Cell Lockdown

With its monopoly coming apart, the Telecommunications Services of Trinidad and Tobago (TSTT), is trying to sew up the cell market by getting its dealers to sign three-year binding contracts. At the end of that period the contracts can be renewed for another three years. The Telecommunications Authority of TT (TATT) on Monday announced that it will be inviting tenders for the provision of cellular services. TATT chairman Dr Ralph Henry said he was ready to invite Requests for Proposals (RFP) for two additional providers. At a press conference on Monday he said consumers should see an improvement of services with greater choices available. In the short to medium-term, there are likely to be three operators — TSTT and two other players. If the TATT follows through on its decision, this will signal an end to TSTT’s monopoly in the cellular market. TSTT, though, is attempting to put the screws on cell dealers before new players enter the market. According to one clause in the TSTT contract,  in a section headed as Dealer Targets, it was stipulated that in respect of the post-paid service there “shall be a minimum of  40 net new customers per month per location, and for the Pre-Paid service 300 net new customers per month per location.”

Dealers claim that such strict demands cannot always be met as the number of mobile phones sold is dependent on the dealer’s location as well as its clientele. TSTT is now seeking to make amendments to this section of the contract, one dealer said. Mobile dealers are also critical of Section 3.9.1 which states: “Dealer shall based on its quarterly forecast make a down payment of no less than 10 percent of the total projected purchase. One dealer said that such a downpayment  will be difficult to meet because TSTT has not been supplying them with sufficient phones to meet the demand of the market. The mobile dealer says that with this shortage of phones, TSTT cannot expect them to fulfil these requirements, noting that one clause says that the “dealer shall at all times maintain a good credit rating and sound financial condition.” One TSTT official said he would not comment on the contracts because of the confidentiality of the agreements. The TSTT manager indicated that in addition to these exclusive contracts,  TSTT was also issuing non-exclusive contracts. He refused to divulge details of these non-exclusive contracts or those dealers who got them.

Dealers, he said, are being given a choice in their dealings with TSTT, and stressed that they “are not being forced into any contract.” “It may be just one dealer who is dissatisfied with his contract,” he said.  Asked whether the contracts were an effort to protect their market, he said he had no comment. TSTT’s latest move though is being criticised by mobile dealers across TT. Some dealers have already signed the document while others are treading carefully by seeking legal advice. Analysts say that TSTT is trying a strategy that is not unique to a monopoly market. One mobile dealer, speaking under condition of anonymity, described TSTT’s move as “blackmail” but has opted to sign the contract. “If I don’t then I will be out of business,” he said. The dealer explained that as the situation stands right now, TSTT is the only mobile provider, and if dealers refuse to comply with the terms of the contract, then they could face closure. ‘It could even mean the end of our businesses,” he said, noting that this will prevent him and other dealers from entering deals with other international mobile dealers.

He said that if AT&T or Digicel offered him a better contract than TSTT, then he will do everything possible to get out of it. According to the dealer,  if they don’t sign the contract,  TSTT would only supply them with  Pay As You Go cards , also known as pre-paid cards. Cellular dealerships, he added,  cannot be run on these alone. With the market opening up, he said dealers should be given the opportunity to capitalise on this. Instead, TSTT is using its monopoly position to get dealers to sign the contract, another dealer noted. As a result, mobile dealers  are left with little choice but to sign these binding contracts, he noted. The Mobile Dealers Association of TT (MDATT) has refused to comment directly on the terms of the contract, saying that it would be unethical to do so in the midst of ongoing negotiations. Public Relations Officer of MDATT, Paul Quinn, welcomed the move by TSTT saying that  “the contract set out by TSTT was a landmark one.” He also admitted to several meetings with TSTT but refused to comment on these discussions He would only say that “competition was a good thing,” noting that consumers stand to benefit  in the long run from the new players entering the market.

Quinn, who is also a mobile dealer, welcomed TSTT’s  move saying that the contract would bring improvement to business.  “It is going to be a win-win situation for small mobile dealers.”  Noting that  a lot of mobile dealers are presently contracted to TSTT, Quin added that TSTT will now have to work harder to keep their current market. Other responsibilities of dealers set out in the contract include terms such as dealers having to make their “best efforts” to promote, market and sell the quantity of products required by TSTT, having a staff that is fully equipped and knowledgeable of the specifications and features. There are also certain specifications on warranties granted to customers as well as any facts or opinions that may be relevant in the marketing of products. (Products here mean any or all equipment and accessories.) Product Manager for Digicel, Vanessa Slowey, said that no direct comment could be made on the contracts being issued by TSTT, as the company is not familiar with the terms. She did however say that competition is a good thing as it allows for a level playing field.