Jamaican government to auction two fiber-optic submarine cable licenses

Fiber Optics Weekly Update, Oct 29, 2004

The technology ministry will now issue two licenses for fiber-optic cable-line, rather than one. The ministry cited the price and service benefits to Jamaican consumers of having a more competitive environment for the change in its policy.

The ministry announced the modification to its previously declared position on the issue on October 22, arguing that while the new policy would engender broader market competition, the restriction to two new entrants would still prevent the industry from becoming overcrowded, and therefore allow the investors a reasonable return on their capital outlay.

Courtney Jackson, the deputy director general of the Office of Utilities Regulation (OUR) who conveyed the new position, reiterated that the new entrants into this end of the market--now dominated by Cable & Wireless--represented a safeguard for rate cuts on Internet and voice services.

"[There is] the critical need to introduce competition in the supply of bandwidth to the retail market such as Internet Service Providers (ISPs) and ISP subscribers," said Jackson. "We are keen to ensure that Jamaica [keeps] it competitiveness with countries such as Dominican Republic, Puerto Rico and Panama."

At present, Jamaicans pay about 10 times more for bandwidth than telecom customers in the United States, and significantly more than their neighbors in the region. Part of the difference in rates is accounted for by the fact that only one main fiber-optic cable exits Jamaica--controlled by local telecom company Cable & Wireless. The line travels physically for hundreds of miles underwater to the Cayman Islands, eventually running into Miami, USA. C & W invested billions of dollars over several years to lay down this infrastructure.

But Jamaica's Internet and voice traffic is said to be growing faster than the present fiber-optic infrastructure can manage, with the OUR estimating that the growing demand may not be met even by two additional cables.

Five players are lining up for the two licenses. One candidate told the Business Observer that the modification would not affect his company's application. "We do not have to rework it because our model is open to competition, so it really does not matter the number of cables," said Mark Reid, an executive of Jamaica Network Access Point (JNAP). "In fact, having two gives a better chance of securing the license."

Jamaica lost much of its Internet and international voice traffic "for four days" after Hurricane Ivan on September 10 and 11 as the storm passed from Jamaica to Cayman. The storm surge damaged the underwater cables.

The OUR will evaluate the proposals with a U.S. consultant. "Up to a maximum of two [licenses will be given], it does not mean that we are going to offer two," explained Jackson. "If there is only one good bid then we would offer one."

The OUR will have another consultant to ascertain Jamaica's ability to transfer traffic from fiber to satellite connectivity during periods of hurricanes.