Harmonized Policies, Legislation and Regulations in the OECS

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Harmonized Policies, Legislation and Regulations
in the OECS

• Presented by Apollo Knights
• Director of Telecommunications - NTRC
• St. Vincent and the Grenadines

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Origin Mission of the O.E.C.S.

• The Organisation of Eastern Caribbean States
  (OECS) came into being on June 18th 1981, when
  seven Eastern Caribbean countries signed a treaty
  agreeing to cooperate with each other and promote
  unity and solidarity among the member states.
• The mission is to be a major regional institution
  contributing to the sustainable development of
  the members by helping them to maximise the
  benefits from their collective space, by
  facilitating their integration with the global
  economy by contributing to policy formulation
  and execution both locally and internationally.

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O.E.C.S. Member States
The OECS is a nine member grouping comprising of

• Antigua Barbuda
• Dominica
• Grenada
• Montserrat
• St Kitts and Nevis
• St. Lucia
• St Vincent and the Grenadines.

• Anguilla and the British Virgin Islands are
  associate members.

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Structure of the O.E.C.S.

• The OECS is administered by a Central Secretariat
  located in St Lucia.
• The Islands share a single currency, the Eastern
  Caribbean Dollar (2.70 ECD 1 USD). The
  operation of the currency is overseen by the
  Eastern Caribbean Central Bank.
• The Islands also share a common Supreme Court
  The Eastern Caribbean Supreme Court with its two
  divisions, the High Court and the Court of
  Appeal.

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• The AuthorityThe OECS Authority is the highest
  decision-making body of the Organisation,
  comprising of the Heads of Government (Prime
  Ministers and Chief Ministers) whose decisions
  direct the work of the organization as required.
• The OECS Secretariat
• The functions of the Organisation are set out in
  the Treaty of Basseterre and are coordinated by
  the Secretariat under the management of the
  Director. It is the purpose of the Organisation
  to assist its Members to respond to various
  challenges by identifying scope for joint or
  coordinated action towards the economic and
  social advancement of their countries.
• More info about the O.E.C.S is available at
  www.oecs.org

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Statistics
Country Size (sq km) Population GDP per capita GDP per capita
1998 2006
St. Lucia 616 170,649 5,408 7,499
St. Vincent Grenadines 389 118,149 4,860 7,007
Grenada 344 89,971 6,038 8,536
Dominica 754 72,386 5,366 6,996
Antigua Barbuda 443 69,481 9,467 14,251
St. Kitts 261 39,349 10,958 14,486
British V.I. 153 23,552 --- 38,500
Anguilla 102 13,677 --- 8,800
Montserrat 102 9,538 --- 3,400
Source United Nations of World Information
2004 Estimates
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Can Harmonisation of the Regulatory Framework
among independent states facilitate increased
connectivity?

• In 1998, the OECS launched the OECS
  Telecommunications Reform Project. The broad
  objective was to reform the telecommunications
  sector in five OECS countries that agreed to be
  part of the project Grenada, St. Vincent, St.
  Lucia, Dominica and St. Kitts Nevis.At that
  time, the telecom sectors of the five countries
  were typified by the following characteristics
• i. Outdated laws, licenses and agreements
  compared to many other countries throughout
  the world.
• ii. These laws, licences and agreements were
  highly restrictive.

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• iii. Main services, such as fixed line and
  cellular, were provided by a wholly or partially
  owned subsidiary of Cable and Wireless or by a
  joint venture with Government and Cable and
  Wireless.
• iv. Tariffs were unbalanced and not
  cost-based, allowing operators to make large
  profits on certain calls or services.

