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Objectives of Caribbean Countries

How can Liberalization maximize the Benefits from the Telecommunications Sector to the Caribbean Lisa Agard VP Legal Regulatory and Carrier Services TSTT CANTO June 2005. Objectives of Caribbean Countries. Development of a knowledge-based society Increased access to information for all

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Objectives of Caribbean Countries

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  1. How can Liberalization maximize the Benefits from the Telecommunications Sector to the CaribbeanLisa AgardVP Legal Regulatory and Carrier ServicesTSTTCANTO June 2005

  2. Objectives of Caribbean Countries • Development of a knowledge-based society • Increased access to information for all • Regional objectives: Caribbean Single Market & Economy (CSME) • Facilitate free flow of goods, services, people and capital across the Caribbean • Improved standards of work and living • Accelerated, coordinated and sustained economic development

  3. Definition of Telecom. Liberalization • The opening of telecommunications markets to additional operators and service providers for the provision of public telecommunications services • Typically under the purview of a regulator • Initiated by governments to satisfy their World Trade Organization commitments under the GATS, and to reap the related benefits to their economies

  4. Contribution of Liberalization - 1 • Reduction in prices for services due to the availability of choice for the consumer • Increased availability and affordability for members of the general public • Enhances competitiveness of Caribbean industries in a global environment • Improvement in quality of service provided by operators and service providers • Corresponding positive impact on the standard of living of members of the public • Encourages increased take-up by public

  5. Contribution of Liberalization - 2 • Availability of new and innovative services that: • Promote commercial opportunities and ultimately economic development • Facilitate regional movement of goods, services and people • Facilitates access to markets across Caribbean boundaries • Supports the free flow and exchange of goods and services across the Caribbean • Promotes coordinated region-wide development • Recovery by Governments of economic value of market opportunities and resources • Governments collecting proceeds of spectrum and rights-of-way bid processes and auctions, and revised fees

  6. Overall market impact of liberalization • Increasing total telecommunications revenues • Higher penetration rates of services • Mobile penetration rates in Caribbean have increased significantly since the introduction of competition • Trinidad and Tobago serves as an anomaly, as the increase in penetration comparable to those of countries with competition • Governments turning attention to increasing penetration rates of Internet access, particularly broadband • Increased usage by high-usage customer segments, due to lower prices and wider range of services • Mobile data e.g. GPRS, EDGE • VoIP • Wired and wireless Broadband

  7. Penetration Rates in the Caribbean Source: Pyramid Research

  8. Liberalization is not a threat to the incumbent • Incumbents across the Caribbean have continued to see a steady increase throughout the liberalization process in: • Revenues • Subscriber numbers • Incumbents have responded to the entrance of competition by streamlining operations, driving innovative new services, and improving quality of service • End result – EVERYONE WINS

  9. Challenges to realizing full benefits of liberalization • Artificial increase in penetration rates due to the grenade phenomenon • A single user having multiple subscriptions distorts perceived penetration rates; it is estimated that 30% of user base in Jamaica have at least two subscriptions • Caused by disparity between on-net and off-net rates • Need for multiple subscriptions reduces the affordability of services • Persistence of subsidies across markets • Reduces the incentives for competition in subsidized markets • Problematic in the absence of universal service and/or access deficit funding mechanisms

  10. Penetration rates – the grenade effect Source: Pyramid Research

  11. Remedies • Need for mobile termination rates to be reasonable, to reduce the on-net/off-net disparity • Difference between termination rates and wholesale (retail – volume discount) rates should only be due to necessary costs related to interconnection facilities and systems • Incentives to promote this outcome should be developed • Governments/regulators should develop and implement comprehensive universal service strategies and frameworks • Elimination of subsidization of markets, possibly via a phased approach • Creation and operation of universal service/access deficit funds

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