BTC Back in Government Hands? Oh, The Horror

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Back to the Telecommunication Stone Age?Prime Minister Perry Christie has been dialing up the rhetoric about reclaiming 2 percent of the Bahamas Telecommunications Company (BTC) so the Bahamas government could claim majority ownership and regain control of the company.

Wait!  Didn’t we try that already?  If I recall correctly, that didn’t really work out so well.

Under the management of the Bahamas government, BTC generated years of complaints from Bahamains.

Why on earth would we want to go down that road again?

Now, it’s true that there have been several outages since Cable & Wireless (C&W) bought the majority share of BTC from the government in April last year for US$210 million. But what else is to be expected when one is upgrading a telecommunications infrastructure that was in such bad shape as BTC’s was?

And, the biggest outage conveniently occurred the day that the CEO of C&W, Tony Rice, was meeting with the Prime Minister, making many people think that was a planned act of sabotage.

If you think BTC’s problems started with the sale of the company to C&W, you must have a very poor memory.  The company has always been years behind and developed a reputation for terrible service.

Back in February of 2003, a Bahama Journal article stated that members from both sides of the House of Assembly agreed that the reality of electronic commerce in The Bahamas was being stagnated by what was considered low quality telecommunications infrastructure.

It was at that time, while the economies of other countries were being bolstered by cell phone services and e-commerce, that Batelco froze their cell network because of over-capacity. The CEO of the company at that time, Michael Symonette, said the cell network had reached capacity, resulting in frequent call drop-offs and less than acceptable levels of toll quality voice services.

A few months later, the situation had grown even worse with most of Batelco’s customers expressing frustration with the inadequate wireless service of the company and clamouring for relief.

One customer said at the time that he was, “tired of this nightmare of no signals, missed calls that go straight to your voice mail” and “this new text message feature that arrives hours late.”

Senior Vice President and Chief Operations Officer of the BTC at that time, Leon Williams admitted that there were serious problems with the cellular network.  “The network is totally congested and that is the major problem,” Mr. Williams said.

Even Bradley Roberts acknowledged the importance of privatizing Batelco back then.

“My government recognizes that the development and provision of a world class telecommunication infrastructure is critical to the ongoing economic and social development of The Bahamas. If one accepts that modernized telecommunication infrastructure is central to socio-economic development, then so too is the privatization and liberalisation of telecommunication services as a critical pre-condition of development,” Mr Roberts published in a policy statement at the time.

In August, 2003, the newly formed Public Utilities Commission issued a report stating that BTC was operating at approximately 43 percent below the average productivity level in comparison to telecommunications operations around the world.

Not much has changed.  Just last week, the Utilities Regulation & Competition Authority (URCA) said BTC’s, “productivity levels remained below those of comparable operators.”  URCA has now set efficiency targets for BTC to achieve over a period of time. Would BTC, managed by the government, be able to meet those standards?

It was also in August, 2003, that Batelco announced an upgrade to a GSM system that would enable Internet browsing and other technologies that had already been in place around the world for years.

By that time, the whole Internet bubble had already burst and Bahamians hadn’t even gotten on board yet.

Late Again

More than a year later, in December 2004, columnist Larry Smith, speaking about the BahamasB2B sponsored Web Awards, said:

“The unfortunate reality that we are not yet a ‘wired’ society was brought home during the recent Bahamas Web Awards (created by Bahamas B2B), which evaluated over 40 Bahamian web sites.”

Smith said the event underlined just how far we have to go.  He was refering, of course, to the Internet, which was created in America in 1983 but that only first appeared on our horizon twelve years later, in 1995.

Smith pointed out how The Bahamas lagged far behind in telecommunication technology, saying that it was due to Batelco’s monopoly.

By June 2005, Batelco’s GSM system was up and running… well, sort of.  Problems were rampant.  Batelco issued a public notice at the time that said the company was experiencing interruptions in its prepaid wireless services as many customers using the new network had a difficult time trying to make cell phone calls.

The whole situation had some subscribers expressing great frustrations and concerns regarding whether their cell phones would work even in the event of emergencies. They went so far as calling on BTC to either shut down the network, or discontinue charging service fees to subscribers until a closer examination of the network is conducted and the system was fully operational.

By August 2005, consumers speaking at a PUC forum were opposing proposed rate increases by BTC, saying the increases were the result of “inefficiencies” rather than inflation.

BTC was slammed for its “unmitigated gall” in seeking to raise business and residential access rates after providing “30 years of poor service”.

