Consumers are opposing proposed rate increases on telephone lines by government-owned Bahamas Telecommunications Corporation (BTC).
At a Public Utilities Commission (PUC) sponsored forum last week at the Hilton, some were of the view that the rate increase was the result of “a lot of inefficiencies” instead of inflation or the fact that there has not been an increase in 30 years.
Consumers have been enjoying relatively low rates while the company has had to deal with competition and inflationary costs.
If the PUC, the multi-sector regulator, approves BTC’s application, residential customers could expect to pay $15, up from the current $9.50; and business customers could expect a $16 increase from the current $20 to $36.
“The changing environment in the telecommunications sector, the onslaught of legal and illegal operators has introduced competition, and we all know competition reduces prices,” said Felicity Johnson, vice president of Legal and Regulatory Affairs at BTC.
Additionally, Ms Johnson explained what the difference in inflation costs meant for BTC between 1975 and 2005 – the 30-year period those monthly rates for telephone lines have remained flat-lined.
“The consumer price index over the last 30 years has risen from 34.6 points to 116.73 points. That’s an increase of 238 per cent,” said Ms Johnson. PUC economists have agreed that based on those figures the current monthly access rates are well below cost.
Even with a 238 per cent rise in inflation cost in the economy over 30 years, BTC’s proposed rate hikes represent an increase of 57.89 per cent for residential customers and 80 per cent for business customers.
Lobbyists for the rate increase at BTC argue that the new fees are still well below the service’s value, suggesting that the fee increase the company is seeking is generous.
At the current consumer price index Ms Johnson said, “What we [BTC] should be asking for in terms of increases in rental rates would be $32.11 for residents and $67.70 for businesses.”
Rupert Pinder, an economics lecturer at The College of The Bahamas, suggested that the real deal behind BTC’s increased rates was the company’s inefficiency. “If you’re talking about average total cost in my view, that cost might very well reflect a lot of inefficiencies, so if we were to reduce some of the inefficiencies, perhaps we could bring cost down on certain services, including rental and fixed lines.”
He also said with higher rates more service subsidisation was necessary, especially for senior citizens and some Family Island residents. “I’m of the view that there could very well be some impact based on universal service obligation as a result of some of these increases in terms of the ability to service some of these residents. A corporation like BTC would have to look at subsidisation. I don’t see any way around it for a country like ours,” he added.
Attorney Michael Smith piggybacked on the idea of BTC’s inefficiency, and feels the company has not fully utilised the scope of available technology. “It appears to me that BTC is not fully taking advantage of the market and the future technology. In other words, the reduction in revenue that you have experienced by virtue of reducing [rates of] long distance calls has really been due to lack of foresight on the part of BTC in terms of looking at future technology and how to advance services,” he said.
Despite the higher rates, BTC officials said the company’s rates would still rank fairly with those of telecommunications enterprises in the region and world-wide. If the PUC does approve the rate increase, the government-owned telecom company’s profits would increase by millions of dollars.
Many consumers are still not sold on the idea, however. “I have been hearing of increases, but not of improvement of services to consumers,” Mr Smith added.
By BARRY WILLIAMS, Nassau Guardian Staff
