted and sentenced to term of imprisonment; iv. Fails without reasonable excuse to carry out any of the

functions conferred upon him under the FCA; or v. Engages in such activities that are reasonably considered

prejudicial to the interest of the commission. Who can overturn decisions of the regulator?

The Commission itself or a Court.

How is the regulator financed? The FTC is financed out of the Government’s consolidated fund

Reporting link The Commission reports to the Minister responsible for The Minister of Commerce, Science and Technology with Energy

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Measures to avoid conflicts of interest

A member who is interested in any matter being discussed by the FTC has to disclose it and not take part in any deliberations or decisions with respect to the matter.

Responsibility To which organism is the regulator responsible with respect to its administration?

The Minister responsible for Commerce, Science and Technology with Energy

To which organism does the regulator present its financial report?

A report of activities and operations of the commission and audited accounts are submitted annually to the Minister of Commerce, Science and Technology with Energy. These are to both Houses of Parliament.

The regulatory process

General description of the regulatory process

Complaints can be brought before the Commission by anyone who feels he/she has information about some anticompetitive activity. The Commission has the powers to initiate investigations.

To what extent does the public have access to the regulatory process?

Hearings which the Commission may decide to hold are open to the public unless the Commission decides otherwise. An affected party can request to be formally heard by the Commission.

To what extent does the public have access to information?

The public has access via the FTC’s website and Documentation Centre (on request)

Appeals process

Any decision of the Commission maybe reviewed and rescinded by the Commission on its own initiative or as a result of an application by an affected party. Appeals are heard before a Judge of the High Court.

Internal structure of the Fair Trading Commission

Commissioners

Executive Director

Administration Department

Legal Department

Competition Bureau

Minister of Commerce, Science and Technology

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The Administrative Department is responsible for the general and financial administration of the FTC, the library and office services. It is staffed with the Executive Secretary, an accountant, a secretary, clerk/typist, Receptionist, an office attendant and a driver.

The Legal Department is responsible for investigating allegations of breaches of the FCA’s consumer protection provisions. It also provides advisory opinions on consumer protection issues to the public and private sector. This department currently has three legal officers, three complaints officers and a legal secretary. The Competition Bureau is responsible for investigating allegations of anticompetitive activities and providing advisory opinions on competition issues to the public and private sector. The Competition Bureau has two Competition Analysts (Economists), Research Officer, Secretary. The position of Competition Chief remains vacant and has been vacant for some time.

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Annex C

189

Office of Utilities Regulation (OUR)

Establishment and organization of the regulatory body

Legal basis for its establishment

Body corporate established under the Office of Utilities Regulation Act, 1995

Establishment Office of Utilities Regulation Act, 1995 (Sec. 3 (1)) Composition Director General and two Deputy Directors General

Internal structure See below. The Director General who heads the organization reports directly to Parliament

Main sectoral and sub-sectoral responsibilities

With respect to telecommunications the OUR is responsible for competition, economic and regulation and consumer protection

Mandate

According to the Office of Utilities Regulation Act (Sec. 4 (1)), “it shall be the duty of the Office to receive and process all applications for a licence to provide utility service required by virtue of the provisions to make such recommendations to the responsible Minister in relation to the application as the Office considers necessary or desirable.”

Regulatory functions

A. regulate specified services and facilities; B. receive and process applications for a licence under this Act and

make such recommendations to the Minister in relation to the application as the Office considers necessary or desirable;

C. promote the interests of customers, while having due regard to the interests of carriers and service providers;

D. carry out, on its own initiative or at the request of any person, investigations in relation to a person's conduct as will enable it to determine whether and to what extent that person is acting in contravention of this Act;

E. make available to the public, information concerning matters relating to the telecommunications industry;

F. promote competition among carriers and service providers G. advise the Minister on such matters relating to the provision of

telecommunications services as it thinks fit or as may be requested by the Minister;

H. determine whether a specified service is a voice service for the purposes of this Act;

I. carry out such other functions as may be prescribed by or pursuant to the Telecommunications Act, 2000 (Sec. 4 of Act)

Related functions of other agencies

Section 5 Telecom Act states that the OUR refers matters to FTC if they are of substantial competitive to the provision of specified services and falls within the functions of the FTC under the Fair Competition Act Section 28 & 35 state that the OUR has to consult with the FTC before making a determination of dominance and making competitive safeguards respectively.

Link to government; degree of independence

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190

Who designates the regulator(s)?

The Director General is appointed by the Governor General on recommendation of the Prime Minister. The Deputy Director Generals are appointed by the Prime Minister on the recommendation of the Minister.

Who has the power to remove regulator(s) and for what reasons?

The Governor General removes the Director General, and the Prime Minister removes the Deputy Director General.

Who can overturn decisions of the regulator?

The OUR itself, the Appeals Tribunal and the Courts

How is the regulator financed? By cess on the regulated entities

Reporting link

Report directly to Parliament and obtains directions of a general nature from the Minister as to policy to be followed by the Office in the performance of its function under the Act as the Minister considers necessary in the public interest

Measures to avoid conflicts of interest Second schedule of the OUR Act section 4(1)

Responsibility To which organism is the regulator responsible with respect to its administration?

The Minister responsible for Development. Section 2 of the OUR Act describes the “responsible minister” as respects any utility service, as the Minister having portfolio responsibility for that utility service.

To which organism does the regulator present its financial report?

The Minister responsible for Development

The regulatory process

General description of the regulatory process

Complaints are brought by carriers, or anyone who feels he or she has been aggrieved by a regulated entity. The OUR can investigate and issue directives.

To what extent does the public have access to the regulatory process?

By way of public consultations on papers prepared by the OUR and pubic consultative forums

To what extent does the public have access to information?

The public has access via the OUR’s web site and documentation center on request

Appeals process Appeal to OUR, thereafter appeals to Appeals Tribunal, thereafter appeals to the court.

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Internal structure of the Office of Utilities Regulation

Minister of Development

Analysis & Research

Corporate Affairs

OfficeDirector General and 2 Deputy Director Generals

Communications Services

Administration & Human

ResourcesLegalConsumer

Affairs

The Analysis and Research Department develops and formulates policies and rules and sets rates for all sectors. In addition to the Director it currently has six economists and one engineer (specialist in numbering).

The Consumer’s Affairs Department deals with consumer complaints and advises the Office on consumer issues and policies. It currently has staff of four professionals (the Director, a consumer policy analyst, and two case officers).

