The new challenge faced by Caribbean operators is how to continue increasing revenues in markets having a small number of inhabitants in which voice services (fixed and mobile) have already surpassed the 100% teledensity mark. Companies will have to focus expansion efforts on value added services and service packaging. This will force operators to invest in new technologies that allow them to offer new services. Signals believes that this scenario will open the door for operators like America Movil to expand into new Caribbean markets as well as increase consolidation in the region.

What is clear is that given this new reality, the behavior of the most important regional operators (Cable & Wireless - C&W- and Digicel) has changed. A report from Signals Telecom Consulting points out that this is due to the clear difference in the positioning of both companies.

Digicel, the operator having the greatest presence in Caribbean Basin markets (with 22 commercial operations), has put in place an aggressive expansion strategy in Central America, where it has added a commercial operation in El Salvador by acquiring Digicel DHL. Signals believes that future launches in Honduras and Panama, together with finally having been able to make the interconnection in Trinidad & Tobago will help the operator to diversify its client base (as of 1Q08, approximately 63% of this operatorsÃ' clients hailed from Jamaica and Haiti)

C&W, on the other hand, is going though a restructuring process on a global level. This operator still has not been able to recover from the advance made by Digicel in the mobile telephony sector, mainly in Jamaica. In said marketplace, during the 2007 / 2008 fiscal year, C&W only has a net gain of 20,000 additional mobile users and 2,000 broadband subscribers. In spite of these results, Signals highlights the fact that one of the most important strengths of C&W is that in the majority of the Caribbean marketplaces, it is a vertically integrated operator which facilitates service packaging (something shown by C&W on St Lucia). This greater flexibility will be crucial when having to face Columbus Communications, which is interested repeating an experience similar to that had in the mobile telephony sector with Digicel, via its CATV operations (mainly Flow - Jamaica and Trinidad & Tobago, although it also operates Cable Bahamas - broadband, video and fixed telephony services

Within this competitive framework, Signals bi-annually analyzes the evolution of prepaid mobile telephony and broadband rates in the region. The behavior of operators in these segments allows for the identification of how these are developing the service offerings given the new competitive scenario in the region. Signals believes that, with few exceptions, the present service offering of regional operators reflects a low level of sophistication as the prepaid mobile offering is focused on voice with little emphasis on value added services, beyond SMS, while the broadband offering is focused on speeds of less than 2 Mbps.

The report also found that:

• Although 1Q08 regional mobile telephony rates show a slight reduction as compared to 1Q07, operators like APUA PCS have not reacted to the aggressive rate policies implemented by their competitors. This operator offers the highest rates on Antigua & Barbuda, making a migration of the more than 3,000 users garnered by Digicel on Barbuda, via a telephone giveaway prior to launching services on this island, a highly difficult proposition. A similar situation exists in Guyana where GT&T does not offer competitive rates as compared to those made available by Digicel in the same marketplace.
• BTC Mobility in the Bahamas offers mobile rates for its GSM network that are more cost effective than those available in a host of regional markets that have been opened up to competition. Coverage problems and a low level of sophistication in the segmentation of the operatorÃ's offering, however, are some of the areas where this monopoly operator must make improvements prior to de-regulation. Signals has identified a high level of sophistication in the segmentation of the available prepaid mobile services offering on Dominica and in the French Antilles.
• Comcel (Haiti), Setar (Aruba) and C&W operations on Barbados, St. Lucia and Trinidad & Tobago offer the most cost effective prepaid mobile rates in these marketplaces. The advent of America Movil (AMX) in Jamaica, however, has not affected MiPhone rates. Signals expects AMX to increase pressure on rates once it achieves the commercial launch of its GSM/CPRS services in this market.
• Although during the 1Q07 - 1Q08 period there was a 9% reduction in DSL rates in the Caribbean, these continue to be approximately 5% higher that those rates offered for services run on cable modem.
• Cable Bahamas and Columbus Networks Flow has positioned themselves as the operators having the most cost effective broadband offering in the Bahamas, on Trinidad & Tobago and in Jamaica. Meanwhile, the Telesur (Surinam) and GT&T (Guyana) broadband offerings are the highest in region.
• The wireless broadband offering in the Caribbean is in an initial stage for operators like Curaçao Wireless, which offers the least cost effective rate in the region for a 1 MB connection. Signals believes that the increase in wireless alternatives via WiMAX and 3.5G operations will allow for a rapid reduction of available rates for these types of connections. It is highly unlikely, however, that wireless rates will become more cost effective that those available via cable based offerings.

Posted to the site on 4th July 2008

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