The Guyana Consumers Association is opposing the proposal by the Guyana Telephone and Telegraph Company (GT&T) for an increase in the rates for landline services and is asking the Public Utilities Commission (PUC) to order a decrease in rates.
“We will respectfully recommend to the PUC that the Application Tariff 14 made by GT&T for increased charges for landline services be rejected,” a memorandum from the GCA to the PUC, dated September 23, stated.
GT&T earlier this year applied to the PUC under the PUC Act for new rates. A PUC hearing on the application had been rescheduled for last week but was once again postponed. It is now fixed for Wednesday.
GT&T said in its proposal that the application was made on the basis of the need to rebalance telecommunication service rates prior to the likely passage of the new Telecom-munication Act by Parlia-ment and the substantial changes in the environment since the PUC last approved new rates in 2002. It said that the landline service was not profitable and that adjustments needed to be made to ensure profitability. It further stated that costs have increased so significantly that they have outstripped efficiency gains the company derived from its major investments and it specifically cited electricity as a debilitating factor.
Further justification for increases was made as GT&T made reference to increases in rates in other utility sectors such as by the Guyana Water Inc and the Guyana Power and Light Company.
Assigned
The GCA differed strongly with GT&T’s arguments and cited segments of its business from which revenues should be assigned to the landline operations.
“GT&T bases its demand for increased landline rates and charges on its present monopoly profits which it hopes to deftly slip into the new liberalized telecommunication structure,” the GCA argued.
The consumer watchdog body says that for the PUC to allow the new rates it would be negating liberalization as the move was being made to have market forces shaping rates.
According to the GCA, financing worth over US$90 million from landline services was used to invest in GT&T’s now thriving cellular services which had not been catered for in GT&T’s initial contract.
The GCA further said that US$1.2 million per annum at least must accrue to the landline revenues from the internet service. The consumers’ body said that the fibre optic and copper lines belonging to the landline segment are being used to transmit internet and mobile traffic. To this end GCA believes that those monies should be added to the landline revenues.
A series of other monies, such as revenue from a new billing system rented by GT&T parent company ATN, tax benefits from imports, gains from depreciation, and those saved from not printing telephone directories for two years were also highlighted as attributable to the landline business.
It further said that a portion of the consideration from the GT&T undersea cable in the Fort Groyne area, Kingston should also be assigned to the landline business.
The consumers’ group further argued that subsidies for domestic rates from international telephony should also be earmarked for the landline business. It also noted that declining labour costs should have reduced the expense of the landline business to GT&T and that this should be reflected in GT&T’s accounts.
Guyana’s sole landline provider was called on by the consumers group to institute segment accounting so that there could be disaggregation of revenues and expenditures. “They must disaggregate their revenues and other expenditures and have proper segment accounting …this lack of disaggregation and segment accounting has curtailed the opportunity for deeper financial analysis and achieving transparency and getting below what could in effect be mere assertions.”
As such, recommendations were made by the GCA to the PUC that in view of the profitability of the landline that the present rates and charges be appropriately reduced and if this is not done then they should remain as is.
The GCA further recommended that the PUC should ensure that it is “in no way instrumental in disturbing or distorting the flow of the free market of which telecommunication liberalization is a manifestation and to which policy the Government of Guyana is committed. To hastily inject rates produced by a monopoly regimen into a newly liberalized industry would be a distortion, in that it attempts to forestall the free market from shaping rates.”
The GCA said that its main consultant in putting together its memorandum was the former Chairman of the PUC Joseph Tyndall.