The Legal Department, is staffed with the General Counsel, two senior Legal Counsels and a Legal Officer

The Administration and Human Resources Department is responsible for the general and financial administration of the OUR, systems and network administration, the OUR’s information center and library and office services. In addition to the Director it has a staff of ten (a financial controller, an accounting clerk, a systems/network administrator and assistant and office services staff)

The Communications Services Department is responsible for public relations including dissemination of information on the role and functions of OUR and to hear the concerns of consumers of utility services. In this respect it ensures the participation of the OUR at community meetings, at press conferences and in the media. It is responsible for publications and the OUR web site.

The Corporate Affairs Department has a staff of 1.

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Annex C

193

Spectrum Management Authority (SMA)

Establishment and organization of the regulatory body

Legal basis for its establishment

Limited Liability company wholly owned by the Government of Jamaica

Establishment Telecommunications Act 2000

Composition Board of Directors (11) Managing Director and four Divisional Directors

Internal structure See below Main sectoral and sub-sectoral responsibilities

The SMA is responsible for the management of the radio frequency spectrum.

Mandate To ensure the efficient and effective management of the radio frequency spectrum in keeping with international best practice and in the interest of social, economic and technological development.

Regulatory functions

The functions of the Authority are to advise the Minister on any matter referred to it by the Minister and to perform any function delegated to it pursuant to section 20(4) of the Telecommunications Act, 2000.

(a) allocate the spectrum for facilities and specified services within Jamaica; (b) determine methods for assigning of the spectrum; (c) issue licences authorizing the use of specified portions of the spectrum; (d) institute procedures for ensuring the compliance by licensees with any obligations regarding the use and operation of the spectrum, imposed by or under the licence, any provisions of this Act or any regulations made hereunder.

Related functions of other agencies

The SMA interacts with all other regulatory agencies in the telecommunication sector, with respect to regulations and procedures.

Link to government; degree of independence

Who designates the regulator(s)?

The Ministry of Commerce Science and Technology with Energy appoints the Board of Directors and the Managing Director is appointed by the Board of Directors

Who has the power to remove regulator(s) and for what reasons?

The Ministry of Commerce Science and Technology with Energy

Who can overturn decisions of the regulator?

The Ministry of Commerce Science and Technology with Energy

How is the regulator financed? Regulatory fees, which are paid by spectrum users

Reporting link The Managing Director reports to the Board of Directors who reports to the Minister

Measures to avoid conflicts of interest

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Responsibility

To which organism is the regulator responsible with respect to its administration?

The Ministry of Commerce Science and Technology with Energy

To which organism does the regulator present its financial report?

The Ministry of Commerce Science and Technology with Energy

The regulatory process

General description of the regulatory process

The SMA adopts a consultative approach in its decision making process. There is a Spectrum Users Committee which includes a wide range of spectrum users, namely, cellular companies, VSAT operators and two-way radio system operators.

To what extent does the public have access to the regulatory process?

Consultations are held with the Spectrum Users Committee. If necessary, general public consultations are also held.

To what extent does the public have access to information?

The SMA has established a web-site on which information is published. The SMA will also be required to adhere to the Access to Information Act with respect to the provision of information to the public.

Appeals process Decisions may be appealed to the Minister (Telecommunications Act Section 60)

Internal structure of the Spectrum Management Authority

Minister of Commerce, Science and Technology

Managing Director

Board of Directors

Spectrum Engineering Legal Affairs

Policy and Strategic Planning

Finance and Administration

The Spectrum Engineering Division is responsible for band planning including allocations, developing and maintaining the National Table of Frequency Allocations,

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inspection and monitoring and enforcement. It has a staff of 4 engineers (responsible for enforcement, band planning and inspection/monitoring) and a technician (band planning) in addition to the Chief Technical Director. The Legal Affairs Division provides legal support for the SMA’s activities including for its licensing and enforcement functions. It currently staffed with on the Director and an administrative assistant. The Policy and Planning Division is responsible for spectrum policy, performance monitoring and reporting. It is also responsible for corporate planning. It is currently only staffed by the Director. The Finance and Administration Division is responsible for all financial, administration and human resource functions of the SMA including in the billing and collection of license fees. It has a staff of 7 (chief accountant, personnel/administration officer, a senior accounting clerk and support staff,…).

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Annex D

197

Annex D

ICT related issues in the WTO’s Doha Round Negotiations

Annex D

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ICT related issues in the WTO’s Doha Round Negotiations90

What are the Doha Round issues that are of concern to telecommunications policy

makers, regulators and to trade negotiators?

The following summarizes two categories of issues of concern to negotiators in the Doha

Round: 1) those which have resulted from the significant changes that have taken place

in the sector since 1997 and 2) those which were left over from the 1997 negotiations91.

The most remarkable changes that have taken place are in the mobile, broadband and

Internet sub sectors. The growth in mobile communications has been phenomenal. No

one could have predicted that the world total of about 200 million subscribers in 1997

would multiply by more than 6 times to 1.3 billion at the end of 2003. There are today

more mobile than fixed subscribers in nearly 100 countries including about a dozen in

the Caribbean. The implication is that mobile has become a substitute for fixed and it

may therefore no longer be appropriate to distinguish between them in trade

negotiations or otherwise especially in a region like the Caribbean where the overall

fixed penetration is still at a relatively low 16 %92. In Jamaica it has been competition

from mobile services which has put pressure on international calling charges. Limitations

in countries’ WTO commitments pertaining to mobile but not fixed telephone services are

therefore no longer be sustainable.

Other issues which may be raised in the Doha Round with respect to mobile

communications services include: the high interconnection charges between mobile and

fixed operators and between mobile operators, which are being treated as trade issues

90 Stern, Peter A. Liberalization and Reform of the International Telecommunication Settlement Arrangements, Primera Conferencia Internacional de Telecomunicaciones, “El Reto de la Apertura, Santa Fé de Bogotá, 16-18 April 1997 91 A comprehensive discussion of these issues can be found in the excellent paper prepared for the Asia-Pacific Telecommunity by G. Russell Pipe, Guide to Telecommunications Trade Principles, WTO Commitments and DOHA Round Negotiations, October 2003 92 In many countries where it was impossible get a fixed telephone or where waiting times were measured in years a mobile telephone can be obtained in less than an hour. In Cameroon for example the number of fixed lines has stagnated at about 80,000 for years. In contrast the number of mobile subscribers has grown from a few thousand in 2000 to close to 1 million today.

