…PUC ties decision to monopoly on telecoms services

THE Public Utilities Commission (PUC) has declined the application for an increase in landline service charges made by the Guyana Telephone and Telegraph Company Limited (GT&T) some two months ago.

The decision was disseminated to media in a release on Wednesday. The telephone company had made the application on October 1, 2018 and, in summary, requested approval to implement bundled packages for its wireline services, increased wireline access charges and increased landline-metered charges for intra-calls.

It would have seen increases in wireline access charges for customers with 1-2 lines from $750 to $800, with an increment of $50 to be added six months after implementation. Residents with more than two lines, the old charge of $1,500 would have been moved to $1600, with $50 increment to be added six months after implementation.

Meanwhile, businesses with 1-4 lines which previously paid $2,250 were proposed to pay $2,500; and those with more than four lines will remain at $4,500, as no rate adjustment was requested of the PUC.

GTT also proposed a ‘Lifeline’ package and customers who requested it would have not been subject to the proposed second rate adjustment. It was to come along with an offering of 10 minutes free intra-calls and five minutes free inter-calls per month for all customers, along with a voicemail service. All minutes thereafter, on both inter and intra-exchanges, would have been charged twice the new call rate. The new intra-exchange call rate then proposed was to move from peak rates of $0.80 to $1.25, while off-peak rates were proposed to be moved from $0.40 to $0.75.

GTT was represented by Director of Legal and Regulatory Affairs, Mark Reynolds; Director of International Regulatory and Governmental Affairs, Delreo Newman; Manager/Financial Planning Analyst, Tianna Roberts; and Vice-President of Finance and Corporate Controller, Mark Singh.

Together, they put forward that the increases were needed to facilitate rebalancing of the prices of GTT’s telecommunications services. Presenting its 2017 Cost Allocation Methodology (CAM), they stated that the net after-tax profit in 2017 was below the company’s entitled rate of return of 15 per cent on capital rendering the Public Switch Telephone Network (PSTN) to be provided at a significant loss to the company. Reynolds said that the changes were recommended to the Guyana Government by the International Telecommunications Union (ITU) in a policy document some 17 years ago, adding that failure to implement prior to liberalisation would compromise the company’s financial ability and threaten existence of the PSTN.

The Guyana Consumers Association (GCA) was represented by its President Patrick Dial and Adviser and former GTT head Yog Mahadeo, who rejected the company’s application. “GTT in its filing is slyly trying to lead the PUC into the trap of fundamentally negating the functioning of the free market. We emphasise that the PUC must never allow itself to go against the government’s free-market and liberalisation policy; and more particularly, to undermine the price-equilibrium mechanism of the free market,” Dial had communicated to the PUC by way of letter.

They also posited that the telecommunications company must first provide information on the impact of the increase on subscribers and the accrual of the anticipated incremental revenue to the company. The hearing on the matter ran from October 24 to November 19, 2018 at Duke Lodge, Georgetown. During the period the PUC had also made known its position that a forensic audit should first be undertaken prior to consideration of increases, while the quality of the company’s landline services still leaves room for improvement.

On the matter of liberalization, the commission stated: “The concept of rate re-balancing is triggered when there has been the dismantling of a monopoly on telecoms services. As it stands, the company retains the monopoly on landline services which is the subject of this application.” Added to this, the PUC has not approved GT&T’s position on CAM. The commission stated that it is unclear whether the expenses used in the process accurately reflected the utility taking into consideration its size and scope of operations.

It was also unsure whether the values of the non-current assets were acquired at market value at the time of acquisition. Another reason the PUC declined GTT’s application had to do with whether it had adhered to the tenets of the licence which makes provisions for universal service, especially as it relates to rural areas. Coupled with this, the release stated: “The company has purported to have invested heavily in non-current assets for more than a decade, but same is not reflected in expected profit progression or in the quality of the company’s services to its customers.” It later added: “Having regard to all the factors as mentioned above, it is the view of the commission that the company has not presented a convincing case for the proposed price increases for its land line services. Therefore, the application is denied in its entirety.”