“When a company with the poor performance record like BTC’s has the unmitigated gall to propose a price hike, it makes one sick to the core,” one woman told a local newspaper at the time.

In December 2005, BTC CEO and president Michael Symonette was removed from his post, allegedly for refusing to accommodate meddling by Minister Bradley Roberts. Such are the problems that one can expect from government-owned utilities and a big reason why returning majority control of BTC to the government poses such a danger.

Speaking of Mr Roberts, it is ironic that he should be so vocal about the service disruptions being experienced with Cable & Wireless operating  BTC.

When Mr Roberts was the Minister in charge of BTC, the company suffered numerous outages, in addition to providing abysmal service.  Is that what we can expect again from BTC if the PLP reclaims majority control?

In March 2006, cellphone service was constantly interrupted, affecting nearly all subscribers. The mass disruption of cellular service was due to BTC’s attempts to improve service by installing new equipment.

It appears that C&W aren’t the only ones who have problems when making major upgrades to infrastructure.

Roberts said at the time that he was aware of the problems but advised that there would be interruptions as they carry out upgrades from one system to the next.

It is unfortunate that he can’t be as understanding now as he was then.

Also, in June 2006, a report analyzing The Bahamas’ Information and Communications Technology (ICT) from the Inter-American Development Bank (IDB) reported that the high cost of telecommunications was eroding certain comparative advantages and is negatively affecting the country’s two top industries.

“For many businesses, telecommunications is the highest or second highest cost in their overall operating budgets,” the report stated.

“The high cost of telecommunications is also discouraging the export of services for which The Bahamas would otherwise have certain comparative advantages,” the report added.

“For example, one of the reasons conference organizers are reluctant to choose The Bahamas is because of the very expensive prices for making international calls and roaming on The Bahamas’ only cellular mobile network,” the IDB said.

Two months later, consumers were again outraged over a two-day BTC system failure which prohibited the usage of their GSM cellphones.

An article in the Bahama Journal, published in September 2006, noted that Bahamians were capable of “running” BTC, but questioned whether they could do it well.

“BTC is ‘profitable’ under Bahamian management, but only by price gauging, overcharging customers and maintaining a monopoly on certain aspects of telecommunications,” the article stated.

Ironically, one of the people who has been appointed to wrestle back control of BTC from the hands of Cable & Wireless admitted back then that he was not the right man for the job.

Leon Williams, then-acting president and CEO of BTC, declined to comment specifically on why the government was making moves to privatize the company, responding that it was a matter for the shareholders instead. He said working with privatization is “outside his field of endeavour.”

He must have read “Privatization for Dummies” since then.

Also, in September 2006, Ivoine Ingraham took BTC to task when they clumsily introduced Blackberry service, questioning how long it would take for BTC to iron out all the kinks in the newly implemented system.

“TDMA has been here for many years [and] BTC never tried to correct that system. GSM came and the serious technical difficulties existed from day one, yet they have not been addressed. Now it is BlackBerry, you be the judge,” Ingraham wrote.

“Judging from their track record, BTC will not service their mobile phones. They either don’t know how or they simply do not care or both. BTC’s record is to collect as much money as they can, brag about their profit and give lousy service and just like Perry Christie, promise they will fix it later,” he added.

So, it appears that BTC suffered numerous technical “challenges” well before Cable & Wireless even entered the scene. In fact, Bahamians should probably be thankful they were able to unload the beleagured company for as much money as they did.

An article in the Nassau Guardian, published in March 2007, called BTC’s GSM phone service “a national disgrace,” saying that, “customers are furious at the nation’s dysfunctional government-run phone company, claiming they’ve been ‘ripped off’ on GSM service.”

Another newspaper article with the headline, “Bad VIBE for BTC,” reported that, “less than six months after BTC introduced Voice Over Internet Protocol (VoIP) technology, the system is in shambles and customers are furious.”

I guess the people who support Perry Christie’s quest to reclaim the company have very short memories, because many of them were the ones who complained the loudest back then.

Did the problems get resolved?  Apparently not, because in August of that year, Grand Bahama customers were once again blasting BTC’s lousy cell phone service.

“Irate customers in Grand Bahama (and probably throughout the Bahamas) have had enough of Bahamas Telecommunication Company’s (BTC) poor quality cellphone service with some demanding compensation for a service they rarely get on a reliable basis,” an article in the Freeport News reported.

By February 2008, BTC’s problems hadn’t gotten any better. The company was forced to credit customer accounts after yet another system-wide failure.