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200

and are considered to be impediments to investment93; the obligation to adopt certain

standards when obtaining frequencies for mobile services as is the case in Europe,

where contrary to practices in this hemisphere, the GSM air interface standard is

imposed; high charges for international roaming and the implications of different

charging arrangements such as Calling Party Pays (CPP) and Receiving Party Pays

(RPP), which may also be imposed in certain cases on operators when they obtain their

licences. The growth of wireless and fixed broadband and, in particular, WiFi and future

WiMAX and Ultra Wide Band (UWB) access and the pressure to make more spectrum

available on an unlicenced basis will no doubt become important topics of the Doha

Round negotiations. (in WiFi, for example, dominance of supply and current high

charges for WiFi roaming are issues of concern to policy makers and regulators94.)

The just as impressive growth in the Internet since 1997 is also raising the number of

trade related issues. In the existing WTO classification of services Internet is a value

added service, which in many countries is either not regulated at all or subject only to

minimal regulation and/or limitations; however, with rapidly improving technology Voice

over the Internet (VoIP) is fast becoming a viable alternative for the basic circuit

switched telephone service. The decrease in international calling prices can in part be

attributed to competition from VoIP. The question then is, whether Internet should be

treated as a basic telecommunications service (a view supported by the European Union

and Australia) or whether it should continue to be treated as a value added service (as

suggested by the USA), the implications being that if the Internet is treated as a basic

service it would be subject to many of the disciplines in the General Agreement on Trade

in Services (GATS) such as those contained in the regulatory principles Reference

Paper and the Telecommunications Annex. The latter, for example, requires that “each

member shall ensure that service suppliers of any other member have access to and

use of public telecommunications transport networks or services (including private

leased circuits) on reasonable and non discriminatory terms and conditions, for the

93 In January 2003 it was reported that USTR and the FCC had launched an investigation to determine whether US telecommunications carriers were being overcharged by European wireless operators in trans Atlantic calls that terminated on these operators networks. The article in the January 20 issue of RCR Wireless News states that “the only reason mobile termination fees are a flash point in regulatory circles is because mobile phones are becoming a substitute for landline communications around the world.” 94 See Trends In Telecommunications Reform, 2003, Promoting Universal Access to ICTs: Practical Tools for Regulators, International Telecommunication Union, Geneva, 2003

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supply of a service included in its schedule.“95 If the Internet is a basic service, then it

might indeed fall within the scope of a public telecommunications transport service which

is defined in the Annex as “any telecommunications transport service required, explicitly

or in effect, by a member to be offered to the public generally“ and might then have to be

regulated to ensure that any supplier of a scheduled service (for example, financial

services, air transport and tourism) has access to and use of the Internet under non-

discriminatory and reasonable conditions. This also means that in Barbados and

Jamaica, which scheduled no limitations on market access (or national treatment) for

Internet and Internet access, Internet Service Providers must be given access to leased

circuit capacity on reasonable and non-discriminatory terms and conditions, namely,

under the same terms and conditions which Cable & Wireless offers its ISP affiliate96.

A related issue concerns the international Internet charging arrangements which, as we

have seen in the previous section, require ISPs in the Caribbean and other regions to

pay high prices for backbone capacity in submarine cables and satellite systems and

transit charges to connect into the Internet mainly in the USA97. These high prices are

reflected in the prices these ISPs charge their customers. Australia has argued that

Internet delivery services are basic telecommunications services to which the principles

of the Reference Paper should apply; that is, competitive safeguards and other

provisions should apply to dominant or monopoly suppliers of backbone which are

essential for ISPs to access the Internet. A study commissioned by Regulatel, the Forum

of Latin American Regulators and AHCIET (Asociación Hispanoamericana de Centros

de Investigación y Empresas de Telecomunicaciones) in 2001 showed that Latin

American ISPs were paying nearly US $ 300 million/year in providing connectivity

between Latin America and North America and estimated that this would increase to

over US $ 1.7 billion/year by 200698. The study did not break out figures for the

Caribbean; however, given the high leased circuit prices the implications for Caribbean

95 Telecommunications Annex in The General Agreement on Trade in Services and Related Instruments, WTO, April 1994 96 Contrary to Barbados, Trinidad & Tobago did not remove limitations on market access in its 1997 Commitment for Internet and Internet Access. 97 Ovum, CybeRegulacion, Los flujos de tráfico de Internet y otros servicios de Telecomunicaciones en América Latina y dinámica de sus mercados, Un informe para Regulatel-AHCIET, Julio de 2001 98 See the Communication from Australia, Negotiating Proposal for Telecommunications Services, S/CSS/W/17, 5 December 2000 World Trade Organization, Counsel For Trade In Services, Special Session

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ISPs are the same. Other related Doha Round issues may concern billing for Internet

use, quality of service and number portability for Internet99.

Doha Round issues left over from the Negotiating Group on Basic Telecommunications

(NGBT) are proposals100 to:

• strengthen the Reference Paper especially with respect to interconnection and

independence of the regulator, the latter being considered by some to be

inadequate to ensure that the regulator not only is independent of major suppliers

but also free of political interference;

• get countries that have made commitments to improve on them and countries

that have not made any commitments (Haiti, Saint Lucia, and Saint Vincent and

The Grenadines in the Caribbean) to table them. Improvements that have been

suggested by Canada, Switzerland, European Union, USA, Australia and others

include: 1) scheduling services, which were previously not scheduled and lifting

the numerous limitations which are currently found in many countries’

commitments including: limitations on the number of operators; limitations on the

type of legal entity; limitations on the level of direct and indirect foreign

ownership; limitations regarding national treatment such as residency and

ownership requirements, and limitations on nationality of certain categories of

personnel. Also it is being suggested that the long phase-in periods for achieving

full liberalization, that are found in current schedules and that have come under

criticism, should be revised.

• include other related services such as postal and courier services, audiovisual

and broadcasting services, cable television and Direct-to-Home (DTH) satellite

services, motion picture and mobile entertainment services, and radio and

television production services.

99 Pipe, G. Russell, Guide to Telecommunications Trade Principles, WTO Commitments and DOHA Round Negotiations, prepared for the Asia-Pacific Telecommunity, October 2003 100 See various Communications of Switzerland, Canada, Australia, United States, Mexico, European Union and others in the WTO Council for Trade in Services S/CSS/W, 2000 - present

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Another issue which may receive renewed attention relates to the concept of structurally

separating the infrastructure or pipeline over which a service is delivered from the

service itself. The issue was recently raised in Europe in the context of unbundling

incumbent operators’ local loops and the question of who should own and operate the

basic infrastructure over which competitive services are provided.

