The Guyana Telephone and Telegraph Company (GT&T) has appealed the decision by the Public Utilities Commission (PUC) to dismiss the company’s application to raise domestic rates for some of its services.
Chief Executive Officer Radha Krishna Sharma yesterday called the PUC decision a lost opportunity to remove the roadblock to liberalisation, while saying it is representative of the disconnect in government’s approach to modernising the sector.
“We are disappointed by the PUC’s rejection of our effort to modify rates to reflect changes in the market since the last comprehensive rate review over a decade ago,” Sharma said in a statement, while noting the effort to bring rates in line with costs.
“We have already filed an appeal, and we believe it is essential to keep pushing,” he added, while charging that the PUC order “is emblematic of the frustrating distance between the government’s words and actions when it comes to modernising the telecom sector.”
Nonetheless, Sharma said the company was ready to work with government to develop “a clear and consistent” plan to move the country’s telecoms development forward, based on proven industry practice, fairness to all and the rule of law.
The PUC last month dismissed GT&T’s application to implement reductions of international rates and increased rates for the domestic market. GT&T based its submission on its June 18, 1990 licensing agreement, under which it is entitled to “a minimum of 15% return” on capital dedicated to public use. GT&T claimed that it suffered a $738 million deficit and needed the increases to maintain its 15%. It has argued that even with the rate changes, Guyana’s rates would still have remained among the lowest in the region.
However, in reaching its decision the PUC pointed out that while GT&T was seeking to invoke the agreement to support its claim, it had failed to fulfil its obligations to provide a universal landline service under the same agreement. The Commission noted that the agreement stipulated that “GT&T [will] establish facilities permitting telephone service along the entire coast from Crabwood Creek to Suddie and in interior locations within three years” but over two decades later “many persons are not the recipients of telephone service.”
In response, Sharma accused the PUC of incorrectly assessing GT&T’s long history of investment, while calling the decision a “list of grievances that are without merit” in a modern telecommunications sector. “The truth is, we’ve fulfilled all our obligations and invested US$250 million since our last rate change and more than US$391 million since our contract began,” he said.
He added that the PUC did not consider the practical effects of its decision, which will force consumers to pay higher long distance rates.
It has been suggested that in the face of impending liberalisation, in the form of a new telecoms bill, GT&T moved to increase domestic rates to offset the loss from reductions for outbound calls in order to compete with the other provider that offers the outbound service. The PUC said if this were so, then the interests of the consumers will fade into insignificance and it also noted the Guyana Consumers Association’s submission that it would be a contradiction for the PUC to allow rates manifesting monopoly profits to be injected into the new liberalised structure, since such action would negate liberalisation.
But Sharma’s statement contends that in denying their request for a revision of rates on some services, the PUC is denying customers an almost 50% on long distance rates, new and enhanced services as well as ignoring fundamental economic principles of increasing consumer welfare and competition.
Sharma also said the PUC decision reflects “a less than clear vision” for the future of telecoms and he warned that unless changes are made the sector is going to fall further and further behind.
He noted that Guyana is one of very few companies, such as Cuba in the western hemisphere that does not have 3G wireless service. “GT&T repeatedly has requested spectrum necessary to provide 3G and we believe our competitor has done the same. The government could facilitate the deployment of 3G at any time by releasing spectrum to the legally licensed carriers,” he said, while noting that the issue underscores a broader concern that government has been “unable or unwilling” to advance the sector and allow the introduction of new services.
GT&T’s application proposed increases for services, such as installations, transfers, additional jacks, wake-up call, 3-way calling, voicemail, call forwarding and reconnection. It also sought to increase rates for intra exchange calls during peak hours by 40% and during non-peak hours by 60%. The current intra-exchange call rate is $.60 (peak) and $.30 (non-peak). For inter-exchange calls (calls from one zone to another), it proposed increases by 20% for both peak and non-peak hours. The current rates for peak hours, per minute are Zone A-$3, B-$4, C-5$ and D-$7. During non-peak hours the rates are $2, $3.6, $4.8 and $5, respectively.
In its decision the PUC also signalled that it may consider an investigation of the company’s asset base due to suspicions that it may be inflated. GT&T did not respond to this aspect of the decision.