“Bahamas Telecommunications Company (BTC) officials spent the better part of Tuesday crediting $5 worth of airtime to the accounts of hundreds of thousands of cellular telephone customers in a symbolic gesture designed to smooth the waters after a systems failure last week left those customers without the crucial service,” reported the Bahama Journal at the time.

The move amounted to a roughly $1 million loss for the company, as there were some 200,000 active customers on the pre-paid network at the time.

During the months of December, 2008 through the end of January, 2009, BTC cell phone customers were forced to suffer interruptions in service again, as the company continued testing its newly-expanded but troubled GSM network.

In June 2009, cell phone service in The Bahamas was deemed among the “worst in the world,” in a newspaper article that pointed to dropped calls, failed text messages and voicemails that appear hours later.

Is this the service we can expect if Perry Christie’s ill-conceived plan to reclaim the majority of BTC comes to fruition?

Meanwhile, there are many prominent Bahamian business people who have gone on record stating that they think government taking back control of BTC is a bad idea.

Oh, not to mention the fact that international ratings agency, Moody’s is questioning the motivation, wisdom and financial viability of Mr Christie’s bid to regain control of BTC.

In a July 31, editorial, the Editor of the Tribune wrote:

“As far as those of us who for years have had the misfortune of working with the incompetence of a government-owned telecommunications company, it’s like going back to the stone age. But it seems that instead of making sound business decisions for the country, this government is going to rule by emotions and nationalistic sentimentality.

“Those Bahamians with an ounce of business sense and who understand what is happening will agree with an important investor who sees this attempt to take back BTC as nationalisation. It’s going the way of Argentina and Venezuela, the investor predicted.”

Rick Lowe, Vice-President of the Nassau Institute and Operations Manager of Nassau Motor Company told a newspaper reporter that he felt Moody’s probe into how the government intends on paying for the shares is valid, in the sense that “they will not get it back for what they paid for it”.

“The government can’t force them to sell.  I suppose they can attempt to force them to sell, but then there would be huge ramifications,” Lowe said.

The Nassau Institute said the government is viewing BTC is a potential “cash cow” to alleviate its debt woes.  Yet, just last week, Geoff Houston, the CEO of BTC, said the government is already receiving almost double the revenue from its current 49 percent ownership than it did prior to the sale.

In a Nassau Guardian interview, Winston Rolle, President of the Chamber of Commerce and Employers Confederation, questioned whether government control of the country’s mobile services provider is indeed in the best interest of Bahamians.

He said the government “does not have a good track record” when it comes to making business decisions and running profitable entities.  He agreed with Moody’s skepticism on the government’s ability to buy back the country’s only mobile services provider.

“Let’s face it, the only way you can buy it is if you have a willing seller,” Rolle said.  “If CWC isn’t open to selling its two percent, or however much, then it will be very difficult for the government to buy it back.  We have some major deficit issues that we’re trying to overcome.  Where is the money coming from?”

Superwash President Dionisio D’Aguilar described Mr Christie’s intentions as “a major mistake”. The former Chamber of Commerce Presdient said it had taken 10 years to privatize the company and urged: “My God, leave it alone.”

All of these people are successful in business and rarely have they all agreed on the same thing.  It would be foolish to dismiss their unanimous concerns.

Aside from the fact that the govermment can’t afford to buy back BTC, and couldn’t manage it correctly even if it did take it back, it appears there are many good reasons why Mr Christie’s plan is ill-advised.

In fact, I can not think of even one good reason why the Prime Minister would be pursuing this avenue, except to appease a small subset of overly-nationalistic supporters who are apparently oblivious to the negative ramifications of such a move.

If you can think of any good reasons, please share them with the rest of us. Or let us know what you think about the matter in the comments section below.

20 thoughts on “BTC Back in Government Hands? Oh, The Horror

  1. It seems very hypocritical of Mr Christie to say that he is seeking to regain ownership of BTC “for the Bahamian people” after he cancelled the sale of BTC stock to the public.

    The stock sale would have allowed individual Bahamians to actually own and profit from the company.

    Having the government take back control of the company is not the same. That arrangement doesn’t benefit individual Bahamians, it benefits the government, which is Mr Christie and his cronies who quite possibly have ulterior selfish motives.