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• By 1999, the member Governments of the project
  decided that they were ready to move from their
  current positions to a situation which was in
  line with developments worldwide, i.e.
  liberalisation, for overall economic, social and
  cultural benefits.The members co-operated
  regionally to achieve their aims, and adopted the
  following statement of overall policy

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• The member Governments aim to ensure that the
  demand for existing telecommunications services
  is met in order to support economic growth and
  diversification, provide a suitable environment
  for tourism, informatics and financial sectors,
  and satisfy the educational and social needs of
  the community. The Governments would endeavour
  to further develop the telecom infrastructure and
  services by providing a liberalised and
  competitive environment with open entry to
  stimulate the introduction of an increased range
  of services using state of the art technology.
  The Governments will encourage investment in
  the sector from all appropriate sources by
  developing, adopting and enabling legal and
  regulatory framework, to enable the public and
  business users to obtain telecom services at fair
  prices that reflect economic cost and efficiency.

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• From this point of a common policy, everything
  else
• followed in a logical fashion
• 1. A Treaty was established to put the
  legislative mechanisms in place to allow a
  harmonized approach to regulating the telecom
  sector. It was called the ECTEL treaty, signed on
  May 4, 2000 in St. Georges, Grenada, and it
  allowed for the establishment of a regional
  regulatory advisory body, ECTEL, that would work
  along with national regulatory bodies (NTRCs).
• 2. Harmonized telecommunications Acts were
  developed and passed in all of the five countries
  during the period 2000-2001. This new telecom
  act, among other things, established the NTRCs as
  the national regulators and provided the
  legislative framework to liberalize the telecom
  sectors.

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• 3. Another important phase that had to be
  accomplished was the ending of the exclusive
  telecom licences held by CW on terms that were
  agreeable by all parties. This was not formally
  part of the telecom reform project, however, the
  project could not have been successful unless
  this phase was accomplished.
• Through lengthy negotiations held between a
  special team established by the member
  Governments and CW, an MOU was signed on April
  7, 2001 whereby CW agreed to surrender their
  exclusive licences in consideration of the member
  states undertaking certain obligations.

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• 4. This MOU was followed by a formal agreement
  between all parties on the 20 May, 2002 that
  enabled the full liberalization of the
  Telecommunications sector to proceed in the sub
  region by April 1, 2002.
• The main components of this agreement were what
  services would be regulated under the new regime
  and the rates that these services would be set at
  until a Price Cap Plan was implemented by the
  regulator.

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• 5. Various sets of regulations were enacted in
  the period 2002-2003 under the Telecom Act in
  each member state, to further strengthen and
  clarify the regulatory framework. These
  regulations were all harmonized among the member
  states and were in the following areas
• Spectrum management
• Fees
• Numbering
• Interconnection
• Confidentiality in networks
• Terminal Equipment
• Tariffs
• Licencing and Authorisation
• Private Networks

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• One regulation of specific importance was Dispute
  Resolution, which was not completed and enacted
  until 2007. This is an important point that will
  be addressed later.
• 6. The first licences to be granted to new
  entrants under the new telecom acts were private
  networks and ISPs. This brought about the first
  form of competition whereby the cable TV
  providers in SVG and Dominica started offering
  Internet Access. Dominica actually granted a
  fixed network licence to the existing cable TV
  provider before the new act was established.
• This issue caused litigation that would have had
  some influence on the whole liberalization
  process.

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• 7. International connectivity was done via VSAT,
  which limited access speeds.
• 8. Competition also came from the existing cable
  TV operator in Dominica, which not only offered
  internet access, but also brought competition in
  the fixed voice market using the existing cable
  network. This local company was the first to
  establish an interconnection agreement with the
  incumbent in July 2002.
• 9. Later in 2002, mobile and other licences were
  granted to applicants throughout the five
  countries. Digicel and ATT were the first
  companies to construct mobile networks, with
  Digicel being the first to launch service after
  coming to a 5 year interconnection agreement in
  March 2003. 10. The agreement took a long time,
  and led to litigation between the regulator and
  incumbent in one of the member states.