Finally it has been suggested that countries must implement measures to ensure greater

transparency in domestic regulation, including the availability and general access to

information on regulations, procedures, and other measures that affect interests of

potential investors including procedurally fair and open treatment and potential investors’

their ability to comment on new and modified proposals.

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Annex E

205

Annex E

Charging and accounting in international telecommunications

Annex E

206

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207

Charging and Accounting in International Telecommunications101

The international telecommunication system was, and in many relationships continues to

be characterized by sovereign international operators interconnecting with each other to

jointly provide international telecommunication facilities and services. Until quite recently,

international operators in almost all countries were monopolies. They were generally

also the sole providers of local and domestic long distance facilities and services. For a

long time the only significant exception to this model was the Cable & Wireless owned

telegraph cable network which spanned the British Empire during the latter part of the

19th and the earlier part of the 20th century. Decolonization and nationalizations after the

Second World War led to the break-up of this first end-to-end international network;

countries of the British Commonwealth did, however, continue to maintain special, co-

operative accounting and financial arrangements in international telecommunications

relations among themselves. The traditional bilateral correspondent relationship

arrangements as well as the Commonwealth co-operative arrangements are briefly

described below.

Under these traditional arrangements, accounting for international telecommunications

traffic between and among countries was carrier out within an international framework of

standards known as Recommendations developed by all members of the International

Telecommunication Union (ITU) within the International Telegraph and Telephone

Consultative Committee (CCITT), now known as the Standardization Sector (ITU-T).

International operators tended to adhere to these internationally agreed standards

because they facilitated not only the interconnectivity and interoperability of the

international network, but also harmony in operating and administering it. International

telecommunication operators and service providers were and are, however, free to

agree to any arrangements between or among themselves so long as this does not

cause technical harm to the whole network.

101 Adapted from: Stern, Peter A. Liberalization and Reform of the International Telecommunication Settlement Arrangements, Primera Conferencia Internacional de Telecomunicaciones , “El Reto de la Apertura, Santa Fé de Bogotá, 16-18 April 1997

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International telecommunication accounting practices distinguish between remuneration

of the corresponding carrier in the country of destination or transit for the delivery of its

traffic (accounting rate) and the charge in national currency collected by an operator

from its customers for the international facilities and services provided (collection

charge). ITU-T Recommendations D.150 and D.155, which concern tariff and accounting

practices in the international telephone service, describe four methods on the basis of

which the carrier in the destination country can be remunerated: 1) flat-rate price per

circuit; 2) the traffic units carried; 3) sharing of accounting revenue between terminal

operators or accounting rates system; and 4) “sender keeps all”, which involves no

exchange of international accounts.

The most commonly used method is the Accounting-Revenue Division Method or

Accounting Rate Method. Here the value of traffic in each direction between two

corresponding international carriers is multiplied by a mutually agreed tariff or

“accounting rate” to give an accounting revenue which is “in principle, shared equally

between the (carriers) of the terminal countries in respect of each traffic direction”. In

theory, international carriers can agree on other than equal shares when their costs or

the extent of the facilities that each provides vary significantly; however, in practice,

accounting rates are shared 50/50. If during a given settlement period (say, a month or

a quarter), there is more traffic flowing in one direction that the other, the carrier which

receives more traffic than it sends will receive a greater amount of compensation from

the corresponding operator for delivering its traffic than it has to pay out. The direction

of the traffic imbalance, therefore, determines which operator has to pay its partner a in

bilateral relation more than it receives. If, for example, the accounting rate between

Jamaica and a given foreign destination is $ 1.00 and the accounting rate is divided

50/50, then Jamaica pays its foreign partner ½ x 1.00 = $ 0.50 per minute of traffic to

deliver that call to its destination from the mid-point to the destination subscriber (The

factor by which the minutes of traffic are multiplied is also referred to as the “settlement

rate”); to facilitate accounting, however, partners in a bilateral relation look at the sum of

the traffic in both directions for a given period and apply the accounting rate only to the

difference. If, therefore, during the period there are more minutes of traffic flowing into

Jamaica than flowing out, the imbalance obtained by multiplying by half of the

accounting rate gives the “traffic settlement” which is due to the Jamaican international

operator, C&WJ. The greater a country’s outgoing traffic imbalance with another country,

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209

the greater its net payments outflow. The long run trend has been to reductions in

accounting rates reflecting the decreasing unit cost to the international carrier to deliver

the traffic that it receives and the decreasing charges collected by the originating

operator for an international call.

ITU-T Recommendations D.150 and D.155 provide for an unbundling of the different

cost elements involved in providing the service. For telephone service, these are: the

international transmission link (usually a submarine cable or satellite link); an

international gateway switch (generally located in the territory of the terminating country);

and a national extension to the end-user, receiving the call. Under the traditional

paradigm of joint service provision, the accounting rate comprised an accumulation of

these different charges. In a competitive environment, individual carriers will want to be

able to provide some of these facilities for themselves, or to purchase them from carriers

other than the carrier to which the end-user is connected.

Figure E.1 Representation of an International Telecommunications Network

Collection charges are considered to be a purely national matter fixed by the provider

of the international services subject to government, regulatory, financial and competitive

constraints. Collection charges for a given service generally differ considerably at each

end of a given relation.

The ability of the international carrier to set prices for its international services and

facilities allowed for a more efficient use of the international network. For example,

lower tariffs in off-peak hours to certain destinations can stimulate traffic to fill circuits

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210

which would otherwise lay idle but which are required to cater for peak periods. This

flexibility has been enhanced through computerization of filling information which allows

fine tuning of collection charges applied to different destinations at different times. The

same flexibility to adjust prices charged for their services allows airlines and hotels to

optimize the use of fixed capacity.

Characteristic of this international accounting and payments mechanism is that each

customer’s contact is limited to the local telecommunications company that provides

these (basic) services to his premises. The customer settles the total cost of an

international call that he has initiated with this carrier which then settles with the

international carrier (if they are not one and the same) according to a formula that they

have agreed between themselves. The international carrier then settles with its foreign

partner according to one of the international settlement procedures just described.

Neither the domestic nor the international carrier has any transactional responsibilities

with respect to a customer in a foreign country that originates or receives a call.

Figure E.2 illustrates the difference among an accounting rate, a settlement rate (here

half the accounting rate) and a collection charge.