  2. I cannot understand what goes on in Perry Christie’s head. IT took years to unravel BTC and bring it into the first world and now he wants to go back to square one. Renationalising BTC is pure socialism and all countries in the world are backing off from owning utility companies, and the Bahamas wants to go the other way. BEC is a disgrace – its costs are so far out, Bahamasair costs the taxpayer a huge amount of money for inferior service. Lets privatise them before we renationalise BTC – wake up Bahamas.
    Patrick Thomson,
    Nassau, Bahamas
    Currently in Edinburgh Scotland

  3. Real question here is why is government so interested in BTC.

    I see two options that would be even better for Bahamians than buying back 2%.

    One would be to create a new Cellular company owned by Bahamians.
    Two, bring in a company like AT&T and get shares in that, thus giving government much higher earnings as they would win regardless of who the owners were.

    Both do what really needs to be done anyway, creating competition. Something else must be going on behind the scenes if BTC has that much of a priority to Mr. Christie. Probably not legal either. Did he bury money under one of BTC’s buildings?? Gotta start really thinking about why he’s after that 2% so bad. I’m sure it’s not just Bahamian pride.

  4. That is a very good article, it is a shame that it is preaching to the choir!
    Does Perry Christie think that CWC will be interested in being a minority partner with Perry Christie after his past history? CWC would do well to just offer to sell them 51% back plus a payment for the millions of dollars invested in upgrading to 4g.
    Until CWC management is able to get the “civil service” culture out of BTC then they will always have difficulty in giving a good reliable service that satisfies the majority of their customers.
    Given the fact that the PM keeps reiterating the credo that he is following the wishes of the electorate, why doesn’t he add this question of renationalisation to the proposed gambling referendum so that we can see if he is in fact correct.

  5. B.T.C. Probably the worst service we’ve experienced anywhere in the World. With dropped calls and the recording telling you all sort of connection difficulties every day, it makes doing business or merely keeping in touch with business or family frustrating. Couple that with FREEPORT POWER and you have now the Worlds worst twosome. An example of greed and incompetance. How many businesses have they destroyed by their unreasonably high prices ?

    Two fine supermarkets recently announced closure, Butlers even released details of their monthly power bill cost. Unrealistic. How many prominent businesses have shut up shop and gone overseas.

    The Government getting involved by ownership is the totally wrong way to go. As you say its been tried and we are in this mess today. These services should be controlled by simple new regulations, i.e. we take the costs and labour apportionment as an accross the board comparison to some of the best utility companies overseas. Florida being a good example of cutting out unnescessary jobs and waste. They combine a mix of outside contractors as well as their own and everyone is held accountable. Enforce these standards on the Corporations here. Grand Bahama prices will drop overnight as the workforce is trimmed to essentials. Motivate them on the service they provide and not on what they demand. The goal should be a great BTC with streamlined products and services. Freeport Power’s motto should be “Consistant Power at affordable prices”.

    That transition will help us all.

  6. I think the motivation for the Christie Administration to own the majority shares in BTC is pure political crap once again! The crux of the matter is that they want to control it and use it for their political selfish gain – i.e. over staff the company with their political supportters for votes in the general elections. If this happens we will be right back to square one, an overstaff company which is headed and controlled by political cronies of the Christie Administration.

    If I was Cable and wireless I would sell the entire 51% back to them in addition to cost accumulated for new equipments and other expenses. Why would C&W wish to work under and own minority shares under this ‘All for me baby’ crowd!

  7. The panacea of privatisation has been exposed for what it is; a giveaway to private corporations. Not too long ago most utilities were government owned or highly regulated, why? because the performance and competitiveness of the economy is closely tied to utilities. Even more our telecommunications are now hostage to a private company! The height of a loss of sovereignty. What is needed is competitors to BTC not another privately owned monopoly.

    OH and all of this talk about Bahamians owning BTC is silly. We DID own BTC; the government sold it! Selling shares would allow a select few Bahamians to own BTC; the ones who have the money to buy shares. So that means a shift in ownership from everyone, to a few. Not exactly visionary.

    1. Thanks for you comment. But if a government-owned BTC had competitors in an open market, don’t you think they’d get crushed due to inefficiency, political meddling and management corruption?

  8. The bigger question to me is what message will be sending to foreign investors considering the Bahamas? Who would want to invest millions in a country where the government may reconsider its decision and pressure you into giving up controlling interest of your company?

  9. Why doesn’t the GOB ask C&W to sell the 2% (or whatever percentage they want, it could be even the 9% that the GOB was meant to sell) with the stipulation that C&W retains administration/management control to Bahamian investors.

    It’s a win-win:

    1) C&W will make some money;
    2) Bahamian investors will get the promised piece of the economic pie;
    3) The monopoly of C&W will be history;
    4) Our credibility internationally as a place to invest safely, will be intact;
    5) We (Bahamians) won’t be out of pocket to the tune of $250million ++++.