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• 11. Among the main provisions of the legislative
  framework was the harmonized approach to
  regulating the sector
• There now exists
• i. Standardized forms for licence applications
  in all five
• countriesii. Standardized licences with
  similar terms and conditions
• iii. Harmonized regulatory fees for licences
  and spectrum.
• iv. A regulatory system that is funded directly
  from regulatory fees collected as compared to
  annual contributions from member Governments.
• v. A regional agency (ECTEL) to allow the
  pooling of scarce human resource in specific
  regulatory areas, thereby reducing the cost of
  regulating the sector as compared to having full
  fledged regulatory bodies in each country.

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• 12. The May 2002 agreement required that a PCP
  plan be implemented within a certain timeframe.
  This was not done, and led to litigation between
  both parties.
• 13. A PCP was finally implemented in Dec 2004
  for CW in all 5 countries. The plan regulated
  most fixed line services excluding international
  calls. More focus was placed on the rates of
  residential PSTN services rather than services
  such as leased lines and internet.

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• 14. A regional spectrum plan was formally
  implemented by ECTEL in 2006 as part of their
  mandate. However, the countries have been working
  with a draft harmonized plan since 2002. This has
  resulted in harmonized allocation of spectrum to
  existing licencees and new entrants.
• 8. A regional numbering plan was implemented by
  ECTEL in 2006 followed by national numbering
  plans by the NTRCs in each member state.

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• We are now at a position where five years have
  passed since large scale competition has entered
  the market in the five OECS countries, and 10
  years since the reform process started.
• This is an ideal time to review what was
  occurred in the sector and assess the success
  and/or effectiveness of each.

Telecom sector Investment.
Penetration of fixed, mobile and Internet
services over last 5 years.
Sources ECTEL/NTRC/Operators
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The following graphs show Fixed Line and Mobile
Subscribers over the past 5 years.
Fixed Line Subscribers
Mobile Subscribers
Source ECTEL/NTRC/Operators
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• Fixed Line Rates

EC () March 03 March 04 March 05 March 06 March 07
Range of Monthly Rental 17-54 20.40-26.40 20.40-26.40 20.40-26.40 20.40-26.40
Local fixed to Fixed (peak) 0.09 0.09 0.07 0.07 0.07
Local Fixed to Mobile (peak) 0.81 0.81 0.76 0.71 0.71
Source ECTEL/NTRC/Operators
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• From the graphs, the biggest impact was on mobile
  penetration. Mobile phones are not a secondary
  means of communication, but actually the
  preferred form of communication for the greater
  part of the population in most of the
  states.However, the cost of usage for this new
  sector of the population is consistently higher
  than the fixed line market, despite there being
  fiercer competition in the mobile
  market.Essentially, the cost of domestic
  communication per minute is higher for the
  majority of telecom customers since competition
  has arrived.

Type of Call Rate 3 min
Fixed to Fixed 0.21
Mobile to Mobile(On Network) 1.62 CW2.25 Digi
Mobile to Mobile (Off Network) 2.55 CW 2.55 Digi
Mobile to Fixed 2.55
Fixed to Mobile 2.13
-What is the real cost of originating or
terminating a mobile call, and are the current
rates inline with these costs? -Do we have a
competitive mobile market with two players?
Source NTRC/Operators
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• Fixed line penetration has shown a slight
  decrease over the period, which has been
  attributed to some customers giving up their home
  phones for mobiles.

One of the first noticeable impacts of
competition in the sector is the initial drop in
international rates, which has now stabilized.
International rates to the USA from SVG
Source NTRC/Operators
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• Internet StatisticsAn important statistic that
  needs to be analysed over the period is that of
  Internet subscribers. In order to reap the full
  potential of a connected society and achieve some
  of the goals as outlined in the 1999 regional
  policy, our consumers need to be connected via
  data connections.

The region has benefited from the liberalization
of the sector from being connected via the voice
medium but has not done as well with data.Why
has the growth of internet subscribers been so
small over the period?
Source ECTEL/NTRC/Operators
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• We have been able to attain mobile penetration
  levels comparable with the developed world, but
  cannot come close when comparing broadband
  penetration.
• The reason seems not to be an issue of whether
  there is a demand for such services in the
  region, but rather a situation of consumers not
  being able to afford the service. It is the
  exact reason why mobile penetration was at the
  level it was right up to when competition was
  around the corner. The service was not
  affordable to the majority of consumers until
  effective competition was implemented.

