CellularOne chief backs sector reform

By Scott Neil of the Royal Gazette

The rapid evolution of telecommunications has left Bermuda’s unusual four-way split marketplace creaking at the joints in the space of just ten years. And as one of the businessmen closest to the action, CellularOne boss Michael Leverock can only see things worsening and becoming more frustrating for all the telecom sector players and their customers unless change comes soon.

That is why he is mostly in favour of the proposed reform of the Bermuda telecoms market to allow operators to offer what services they wish without falling foul of artificial boundaries put in place in the mid-1990s.

Proposed Government regulatory reforms seek to do away with the four categories of telecom licensing that separate international service providers (class A), fixed and wireless domestic providers (class B), internet service providers (class C) and cable TV providers.

The convergence of technology that allows internet to be available via TV, TV to be available via Internet, internet access on cell phones, long-distance phone calls via the Internet and other such crossovers has left Bermuda’s alphabet soup licensing system appearing increasingly archaic.

Mr. Leverock, the CEO of CellularOne, said: “The whole idea of the licensing categories have been obsolete for a number of years. The framework was put in place to kick-start competition.

“But now things have developed and matured in the marketplace, and secondly, we have had the advancement of technology with things available now that could not be built into the regulatory regime when it was created ten or 11 years ago.”

CellularOne is one of the Island’s main cell phone businesses and how it might expand its orbit or influence in the crowded telecoms market if and when regulations change is a closely guarded secret, but Mr. Leverock confirms there is a plan.

Looking at the local situation he said: “We have a good level of competition now, but we are finding that everybody is pushing against the edges of their boundaries. Customers have become more demanding about what they want and expect.”

An opening up of the market and placing everyone on a level playing field would likely see newcomers seeking to gain a foothold or even a few big overseas corporations stepping in. Whatever happens competitive forces in the local market would level things out after the initial big bang, in Mr. Leverock’s view.

One of the big changes would be the doing away with the 60/40 rule relating to how much of a company is allowed to be foreign-owned and what portion should be Bermuda-owned. Losing that regulation could conceivably open the door for a global telecoms company to move into the Bermuda marketplace and dominate.

Mr. Leverock said: “The companies that exist here might get offers from foreign companies. But it will be up to the owners and the shareholders whether or not to sell.”

He said CellularOne was surprised the proposed changes sought to do away completely with the 60/40 rule and he thought a rule that would allow a process of consideration to decide whether or not to permit a totally-overseas company entering the domestic market would be better than having no vetting process.

On the whole though, he is happy with the proposals that are now going through fine-tuning by Government.

Asked what might happen if Bermuda’s current segmented telecoms market was allowed to continue, Mr. Leverock predicted increasing headaches and arguments amongst the various providers as they battle to be allowed to do things that are outside their fenced off slice of the market.

And the demand of customers for a simpler way of buying the services they need without having to go to different companies and having multiple billings will not go away, according to the CellularOne boss.

“One of the things that people ask for is a reasonable-priced market and that’s what we are trying to provide. We get people asking for long-distance calling and better rates. Customers want to have the convenience of a one-stop shop,” said Mr. Leverock.

He feels the quicker there is market-place reforms, the better.

“It would allow us to leverage infrastructure and it will take away a certain uncertainty. Companies are waiting to see what will happen to see if they should upgrade their infrastructure.”

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