    Then if BTC performs badly the Bahamian investors and the GOB can link hands and demand better, if BTC does well we all do well together. I don’t think the GOB should have a monopoly either as we will revert to a culture of entitlement, which we desperately need to move away from in order to compete on the world stage.

    1. That is a nice concept Ginny, but impractical. C&W can not be expected to be responsible for BTC if they do not have the authority to manage it without political or financial interference. One can not assume responsibility without being given authority.

  10. Anything, anywhere Government run is awful… period!

    A deal is a deal, to nix this, other investments in the Bahamas would be very hard to come by.. not good for Bahamians at all.

    Simply…. my service is 100% better now… nothing is perfect is it?

  11. The government is already realizing a larger return on 49% than they did when they owned 100%. Could this possibly have anything to do with a different style of management and a 21st century business model?

    Typical of them however to want to break something, pun intended, that’s finally well on the way to being fixed, just in order to pander to, if Mr. Christie is to be believed, the majority of the electorate.

    As “all fa me baby” & “dis we ‘tings” didn’t work before, the hindsight and once bitten principles should be applied here.

    Blue Water runs deep!

    1. Blue Water runs deep… indeed! I understand that group has already formed a new shell company to buy BTC from the government once Perry and his boys get control back. Not sure how Mr Christie will explain that to the Bahamian people.

      1. How will Mr. Christie explain it to the Bahamian people? Two of the late Herr Goebbels quotes come to mind.
        “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.”
        And… “Think of the press as a great keyboard on which the government can play.”

  12. We are looking at this entirely wrong.

    The REAL issue is that BTC is now being controlled by a foreign entity. This is really a matter of National Security. The first thing that happens when there is a take over of a country is that the communications – especially to the outside world – is controlled. Bahamians no longer have control of our national communications – in the Bahamas.

    The Government has to have made more money from their 49% as the first thing that C&W did was to cut the profits of the most profitable part of BTC (prepaid wireless) in half for the distributors who were selling their cards. When prepaid first came out the distributors were receiving a 35% discount on their wholesale orders – they were getting $100,000 worth of minutes for $65,000. So they could make $35,000 on an expenditure of $65,000 or 53.8% on their investment. This was later cut back to 25% (a return of 33%) but C&W cut this to 12% (a return of 13.6%) – destroying the era of the street phone card vendor who could have made a good living.

    Service has not gotten better – it has gotten worse. I can be sure that EVERY DAY my internet on my phone will be down for a significant amount of time. I can also be sure that I will not be compensated for these daily outtages. The chief at C&W stated in a newspaper article that there will be no outtages during the upgrade this summer. History has shown that we have had the most and most severe outtages in a long long time. The argument that there has been inside jobs that assisted in the crashes is ridiculous at best. What you are saying is that the “World Class” communications outfit that operates all over the globe is not prepared for some internal employee discontent? Right!

    I cannot believe for a minute that the contract that C&W signed does not have performance metrics. If it does not we are in a bigger problem than we think we are in. Curiously if that were the case it would not come as a surprise to me. However URCA has the ability to require things of BTC and thus we the people have a hope that things will actually improve.

    The Government needs to be ready to issue the next cellular licences as soon as the contract allows. I have seen the “World Class” C&W (LIME) operate in The Turks and Caicos Islands where they are being savagely beaten by Digicel (Regional Operator) and IslandCom (Local Operator). My prediction is that the day that we have an additional cellular service provider we will see an immediate improvement of our telecommunications matters.

    I hope for the best but prepare for the worse.

    tim

  13. Does anyone want to try EDGE again?! If it wasn’t for outside investers we would still be on the first ever invented GSM service… PLP only want it back so they can line their pockets some more!

  14. I see it as a potential disaster waiting to happen and the consumer (as always) suffers most. How soon Bahamians have forgotten the mess (internally) at BEC several years ago when large amounts of money were found to have gone missing and to date no employees have been held accountable. A private company is more likely to have frequent audits by a reputable accounting firm which lessens the possibility of embezzlement and any “cover-ups”. Government authorities always seem to “police themselves” and some (often ill-mannered) civil servants are arrogant in the belief (having become “established”) they have the protection of their union. Private corporations demand efficiency and set higher standards Finally, crony-ism and corruption in government is perhaps worse than we imagine. The result doesn’t bear thinking about for too long, lest we all fall into a serious depression.

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