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• With competition in the mobile sector, mobile
  services became affordable, and the barrier of
  entry became lower. The initial barriers in the
  market were the cost of the handset (CPE) and the
  fixed monthly fee for post-paid accounts. The
  barrier started getting lower with the
  introduction of the pre-paid platform (no monthly
  fees) then went much lower when handsets started
  to be subsidized.

The issue of increased coverage may also have
played a part in the development of the mobile
sector, as coverage was very limited prior to
competition.
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• The problem which exists in the broadband arena
  is the barrier of the high cost of computers, and
  the monthly internet fee.
• The above problem has always been recognized by
  regulators and policy makers, but is taking time
  to be addressed. There are obstacles that prevent
  the growth of broadband access following that of
  voice access in the region.
• The following slides would outline the perceived
  problems, and what is being done to address them.
  The end result would be a connected sub region
  (in its fullest sense) that would then form part
  of a connected region and a connected world,
  which is the main reason we are gathered here
  this week.

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Challenges to Broadband penetration
1. Noting the relative small sizes of all five
countries, our situations may differ in a number
of areas when compared to other developing
countries. Our low penetration rates of fixed
lines were not due to network build out issues,
but to affordability and capacity availability in
some areas.
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• 2. It is generally agreed that a mobile network
  is more easily established than a fixed network,
  and it was no surprise that mobile networks were
  the first to be deployed. Voice services also did
  not require much bandwidth for international
  traffic, and new entrants could rely on satellite
  solutions from the incumbent operator if
  desired.
• 3. Competition came into the mobile market which
  led directly to overall increased penetration
  levels of the incumbent and one of the new
  entrants (Digicel), ATT/Cingular never took off
  and was subsequently acquired by Digicel .

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• 4. Although it was evident that internet access
  was important to all sectors, competition in this
  area was still very limited. The data speeds
  available on the 2-2.5 G mobile networks were
  not a viable option for internet access the only
  option that would be able to provide efficient
  service in this area would be through fixed
  networks. ISP licences were granted to a few
  companies, but the only ones that actually
  started service had established cable TV networks
  that could be easily modified to offer internet
  service.Although some competition came in this
  manner and had some effect on the prices of
  internet services, it was not effective
  competition, since internet service depends
  heavily on international bandwidth.

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• 5. Although a satellite solution was available,
  it was not practical to effectively compete with
  the incumbent. There was no competition at
  this time in any of the member countries for
  international capacity via submarine cable, and
  as such, the effect that competition has on rates
  and delivery of service was not seen in this
  area. Another important issue is that while it
  is norm for telcos to provide CPE equipment to
  deliver of voice services, this is not the case
  with internet service. Computer cost and
  availability are still very problematic.
• 6. While the computer is the main obstacle, work
  is also needed on the actual internet rates. In
  2006, the first submarine cable was landed in St.
  Lucia. This corresponded to a lowering of
  internet rates which was further lowered in 2007
  when another cable was landed in the other
  states. There was then an immediate lowering of
  rates and increase in speeds.

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• Entry Level Internet rates over the past 4
  yearsEntry Level refers to the minimum speed
  offered by the provider for a given year.

Speed Monthly Rate
2005 64kbps 79
2006 256kbps 99
2007 512kbps 79
2008 1Mbps 79
Source NTRC/Operator
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• 7. Despite these developments, the growth in
  internet subscribers remains low. The incumbent
  has occasionally offered promotional packages to
  new customers that involved computers, which
  should be commended and encouraged as it is the
  only way to achieve growth in this sector.
  While we have seen a lowering of internet rates
  and increased speeds by the incumbent and
  corresponding rates from competitors, the entry
  level for broadband access is not being lowered.
  Existing users are benefiting from higher speeds
  and lower rates, but the barrier to entry for new
  customer still remains high. Until we see the
  rate for the entry level package reduce to an
  affordable package with appealing initiatives to
  procure computers, we will not see much growth in
  the internet subscriber base. A model T computer
  is required for the masses.

