Digicel’s plum in the pie

"Trinidad is the prize for Digicel," Delves said matter-of-factly at his Kingston, Jamaica office last week.

In anticipation of securing a large slice of the Trinidad and Tobago mobile market, Digicel has invested US$200 million in setting up infrastructure and is awaiting inter-connection with TSTT, in which the government has a 51 percent stake and global telecom giant, Cable and Wireless — 49 percent.

Trinidad and Tobago, with a population of 1.2 million and a GDP per capital of US$10, 500, represents a "significant opportunity" for Digicel, according to Delves.

Over the last five years, Digicel has literally been bulldozing its way into the Caribbean, securing markets in eight territories; acquiring licences in Trinidad and Tobago and Haiti and purchasing Cingular’s Bermuda and Caribbean assets, adding an additional five new markets to its list and spending well over US$1 billion. Seemingly unfazed by the controversy in Trinidad and Tobago over inter-connection, Delves indicated that Digicel faced similar circumstances when it received licences in markets to operate in which Cable and Wireless was the monopoly provider.

Like in many Caribbean islands, Cable and Wireless held the monopoly in the Jamaican market until Irish businessman Denis O’Brien, the man behind Digicel challenged the status quo and entered that market in 2001 with the country’s first GSM mobile phone service. Following government’s deregulation of the telecommunications industry in Jamaica, O’Brien identified a unique opportunity and applied for an operating licence, which he and investors secured for US$47 million. O’Brien was described in a company bio as one of the world’s most exciting and dynamic entrepreneurs, with successful business in Ireland, Portugal, the Caribbean, Holland, Czech Republic, Barcelona and Italy.

He starts a new business every three months on average and in the past ten years, O’Brien has amassed a collection of business, which include golf properties, radio stations and telecommunications companies.

In 1991, he established Esat Telecom in Ireland, which became the first company to compete against the former state-owned telephone company, Telecom Eireann (now eircom) on both land-line and mobile.The start-up of Digicel’s business in Jamaica also led to expansion into new markets including St Lucia, St Vincent and the Grenadines, Grenada, Aruba, Barbados, Cayman Islands and Curacao, creating employment for over 1,500 Caribbean nationals directly and over 2,000 indirectly while 90 percent of its directly employed staff are Caribbean nationals.

Delves said in the pre-competition telecoms environment, the monopoly held by Cable and Wireless resulted in poor network infrastructure, limited availability of services, excessive prices for consumers, poor customer service and widespread consumer dissatisfaction.

"Governments throughout the Caribbean, with a few exceptions began pushing through liberalisation in the early 2000s. In many cases, governments were forced to adopt liberalisation measures in order to comply with norms established by the World Trade Organisation (WTO)," said Delves adding that liberalisation in the mobile communications market came late in the Caribbean.

In other instances, governments began opening their markets after noticing benefits in nearby markets resulting in higher penetration levels, lower prices, higher levels of foreign direct investment, greater coverage and introduction of additional services and applications. Delves also said that Digicel provided service in areas neglected by the monopoly and currently provides over 90 percent geographic coverage in all countries in which they operate.

Jamaica’s Minister of Commerce, Science and Technology Phillip Paulwell said his country experienced similar battles between Cable and Wireless and Digicel over the inter-connection issue.

"Well, at first it was war but we were very clear that without inter-connection nothing is going to happen and we have to ensure that the rules were there and that we as policy-makers make obvious to all players that we wouldn’t tolerate people’s inertia in an area that we were pushing and that once the rules were considered to be reasonable and we deemed them to be so, them we pursued the matter rigorously, " Paulwell said. On the eve of Digicel’s launch in Jamaica, the fiercely fought inter-connection negotiations went into a "tail-spin" which threatened to put off or cancel competition in the telecommunication’s sector for a prolonged period.

"We met that night with all the players, Digicel and Cable and Wireless — they got nothing to eat or drink until they resolved the issue and they (Digicel) had a fantastic launch the day after," said Paulwell.

One of the things that the Jamaican government did several years prior to liberalising the telecoms market, was selling off its shares in Cable and Wireless, getting rid of their vested interest in the company. Describing the liberalisation of the telecoms market as "quite amazing" Paulwell said prior to Digicel’s entry into Jamaica, there were about 70,000 cell phone users.

Four years later, the figure has climbed to a staggering 2.2 million cell phones.

"But more importantly, there were more dark spots in Jamaica than areas where you had coverage. Today 95 percent, closer to 100 (percent) of Jamaica has access to the signals...but all this grew out of a spirit of competition," he added.

Paulwell said the competition has also transformed Jamaica’s economy." Our economy is far more efficient as a result of greater level of competition," he said adding that it will also open up a whole new range of opportunities from voice into data. Paulwell said one of the first things the government did when it decided to liberalise its market, was to establish a regulatory framework that is transparent, impartial and one in which investors would have confidence.

He said it was also the foundation for an emerging competitive environment that promotes competition." It also requires some political action on the part of the government directly because the regulators are not seen. But I think there has to be political leadership as well because many of these issues can be marred into litigation." Many of the issues affecting inter-connection can be tied up in court for many years before resolution..." said the Jamaican minister.

"But if there is a sense on the part of the investors that the minister’s office is impartial, that we’re really are committed to competition, then you are able to negotiate away some of these difficulties that could otherwise bog you down into inaction for long periods."