Reality of Competition

The decision by the Telecommunications Services of Trinidad and Tobago (TSTT) to cut its international telephone rates by half, was surely not dictated by altruism. If it were, it would have been done a long time ago. Instead, the rate cut which was announced on Monday resulted from Government’s plan to liberalise the telecommunications industry, albeit belatedly. The action then by TSTT, which has maintained relatively high international rates over the years, should be seen in the context of its mounting a pre-emptive “strike” against potential competitors. Whether customers will see through this is another matter entirely. It is only when the market is opened up that customers’ forced allegiance to TSTT will be tested.

What is galling, however, is TSTT in the same breath hinting that domestic phone rates will have to be raised or rebalanced to compensate for the loss in the international call rates. Customers may want to question the legality of the company’s action but it may be seen as giving with one hand and taking with the other. TSTT CEO Sam Martin, who is on his way out, has dismissed any suggestion that the company was reacting to the directive by the Regulated and Industries Commission (RIC) that it lower its rates to bring revenues in line with the 15 percent rate of return stipulated in the shareholders’ agreement. The TSTT decision may be calculated to take some of the wind out of the sails of the international calling centres and to buffer the impact of competition when the Telecommunications Act is proclaimed.

The impending liberalisation of the telecommunications industry and with it the end of TSTT’s having a virtual monopoly has meant that TSTT, which is 49 percent owned by Cable and Wireless, would have to cut its rates to maintain its customer base in a competitive environment. Already, Cable and Wireless’ position has been increasingly under threat in other CARICOM Member States, including Jamaica, the Organisa-tion of Eastern Caribbean States and Barbados, with Digicel cutting a swath through C&W markets and making impressive inroads. In Barbados, for example, Digicel Barbados expects to build up a customer base of 75,000 by December of this year, up from its present 50,000.

It is this understanding of Digicel’s challenge and the challenge of other providers that clearly would have been responsible for TSTT’s move this week. Of interest is that Digicel, despite being launched in Barbados only in February of this year, has been able to make serious inroads in a market formerly dominated by Cable and Wireless. Regardless, however, of which telecommunications company emerges as the principal, two things are certain — the days of high telephone rates are ended and the customer will be the major beneficiary.