Collection chargeThe amount charged to the customer by the PTOAccounting rate

Internal price between PTOs fora jointly-providedservice

Settlement ratePayment from one PTOto another. Generally, half the accounting rate

Figure E.2 Accounting Rate, Settlement Rate, Collection Charge

Jamaica adopted the accounting rates system in 1983. Until then Jamaica benefited

from special arrangements which prevailed the 30 or so countries who were members of

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the Commonwealth Telecommunications Organization (CTO). These were successive

revenue and cost sharing schemes, which were designed to promote maximum use of

the Commonwealth world-wide common network of undersea cable networks and

satellite systems and to help the poorer members finance the development of their

international facilities. These schemes, which were in place between 1948 and 1983,

were known as Wayleave and Commonwealth Telecommunications Financial

Arrangements (CTFA).

The liberalization of the use of private leased circuits has facilitated the provision of

International Simple Resale (ISR) and Private Networks including Managed Data

Network Services (MDNS) and International Virtual Private Network Services (IVPNS).

These services, often provided by other than the network operators, have become

formidable competitors to these same operators not only in the provision of data and

value added but also more recently in voice services.

International Simple Resale (ISR) is offered by service providers that lease circuits

(international private leased circuits) from international network operators, gather traffic

to a particular destination from a variety of different customers, and then route this traffic

via the leased circuits to their destination. The ISR service provider can charge their

clients per minute while paying only a fixed-rate fee to the network operators from whom

they lease the circuits. The service requires the ability to lease lines from international

network operators which can be connected to the public switched network at both ends.

Many countries permit ISR between including those of North America, Europe, and

Australia and New Zealand. Allowing interconnection at both ends of international private

leased circuits has also facilitated the practice of refile and hubbing, which may not

always be legal.

Refile and Hubbing: exploits differences in accounting rates between countries to route

traffic by the least cost path but not always with the agreement or knowledge of all

network operators involved. So, for instance, if the combined accounting rates between

United Kingdom and the United States and the United Kingdom and France is lower than

that between France and the United States, there is an incentive to route calls between

France and the United States via the United Kingdom as this would be the least cost

route. Refile and hubbing is often used in association with international private networks

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or international simple resale so that, in the example above, traffic on the UK/US route,

where international simple resale is permitted, might be aggregated onto a leased line

and would then break out into the PSTN for delivery to other European destinations even

where such a breakout may not be permitted. Fierce competition in transit traffic has

also caused network operators to hub and refile traffic through their international

gateways, not always in agreement with the destination countries. Newly established,

competing international operators that do not have circuits to every country in the world

often rely on providers of refile services to deliver their traffic to destinations with low

density traffic. Three situations, least cost routing, refile, and hubbing are described in

the following boxes.

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Least Cost Routing

Traffic from A to C goes via a direct route; return traffic from C to A goes via B

Example Assume: Settlement rates: Tac = $ 0.50 Tbc = $ 0.40 Tab = $ 0.20 Then: A receives Tab = $ 0.20 and pays Tac = $ 0.50 B receives Tbc = $ 0.40 and pays Tab = $ 0.20 C receives Tac = $ 0.50 and pays Tbc = $ 0.40

Box A Least Cost Routing

A

T B

C

a bT

b cTlo w

h ig h

h ig h

b

a cT

A

T B

C

a bT

b cTlo w

h ig h

h ig h

b

a cT

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Refile

B offers a refile service for traffic from A to C. Traffic from C to A follows a direct route

Example: Assume: Settlement rates: Tac = $ 0.50 Tbc = $ 0.30 Tab = $ 0.30 Transit charge: Tb = $ 0.20 Then: A receives $ 0.50 and pays $ 0.30 + $ 0.20 = $ 0.50 B receives $ 0.30 + $ 0.20 = $ 0.50 and pays $ 0.30 C receives $ 0.30 and pays $ 0.50

Box B Refile

A

B

C

abT

bcT

Tac

low

low

high

A

B

C

abT

bcT

Tac

low

low

high

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Hubbing

Traffic from A to C is sent to hub B via leased circuits; traffic from C to A goes via direct route;

C receives less than it has to pay out

Box C Hubbing

B

A

C

bcT

Tac

Leased circuits

low

high

B

A

C

bcT

Tac

Leased circuits

low

high

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216

Voice over Data Networks. While voice can be provided over circuit switched data

networks, packet switching networks using ITU-T X.25 technology have been too slow.

Newer and faster packet switching technologies such as Frame Relay and

Asynchronous Transfer Mode (ATM) allow real time voice to be offered over packet

switched networks. Private network operators who offer various types of data services to

third parties may often also offer voice if they have the capability to provide Frame Relay

or indeed ATM. This often presents a dilemma for the regulator in a country where

private data services can be resold but there are restrictions to bypassing the PSTN.

Voice over the Internet has been facilitated by a protocol known as the User Datagram

Protocol (UDP). Voice over data is significant in that it permits accounting rate by-pass

because data communication networks tend to employ alternative revenue division

mechanisms, such as private leased circuits or sender-keeps-all for the Internet.

What these alternatives have in common are that they avoid the traditional

arrangements for accounting for and settling traffic accounts and that they generally

respect the rules and regulations of all countries involved even though this may not

always true for the practice of refile and hubbing.

Alternative Calling Arrangements. Technology and more aggressive marketing have

facilitated alternative calling procedures which continue to rely on the traditional

accounting and settlements procedures but have the effect of significantly altering traffic

flows and, therefore, skewing balances. These are calling cards, country direct/home

services and call back, which all result in reversing the “normal” direction of the traffic

flow. They are the cause for a growing outflow of traffic from countries such as the US in

which network operators and service providers which offer these services are located.

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Annex F

Summary of recommendations

Annex F

218

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219

Recommendations

The recommendations in this report fall into two categories: a) thosepertaining to the

reform of the legal, regulatory and institutional framework and b) those pertaining to

current regulatory issues including action to overcome the bandwidth squeeze and to

address problems in international facilities based competition in Jamaica. The former will

require new legislation and structural changes; the latter can and should be addressed

immediately under the current structure and arrangements. The numbers in the brackets

after each set of recommendations refer the relevant section in the report.

A. REFORM OF THE LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK

REVIEW AND REVISION OF THE CURRENT LEGAL AND REGULATORY INSTRUMENTS

The following recommendations concern the revision of the legal and regulatory

instruments for the sector and to the process for achieving this.

New Act and Regulations

• A new Telecommunications Act should be drafted and submitted to Parliament.