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Current Computer Prices in St. Vincent and the
Grenadines
Store 1 Store 2 Store 3 Store 4 Store 5
19 Flat Panel 1GB RAM160GB Hard DriveDual Core 2.2GHzDVD-RW10/100Mbps NIC 2,999 2,900 3,000 3,199 2,375
Notes Store 4 has a 320GB Hard Drive Store 5
has a 250GB Hard Drive Stores 1 to 4 are all
branded computers (Dell, HP) Store 5 is a clone
(a mix of various manufacturers parts)
Source NTRC/Retailers
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• 8. Over the past few years, the relevant policy
  decisions were made to try to have some
  regulatory interventions to spur growth and not
  rely solely on providers to facilitate the growth
  that is needed. Our telecom legislation required
  the establishment of USFs in each member state
  managed by the regulator. Noting the market
  situation, it was agreed that these funds be
  targeted to facilitate broadband access
  initially to public institutions. A feasibility
  study was done in 2005 by the World bank which
  confirmed our initial views, and was followed
  with a new project jointly funded by the world
  bank and member governments TICT in 2006.The
  project was aimed at developing national ICT
  plans for all states, implementing ICT pilot
  projects, reviewing all existing
  telecommunications legislation, and developing
  USF regulations and guidelines that would be used
  to operationalise and govern the use of the USFs.

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• 9. Presently, draft USF regulations have been
  developed with input from all stakeholders,
  especially the providers. Regulations are now
  with member states for enactment, with St. Lucia
  already enacting their regulations. The USF
  would be funded from a percentage of annual
  revenues collected from providers and also allow
  for funds to be received from external funding
  agencies and donors. The OECS states may be the
  first to operationalise USFs in the Caribbean
  region (subject to correction).

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What could have been done differently?

• There are matters that could have been dealt with
  differently

1. Certain regulatory instruments should have been
   implemented prior to liberalizing the sector,
   such as (1) dispute resolution regulations, and
   (2) costing studies. Practical regulatory
   mechanisms should be the only means of achieving
   the relevant objectives.
2. In moving from a monopoly environment, it must be
   recognized that disputes would arise between new
   entrants and the incumbent and that the relevant
   regulatory provisions should be in place to allow
   for these to be resolved in a systematic and
   transparent manner instead of a lengthy court
   system as the only option.

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1. Having access to costing studies specific to the
   region would have been helpful during the
   approval process of the interconnection
   agreements. Costing studies have since been
   done and would be used when the existing
   interconnection agreements are renewed later this
   year. Mobile telephony is the only form of
   communication for the majority of the populace in
   the member countries, however the rates being
   charged are approximately ten times that of the
   fixed line service. It is important that the
   regulators ensure that these rates are cost
   oriented. It makes no sense in trying to regulate
   the rates of the fixed line service of the
   incumbent (via the PCP) that affects 25 of the
   population (and 25 of telecom consumers) but not
   the rates of the mobile service that are 10 times
   higher and affects 90 of the population.

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1. A lot of time and resources from the regulator
   and the incumbent were spent to implement the PCP
   , but at this time, it is not certain if the
   implemented PCP is serving its regulatory
   purpose. Of specific interest is the rates of
   leased lines and Internet services. Although
   these have been reduced during the duration of
   the PCP, it was not as a result of the mechanisms
   of the PCP it was instead due to the voluntary
   decisions of the incumbent at specific times.
   Was the PCP required or is this just a case of
   following international best practice? Was it
   implemented effectively, or could other means of
   rate stabilization be used instead?These issues
   need to be addressed when the plan is up for
   renewal later this year. Maybe it was envisioned
   that these services would have had more effective
   competition in the early stages of
   liberalization, and not require too much of a
   regulatory oversight. However, it took a very
   long time for effective competition to arrive for
   these services.

