Cut throat competition

Rock Mobile wins telco license in Jamaica but faces an uphill battle as a new entrant.

The Jamaican government recently granted Rock Mobile a licence to operate in the country’s telecommunications sector. The Ministry of Technology considered that a new player would increase competition in the sector, granting better quality for more affordable prices.

Jamaica’s telecommunications market is currently dominated by a duopoly, Digicel and Flow (Cable and Wireless re-branded). The sector suffers from poor quality of service and low reach/availability of broadband which has been further exacerbated by the ongoing pandemic. The recent announcement that a third license was issued to Rock Mobile brings some measure of hope to consumers, but it won’t be easy for the new entrant.

A telecommunications executive in Jamaica was watching the market developments with interest, “The idea is to create better competition by bringing a new entrant into the market to force incumbents to improve their service. Historically, this hasn’t worked. We used to have Claro here too but in the end Claro’s operations were acquired by Digicel.”

“The idea is to create better competition by bringing a new entrant into the market to force incumbents to improve their service. Historically, this hasn’t worked.”

Telecommunications executive, Jamaica.

Rock Mobile is expected to launch its commercial operations within one year of receiving its licence and become fully operational after two years. The company aims to reach 95% of population coverage in two years and aims to improve broadband access to currently underserved areas. A consultant to the industry gave some insight into new entrant, “Rock Mobile is, so to speak, 100% locally-owned, the principals are to some degree Jamaican, compared to the ownership of the other two companies, it is considered a Jamaican-owned provider.”

This may give them some benefits but according to our sources, the biggest risk to their success will be the regulator, as the executive explained, “Regulatory issues will be Rock’s main challenge. The regulator here is weak: it hasn’t implemented quality-of-service regulations and there is no recourse against the incumbents who can easily frustrate Rock’s ability to interconnect with their incumbent networks. Finally, you have to understand that all data flowing in and out of Jamaica goes through four subsea cables and guess what, Flow owns all of them.”

“Regulatory issues will be Rock’s main challenge. The regulator here is weak: it hasn’t implemented quality-of-service regulations and there is no recourse against the incumbents who can easily frustrate Rock’s ability to interconnect.”

Telecommunications executive, Jamaica

Regulation of the industry is also fragmented, the executive continued, “Currently, to get a license you have to go to two different places: the Office of Utilities Regulation and the Spectrum Management Authority, there is no need to have two. The current setup does not fit the goals and aspirations of the government, it’s good to bring new competition but there needs to be regulation that supports them.”

Inappropriate legislation is the root cause of the market’s problems, according to the industry consultant, “Legislation is required to stop anti-competitive behaviour by the incumbents and to modernise the whole sector. The Telecommunications Act is more than 20 years old and amendments were last made in 2012, it is not reflective of today’s reality. New legislation is in the works and it is on the government’s agenda but who knows when it will come out.”

Rock Mobile has been awarded the recently auctioned 700 MhZ 4G broadband spectrum and it is expected to increase broadband access throughout Jamaican territory to narrow the connectivity gap between different regions in the island. A Jamaican technology expert provided a warning related to spectrum, “Spectrum hoarding is an issue in Jamaica, incumbents tend to acquire the spectrum that competitors might need, making it very expensive for new entrants. Digicel’s acquisition of Claro was all about acquiring spectrum to lock out new entrants.”

Daryl Vaz, Minister of Technology of Jamaica said that the criteria by which Rock Mobile was granted the contract would be closely monitored, adding “simply put… use it or lose it”.

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