At the same time the key enabling regulations (including interconnection,

licencing, price regulation, universal services and spectrum use) should be

drafted and approved. The new Act should provide a basic, fundamental legal

framework for a liberalized telecommunications sector in Jamaica with details left

for regulations and other agency action. The new Act should take into account

the Government’s Policy for the sector, the recommendations of the JTAC and

the Consultants, the recommendations of the OUR pertaining to universal

services/access, comments of all stakeholders including the OUR and SMA on

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the current arrangements and the following recommendations relating to

interconnection, pricing, universal services and licencing.

a. Licencing

The regime should be simple, non-discriminatory, transparent and light-

handed. Licences should be required to operate a public

telecommunications network102, provide public telecommunications

services103 and use the radio frequency spectrum. No licences should be

required to provide information and value added services104, which would

include access to the Internet, web sites, and on-line services but not

voice services over the Internet, which is a public telecommunications

service. Similarly no licences should be required to establish and operate

private networks other than for the use of the frequencies they may need.

The Act should state the requirements, conditions, rights and obligations

of licence holders including obligations to contribute to the operation of

the Authority, to a universal access program, and to emergency services.

There should also be obligations included to require public

telecommunications network operators and service providers to develop

quality of service procedures and processes for handling of customer

complaints and to report regularly to the Authority on their performance as

measured against these indicators. (The Authority should, in accordance

with the Telecommunications Policy, establish a list of quality of service

performance indicators for all licensed services.)

There should be only one licence for each licence holder describing the

networks the licencee can operate, the services the licencee can provide

102 Which can be defined as “a telecommunications network used to provide a public telecommunications service.” 103 Which can be defined as “a telecommunications service, including a public telephone service, offered to members of the general public, whereby one user can communicate with any other user in real time, regardless of the technology used to provide such service, but does not include a service that modifies a communication, restructures, adds or supplies, or permits user interaction with, information unless such service is offering a public telephone service.” 104 Which can be defined as “services other than public telecommunications services that modify the form, content, code, protocol or other similar aspect of the communication, restructure, add or supply information or permit user interaction with information.

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and frequencies assigned to it. A list of authorized frequencies should be

appended to the licence eliminating the need to have separate frequency

licences. Licences should be renewable, if the licence holder has not

breached the terms and conditions of the licence.

Licences issued for particular networks or services should be non-

discriminatory; that is, similarly situated providers should have identical

licence conditions. Where a network or service provider is dominant,

certain licence provisions should apply. These would typically be

contained in the dominant operators’ licences105

The basic fundamental licencing provisions in the Act should be

supplemented by licencing regulations.

b. Interconnection and access to infrastructure

There should also be provisions to ensure that new entrants will have

access to technically or commercially essential facilities, and that require

operators (and public utilities) to provide access to their infrastructure

(such as towers, poles, conduits and other facilities) to other operators

and service providers on the basis of fair and non-discriminatory terms

and conditions, at cost based prices and on a timely basis. It should be

possible to deny access only for specified reasons, such as safety,

interference or lack of space. Disputes among operators should be

mediated or be subject to arbitration by the Authority. Basic fundamental

interconnection provisions in the Act should be supplemented by

interconnection regulations.

105 See for example: Draft Licence and Frequency Authorization Granted by the Commission under the Telecommunications Act, 2003 to Cable & Wireless (West Indies) Limited for the Establishment and Operation of a Fixed Public Telecommunications Network and the Provision of Certain Public Telecommunications Services and to Use Certain Frequency Bands in Anguilla, Schedule 8 of an Agreement of 11 April 2003 between the Government of Anguilla and Cable & Wireless (West Indies)

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c. Pricing

The Act should establish the principle that prices for telecommunications

networks and services, in an open and competitive market, will not be

regulated but be freely determined by the principles of supply and

demand; the Authority should, however, be able to regulate prices in the

following limited circumstances: i) where there is only one operator or

service provider supplying a particular facility or service (monopoly

supplier); ii) where an operator or service provider is in a dominant

position as the supplier of the particular facility or service; iii) where, in the

regulator’s opinion, there is no fair and open competition to establish

prices; or where there is evidence of anti-competitive pricing practices.

Again basic provisions in the Act should be accompanied by enabling

regulations.

d. Universal access

Regulations should be drafted establishing a fair, non-discriminatory, and

proportionate formula for determining contributions to universal access for

each licensed public telecommunications network operator and service

provider. In the interest of potential cost savings in administering the

universal services/access program consideration should be given to

having this done with in the Authority instead of establishing a separate

body as proposed by the OUR. (See proposed structure of the Authority

below.). Basic, fundamental provisions in the new Act should be

supplemented by regulations. (II.2.6)

The Process

• A formal consultative process to revise the legal, regulatory, and institutional

framework for telecommunications should be implemented to ensure that the

opinions of all stakeholders are taken into account when drafting new legislation

and regulations and establishing a new institutional structure. This can typically

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be achieved by first inviting and receiving comment, preparing a first draft of a

new Act and key regulations, submitting them for further comment and then

finalizing the package before submitted it to Parliament for approval. As a hands-

on training exercise the consultative process should involve young professionals

from all the relevant agencies. (II.2.4)

• Technical assistance financed through the IADB’s ICT project should be sought

in drafting the new Act and key regulations. The technical assistance should also

be applied to developing and coordinating the consultative process and defining

specific training (to be financed from the same IADB program) for young

professionals in Ministry of Commerce Science and Technology with Energy, the

new regulatory body, the FTC, the CAC, the CAC, and other agencies and

institutions. IADB’s ICT project funds should be used for this technical

assistance. (II.2.5)

ESTABLISHING A SECTOR SPECIFIC REGULATOR

The following set of recommendations pertain to the establishing of a sector specific

regulator and most specifically its sectoral responsibilities, policy and regulatory

functions, structure and composition, internal structure, accountability and measures to

reinforce its independence.