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1. It is believed that liberalization followed by
   competition would still have occurred in our
   member states without there being a harmonised
   regulatory framework in place, which has already
   occurred in most other Caribbean countries
   since. However, it is doubtful that it would have
   came at the same time and in all of the countries
   simultaneously as was done.
2. The harmonised framework has allowed for us to
   have a regulatory framework that costs less to
   operate as compared to if all five states had
   established stand alone regulatory bodies, which
   is especially important noting the sizes of the
   countries in question.The cost of regulating
   is covered directly from fees collected from
   providers, therefore all savings obtained from
   having a common regulatory structure is enjoyed
   by the providers who in turn can pass these back
   to the consumers.

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1. Apart from the savings in direct regulatory fees,
   the providers can save on the administrative
   cost associated with their regulatory
   responsibilities. For example, the incumbent
   has one price cap plan for all five countries
   instead of five plans.The development of
   regulations and other instruments that govern the
   sector are prepared in a single format and is
   subject the consultation for the same periods in
   all five countries. Consultations are held in
   each state, but the companies usually prepare one
   response that is submitted in each country,
   saving time and resources. The countries are
   still five independent nations and all
   legislation and regulations has to be enacted
   within each jurisdiction.

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• The CTU has been working on establishing a
  harmonised spectrum policy and plan for the
  Caribbean region since 2006, which was one of the
  first tasks dealt with in the OECS. The member
  states have been deeply involved with the CTU
  task force.We are part of the CTU task force
  on the matter and were able to contribute our
  experiences with a harmonised scheme involving
  five countries. The CTU is now attempting a
  similar approach, this time using around 14
  Caribbean countries. This is not an easy task,
  and we have been able to share our experiences,
  as well as receiving new ideas to improve our
  current system.
• We are already putting the advice and ideas to
  use by incorporating them in our revised
  legislation that is currently been worked on.

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• Here is a good example of how a harmonized
  spectrum plan directly affects providers and
  consumers When spectrum plans are not
  harmonized, it leads to the same service being
  allocated to different bands in different
  countries, which is the reason that dualband,
  triband and quad band mobile phones exist. The
  more bands, the more expensive the phone.

Below are costs for different band phones in one
OECS state.
Dual Band Tri-Band Quad-Band
Cable and Wireless 99 199 580
Digicel 149 209 649
An operator may use a single band in one country,
allowing all customers to use a single or dual
band phone. However, due to non-harmonized plans
around the world, this phone will not work in
some other countries. Also, visitors with
different band phones cannot roam, forcing the
operators to install additional transmitters to
cater for different bands, leading to higher
CAPEX which would have been used for lowered
rates, new services, increased coverage, etc.
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Can Harmonisation of the Regulatory Framework
among small independent states facilitate
increased connectivity?

• Based on the previous information, harmonization
  will likely lead to reduced regulatory cost and
  resources which will directly benefit regulators
  and providers. These benefits will impact
  directly on both entities from a financial and
  human resource standpoint, which can then be
  utilized in rolling out new services faster and
  to larger numbers of the population, resulting in
  increased connectivity.
• The OECS region seems to be at the right point
  to partner with all stakeholders in an effort to
  facilitate notable growth in broadband
  penetration and the ICT sector on a whole. The
  harmonised regulatory framework allows
  simultaneous developments in multiple countries,
  thus utilizing less resources.

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• We are aware of the work Canto is doing with the
  OLPC project and are willing to work with them in
  preparing a pilot project for the region that
  could be proposed for funding from our USFs. To
  achieve the goals of a connected Caribbean in the
  shortest timeframe the two major parties
  (providers, regulators) would have to work
  closely together to bring reality to the ideas
  that are in the minds of the people of this
  great Caribbean Civilization.
• In the end our (regulators, stakeholders,
  providers, vendors) objective is the same
  getting our citizens all connected. It is just a
  matter of working together and trying to strike a
  balance on what should be done, how it could be
  done and when.