Eddie Saints Interview / Part 2

‘How do you make a return in a small industry?’
Small market, high costs force telecoms firms to charge comparatively high rates
Q: Have we seen any real progress in the government’s telecoms reform policy or has it fallen by the wayside?

A: It’s disappointing that we haven’t (yet) been able to get the policy in place, but one has to also understand that it’s a very complex programme. It does take time and we all need to be patient, but there has to be an end game.Eddie Saints in Devonshire Bermuda

But I understand that the Ministry of Energy and Telecommunications is pretty much at the final stages of it now, and I would expect by the end of this month that a policy document itself would be presented to Cabinet, for some decision to be made on either adopting it or amending it, or otherwise.

But getting it to a point where Cabinet can make a decision on it to allow the whole transformation to start is what we’re looking for.

I know the government is committed to it. I know that (the Ministry of Telecommunications’ permanent secretary) Bill Francis and his team have committed diligently to the details of the reform process. They’ve been very careful to make sure there’s been industry consultation, both (from) carriers and consumers. So they’ve done it right, but one can’t help but to get a little anxious about getting on with it.

Q: In November 2007, an OECD (Organization of Economic Co-operation and Development) report came out saying that Bermuda has some of the slowest internet speeds in the world, but is also one of the most expensive jurisdictions in terms of service. Is this telling of the island’s telecoms industry as a whole?

A: That really was not surprising when the information was released, and it just reinforced the fact that Bermuda needs scope and scale in its operations.

It needs economies of scale to drive down costs. It’s very simple – if you start fragmenting the market with many providers in a small customer base, what you’ve got to really think about is that Bermuda is only 62,000 people. That’s all of us. Of which maybe 27-30,000 use telecommunications in some form.

How do you ever expect to get return on a multi-million dollar investment in a small telecoms industry? It doesn’t happen easily.

Now you can cut, you can downsize, you can short-cut, but it costs a lot of money to run telecommunications networks – multiple ones – in Bermuda. You’ve got so many different players, you’re not going to get the return off 30,000 people, and you only have the market share of a few of them.

So we weren’t surprised by the report, and that was one of the driving forces behind the (attempted) KeyTech acquisition which we would have been able to achieve the scale to be able to make the investments, but also that we could have a broad market where we could offer services at a much lower price.

I know a lot of carriers reacted to that report and they cut their prices. One has to ask, ‘why would you cut your prices on the announcement of that report?’

Companies being honest about it would say we have a very expensive cost base and we have to make a return on investment, and we have to have enough money to make reinvestments going forward.

Q: With C&W’s new undersea cable ‘Gemini’ coming online in March, can we expect internet speeds to go up and prices to come down?

A: You can expect the value per kilobyte to significantly improve to the consumer. So if it’s increasing the broadband for the same price, or price reductions, the consumer’s going to get better value for money.

Not only in speeds, but also in dependability, reliability, and speed of network use. The technology of the new Gemini Bermuda (undersea cable) is vastly superior to technology that we installed back in 1989. But back in ’89, that was the latest technology in the world. We were the first private fibre optic cable across the Atlantic.

Our problem is delivering capacity to the consumer. We do not have the capable domestic network to drive high-speed volumes over a data network in Bermuda. So we have big pipes on and off the island, but we have smaller pipes delivered throughout the island.

Q: What are your thoughts on the Cable Co consortium’s plan (a partnership between KeyTech, North Rock Communications and Transact) to lay its own undersea cable? Do you think it’s good for Bermuda?

A: Yeah, sure it’s good, but how many cables can the island handle at the end of the day? Brazil Telecom’s got a cable, we’ve got C&W’s Gemini, we’ve got this new Challenger cable in. We’ve got more cable than the island probably needs now. We’ve got to start paying attention to the domestic network. The international networks are fine. They’ve got more resilience than we need.

We’ve got to pay our attention to the domestic infrastructure to get it where it needs to be. C&W is looking to areas where we can make significant investment to the domestic market. I’m not pointing any fingers – all of us have to pay attention to the domestic capabilities to really be able to realize the benefits to consumers.

Q: What is the telecoms industry like in your new regions of responsibility (Jersey, Guernsey and the Isle of Man), and how does it compare to Bermuda?

A: The Channel Islands’ (Jersey and Guernsey) services and capabilities are well ahead. One of the eye-openers for me here is just how well engaged businesses and the community are with each other. Between different islands we are in different market positions. Our entry into Jersey and even earlier in the Isle of Man – we’ve only been there nine months – and the mobile business is growing phenomenally.

Across all the islands we are the number-one mobile provider.

For us, we’ve got a sophisticated mobile, data, and IP network deployed throughout Guernsey, we get about 8 to 12 megabytes, if not more, to consumers here. And on top of that now we have a content strategy that is driving the use of the networks, not just giving people pipes, but there’s application content services.

We have very rigid key performance indicators here. These businesses are extremely well managed and high performing business. Guernsey, Jersey and the Isle of Man are in the top five business of C&W’s (markets) worldwide.

Bermuda will benefit from leveraging the capabilities of the Channel Islands to also bring itself up into the top ranking business around the world.

Q: Was it a tough decision for you to leave Bermuda to take up this new position?

A: It was easy – it was easy in the context of taking on a bigger challenge. I mean, this is a huge challenge. The portfolio here dwarfs (my previous position). We’re in the top performing business in C&W worldwide.

I’m very proud as a Bermudian to have been given this opportunity and to work with such accomplished and well-established professionals here. It’s a learning experience for me and I’m enjoying every moment of it, the Channel Islands is a beautiful place.

Every country has its uniqueness in terms of the way it operates, but it’s no different to Bermuda in terms of sophistication of its people, its corporate enterprise space, and its desire to be a global player in international offshore financial services.

There’s very similar parallels with Bermuda.

Q: What vision do you have in this new role and what are some of the immediate challenges you face?

A: The overall mission is to be the number one provider of a full range of telecoms services in the markets we serve. Nothing short of that.

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