Sectoral responsibilities of the Authority

a. Convergence of content and delivery

• Regulation of broadcasting content should not be incorporated into the new

single telecommunications Authority at this time; however, the technical aspects

related to the radio spectrum for broadcasting should be merged with the

spectrum management functions of the single regulator to ensure that there is

sufficient coordination of use of spectrum for both broadcasting and

telecommunications. Technical aspects related to the approval and inspection of

cable and broadcasting installations should remain with the Broadcasting

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Commission; however, the provision of any telecommunications services over

these facilities including subscriber television networks should be regulated by

the Authority according to provisions in the Telecommunications Act and

regulations. The merging of content regulation into a converged regulator at a

later stage should be subject for further study and evaluation. Also consideration

should be given to whether the Broadcasting Commission should have oversight

of content matters pertaining, for example, to video games and the Internet

(excluding e-mail and like communications). (III.3.3 a)

b. Spectrum management

• The entire spectrum management functions should be brought into the new

telecommunications Authority along with the necessary enforcement powers,

which are currently with the Posts and Telecommunications Department

(PostCorp). (III.3.3 b)

c. Competition and consumer protection

• The functions of neither the Fair Trading Commission nor the Consumers Affairs

Commission should be merged into the Authority. The relationship between the

Authority and these two Commissions with respect to referrals should be stated

in the new Act but only in general terms in the Act. Informal flexible procedures

for dealing with fair competition and consumer complaints pertaining to

telecommunications should be developed between the FTC and the Authority, on

the one hand, and the CAC and the Authority, on the other. The concept of

consultative committees on competition issues and consumer protection should

be further pursued. (III.3.3 c)

d. Efficiency

• The government should consider removing or reducing any annual (operator,

service provider, spectrum use) license fees which are not used to finance the

Authority. (III.3.3 d)

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e. Regulation of the other non telecommunications sectors

• Regulation of non-telecommunications public utilities should not be assigned to

the new telecommunications Authority; however, a study should be undertaken to

determine the most appropriate way to regulate these other utilities, which OUR

should continue to regulate for the time being. Consideration should be given to

the possible future need to regulate postal services, responsibility for which

should in the intervening period remain with the Post and Telecommunications

Department in the Ministry of Communications Science and Technology with

Energy. (III.3.3 e)

Policy and regulatory functions of the Authority

• The functions of the Minister responsible for ICT should continue to be the

development of sector policy, the preparation of drafting instructions for

legislation, and representation of Jamaica’s interests internationally. The

functions of the Authority should include the points listed above. (III.3.4)

Structure and composition

a. Governance

• The Authority should be constituted as a collegial body (The Board) with five or

seven full time (professional) members including the Chairman of the Authority.

The establishment, composition, functions and powers, appointment of members

and Chairman, the terms and conditions of office, qualifications of members,

financing, reporting procedures, and conditions for avoiding conflicts of interest

should be described in the new Act and should take into account the

recommendations that follow. (III.3.5 a)

b. Appointment of members of the Authority

• Members of the Board of the Authority should be appointed through a

recommendation of the Cabinet. (III.3.5 b)

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c. Terms and conditions of office

• Members of the Board should be appointed for renewable fixed 5-year periods.

Appointments should be staggered. This should be stated in the new Act. (III.3.5

c)

d. Professional qualifications

• Members of the Board should be appointed on the basis of their professional

competence in the legal, technical, economic and financial areas. This should be

stated in the new Act. (III.3.5 d)

e. Head of the Authority and his or her appointment

• The Chairman of the Authority should be appointed through a recommendation of

Cabinet from among the part time (professional) members of the Board of the

Authority. An alternative which might be considered is the Colombian model

(which is also used to designate the head of the government in Switzerland); that

is, to rotate the position of Chairman of the Authority among the members of the

Board. The term of office (rotation) in the latter case should be 2 or 3 years. This

should be stated in the new Act. (III.3.5 e)

Internal structure of the Authority

• There should be an internal structure with 6 functional departments each

reporting to one of 3 Vice Presidents of the Authority. These should in turn report

to the President of the Authority. (III.3.6)

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Corporate Affairs Legal

President

Engineering/Technical

Spectrum Management

Economic Regulation

Policy, Research and International

Affairs

Parliament

Minister responsible for the Information and Communication Technology (ICT) Sector

Telecommunications Regulatory Authority of Jamaica

Vice President Vice President Vice President

Board of the Authority (5 or 7 part time Members including the

Chairman)

Organization of the Proposed New Telecommunications Regulatory Authority of

Jamaica

The functions of each of the 6 departments would be as follows:

The Engineering/Technical Department plans and administers the national

numbering plan, and to the extent necessary technical plans, signaling point

codes, and technical standards; provides technical support matters related to

regulating interconnection; carries out terminal and network equipment type

approval; and provides technical support in evaluating applications for

licenses.

The Spectrum Management Department facilitates and organizes the use of

the radio frequency spectrum in the national interest; ensures that adequate

spectrum is available both in the short and long term for public and private

(including commercial) use, for telecommunications broadcasting, public

safety, transportation, crime prevention and law enforcement, national

security, education, conservation of national resources, and scientific

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research; and provides an orderly method of planning and allocating

frequencies, authorizing and recording frequency users, establishing

regulations and standards to govern spectrum use, resolving spectrum

conflict, and representing Jamaica’s interests in international fora dealing with

spectrum issues.

The spectrum management function can be sub divided into five general

areas, namely, planning and allocation; assignment and licensing;

enforcement and monitoring; spectrum engineering; and spectrum

coordination.

The Economic Regulation Department conducts cost and economic studies,

and is responsible for tariff regulation of dominant operators; monitors and

enforces compliance of licensed operators with the terms of their licenses,

and with their obligations under interconnection and other regulations; in

conjunction with the Fair Trading Commission promotes and enforces

competition in the market, from licensing through interconnection and dispute

resolution; in conjunction with the Consumer Affairs Commission coordinates

the resolution of consumer complaints related to the telecommunications

sector ensuring protection of telecommunications users’ rights.

The Policy, Research and International Relations Department is responsible

for conducting and coordinating multidisciplinary research into

telecommunications policy and industry development, and for promoting

growth, innovation, and expansion in the sector generally and anticipating the

changing role of the Authority in the rapidly evolving sector. It would be

responsible for representing the Authority in international regulatory

organizations and for administering the Universal Services Program and

Fund. It works closely with the Engineering/Technical Department sections

studying and analyzing the evolution of technology and is responsible for

providing advice to the policy unit in the Ministry.

The Corporate Affairs Department administers and manages the Authority’s

corporate activities and ensure that the Authority performs as a successful

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regulatory agency; provide appropriate work conditions and resources for all

the Authority’s departments; maintains an updated information management

system with public access (via the Authority’s web site) to the Authority’s

activities and decisions and to sector information and data. This department

would typically be divided into the following units or sections: administration,

which would administer and manage the Authority’s corporate offices;

finance, which would manage the authority’s revenues and expenses; human

resources and training; and information management.

The Legal Affairs Department is the clearing house for all legal decisions,

proceedings, advice, and enforcement responsibilities of the Authority. It acts

as an internal consultative entity for all levels of the Authority (All actions that

require specific legal opinion or input would referred to this department.) and

for the Board in their increased role with the public.

