TSTT ANNOUNCES UPGRADE

The Telecommunications Services of Trinidad and Tobago (TSTT) has reacted to the impending liberalising of the telecommunications sector and the competition it is triggering by investing in a $727 million upgrade in a move to minimise loss of market share. Samuel Martin, chief executive officer of TSTT, in announcing that the expenditure was designed to improve the company’s network by the end of the year, admitted that TSTT was aware that any monopolist entering into a competitive environment understood there would be a market share loss. The question arises: Why was it necessary for an immediate challenge to be posed to TSTT’s virtual monopoly before action was taken on the upgrade? And this, particularly when pressure on Government, TSTT’s principal shareholder, to liberalise the telecommunications sector began almost a decade ago.
        
In turn, with deregulation of the industry literally around the corner, and telecommunications majors - Digicel and AT&T - mobilising to pose challenges to TSTT’s market share, the company’s decision to effect the upgrade may leave many of its customers wondering why only now. Indeed, it would have been better customer relations had TSTT moved earlier not only on the upgrade but the recent reduction in its telephone rates. This would have had a greater impact on TSTT’s customers than its recent roll back in rates, both domestic and overseas, and will be a factor in whether they take their business to competitors or remain with the company.

As it is TSTT, however unwittingly, has allowed its customer loyalty to be potentially in the balance. The perception that Government unduly delayed the liberalising of the telecommunications sector as a strategy to guarantee that its shareholding investment would enjoy optimum returns may affect TSTT negatively in the long term. Many persons questioned the relatively high rates of the 51 percent State owned company in light of tumbling telephone rates internationally. In addition, they saw Government’s stubborn delay in introducing and passing a Telecommunications Bill as stemming from a conflict of interest.

Jamaica moved four years ago to end the monopoly enjoyed there by Cable and Wireless by passing the Telecommunications Bill. Meanwhile, it did not abruptly bring to an end the monopoly, preferring instead to effect this over a three-year period. Cable and Wireless is Government’s shareholding partner in TSTT. Two early challengers for the deregulated Jamaican telecom market were Centennial Communications and mobile phone service provider, Digicel, and its partner, CL Financial. Centennial paid a reported US$45 million for its licence, while Digicel and CL Financial paid some US$47.5 million for theirs and ploughed almost almost four times that amount into development of the service. This should serve as an indication that despite anticipated loss by Government in dividends from its shareholding in TSTT, new revenue can and will be generated, not merely from the one-off licence fees, but from development, rental of office space, the construction of GSM sites, corporation and income taxes as well as VAT.

Principal beneficiaries, however, will be the individual telephone users, as well as multinational corporations operating here which need to be in constant telephone (including mobile phone) and e-mail contact with their principals and regional and international companies with which they do business. Meanwhile, the profit margins of the telecommunications companies in the age of deregulation will be determined by their competitiveness in the services they provide, the cost factor and their customer appeal.