The main legal activities can be divided into two key types of functions: 1)

administrative which includes representing of the Authority in cases brought

before the courts; drafting and negotiating contracts and agreements; and

providing legal opinions to the Authority; and 2) telecommunications legal

functions which includes drafting and/or providing legal opinions on new and

modified legislation pertaining to the sector, drafting rules, regulations,

orders, and decisions; preparing Authority papers having legal implications;

interpreting statutes; and conducts public hearings related to resolution of

disputes.

Accountability and measures to reinforce the Authority’s independence

a. Financial and operating independence

• The Authority should be financed out of regulatory fees imposed on regulated

companies in the sector and these should correspond to the budgetary

requirements of the Authority and should be proportional to the relative revenues

of the regulated activities of each of these companies. The Authority should be

able to contribute to international organizations in which its participation is

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beneficial to its functions, without need for the Government’s approval beyond

that which is indicated in its budget and annual activity plan. The Authority should

give high priority to establishing and maintaining regional cooperative

arrangements in the Caribbean. (II.3.7 a)

b. Accountability and reporting mechanism

• The Authority should report to the Minister responsible for the Information and

Communications Technology (ICT) sector (presently the Minister of Commerce,

Science and Technology with Energy) and annually to Cabinet by means of

annual reports submitted through the Minister. These reports should be made

public. Companies, which are required to fund the Authority through regulatory

fees, should be given the opportunity to comment on the Authority’s draft annual

budget which the Authority should be obliged to into account before finalizing and

submitting its budget to Cabinet (through the Minister) for approval. The report

should summarize activities for the year being reported upon, current and

planned activities and detailed accounts of the Authority’s expenditures. Details

of activity and budget planning and reporting requirements should be stated in

the new Act. (II.3.7 b)

c. Conflict of interest rules

• Strong conflict of interest provisions should be included in the new Act to govern

the selection and appointment of members of the Board. (II.3.7 c)

d. Justification for removing the regulator

• The reasons justifying the removal of a member of the Board of the Authority

should be stated clearly and unambiguously in the new Act. (II.3.7 d)

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e. Who has the power to remove members of the Authority?

• The person or persons with the power to appoint members of the Authority

should also have the power to remove them but only for the reasons stated in the

Act. Members of the staff of the Authority should be hired and dismissed only by

the management of the Authority. The President of the Authority should be

selected by the Board with his or her appointment approved by the Cabinet.

(II.3.7 e)

THE REGULATORY PROCESS

Transparency

• The Authority should develop comprehensive procedures defining the regulatory

process which should be transparent. Adequate resources should be made

available in the Authority’s budget to develop and maintain a comprehensive up-

to-date web site containing information on all of the Authority’s current and past

regulatory proceedings, as well as easy decisions, regulations, consultations,

and other data and statistics for the sector. (III.4.1)

Who can overturn decisions of the regulator?

• There should be provisions in the new Act to appeal decisions of the Authority in

front of the Telecommunications Appeal Tribunal. In the first instance, however,

any decision should be appealed with the Authority itself and only subsequently

in front of the Tribunal. (III.4.2)

Empowering the regulator

• The regulator should be encouraged to undertake actions such as the ones

described in Section III.4.3 to strengthen the regulatory process and its

effectiveness in regulating the telecommunications sector in Jamaica. (III.4.3)

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JAMAICA’S REGIONAL AND INTERNATIONAL OBLIGATIONS

• The Government with the support of the regulator should undertake the following

three actions in accordance with the Telecommunications Policy objectives of

encouraging active participation in regional and international fora. It should seek

to develop activities along the lines of the second and third points jointly with

other countries in the Caribbean possibly under the ambit of the Caribbean

Telecommunications Union.

1. Create a dialogue among national policy makers, regulators, operators,

and users to examine issues bearing on telecommunications services

trade such as market access, competition, and regulation and to develop

national positions on these;

2. Organize training seminars and workshops to provide more in-depth

analyses of telecommunications trade issues including interconnection,

pricing, and universal service obligation, IT and e-commerce and

convergence of telecommunications and information services and

develop procedures for the various international and regional trade

negotiations and generally to improve negotiating skills. This might

include the development of a case study model and a reference

handbook to assist in negotiating and preparing commitments;

3. Establish a data base of information on key trade agreements, official

texts, documents and other authoritative material on telecommunications,

ICT strategies, policies, trade, technologies and applications with links to

relevant sites of international organizations and national governments.

(III.5)

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B. REGULATORY ISSUES OF IMMEDIATE CONCERN

PROPOSED ACTION TO OVERCOME THE BANDWIDTH SQUEEZE

Develop a national broadband wireless strategy

• The SMA together with OUR and BC should develop a comprehensive national

wireless broadband policy with the objective of promoting the construction of high

speed local loop facilities using the best and most cost effective new and existing

technologies using both licenced and unlicenced spectrum. To the extent feasible

regional collaboration should be sought in carrying out these studies and in

developing such strategies. (IV.3.1)

Promoting competition through the development of alternative infrastructure

• The Ministry, OUR and JAMPRO should develop and implement a strategy to

promote the construction of alternative backbone facilities in Jamaica and

internationally. This strategy might consist of a combination of initiatives including

offering tax and other incentives to investors, creating a point for information and

coordination for potential investors, and facilitating the acquisition of required

land and rights of way. Access to cable facilities landing in Jamaica should be

provided to all licenced operators and service providers on a non-discriminatory

basis. The Ministry should assist in obtaining the necessary environmental

permits by coordinating with the ministry and agencies responsible for the

environment in Jamaica and concerned environmental and fishing groups. The

Government can lend its support to potential investors in the latter’s discussions

with authorities in the country of the far end landing point. (IV.3.2)

Regulating the dominant supplier’s wholesale prices

• Of the three possible actions for putting pressure on the incumbent operator’s

high wholesale prices priority should be given to latter and negotiations with the

incumbent using these benchmarks as a reference. In developing benchmarks

the regulator should seek to collaborate with other regulators and especially his

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or her colleagues in the Caribbean. At the same time the OUR should proceed

with its study on local loop unbundling. (IV.3.3)

INTERNATIONAL FACILITIES BASED COMPETITION IN JAMAICA

• Termination charges for calls originating from outside Jamaica should not be

treated differently from termination charges for calls originating in Jamaica. Other

mechanisms should be developed to subsidize access deficits and universal

services (possibly within a comprehensive universal services/access program in

Jamaica). Regulations for equal access (indirect access) should be implemented

as quickly as possible. The new Act should clearly indicate the obligation for

every operator and service provider to make direct and indirect interconnection

available to the public telecommunications networks and public

telecommunications services of other operators and service providers. (IV.4)