Why should that be of concern for Jamaican cellular operators?
 It’s a day that may well come to be regarded as a red-letter day for the Jamaican telecoms business. On February 17, came the announcement
that AT&T Wireless agreed to be acquired by Cingular Wireless, itself created out of a merger of two of the regional companies (or “baby Bells”)
that emerged out of the Federal break up of the US telecoms monopoly in 1980 (a scant 24 years ago, it seems like centuries). The US$41 billion
acquisition deal (subject to approval) will make Cingular the largest mobile carrier in the U.S.
Why should that be a concern for Jamaican cellular operators?
First of all, the move heralds the arrival of a truly large player into the still evolutionary Jamaican cellular communications market. Once the deal
is approved then AT & T Wireless as an entity will cease to exist, with current and future AT & T customers subsumed into the more powerful Cingular
brand. The combined entity will have 45 million subscribers in the U.S and Canada alone, or more than 20 times the combined customer base of the current
local three. That will no doubt give Cingular the ability (if not the will) to squeeze its competitors margins through price wars and further handset
subsidies (along the lines currently being offered by MiPhone).
Cingular, with its catchy logo and ads, is already one of the best-known brands in its home market, but will the “asterisk man” play as well in Kingston
as in Kansas? That remains to be seen (see sidebar).
But what's abundantly clear is that each of the existing CARICOM mobile carriers will be needing every last subscriber that can be added to their
respective bases. The Caribbean, with a total population of just over six million, is not Cingular's ultimate objective, but merely a beachhead,
the present-day commercial equivalent of the military Normandy landing of 65 years ago. Cingular's real push is into the larger markets of Central
and South America.
What's more, Cingular is presumably just the vanguard of a larger telecoms "invasion" force both within and outside the U.S. and Latin America.
News breaking since the Cingular-AT&T announcement is that Spanish firm Telefonicas has bought the assets of the former Bell South in Latin America.
The numbers may not be a huge bonanza to the likes of a Cingular or Verizon but Jamaica's record-setting volume growth is certain to be raising
eyebrows as these companies look for new growth horizons. A 10% percent share (throughout the Caribbean) may prove within the comfort zone of those
behemoths, given their interest in the larger hemispheric market, but a 10% drop in subscribers would undoubtedly be a serious challenge to the
incumbent local players.
Speaking recently on radio, Evan Thwaites, member of the Trade Committee of the Jamaica Chamber of Commerce, said various permutations were
possible in respect of the much-talked about and (for now at least) very unwieldy Free Trade Area of the Americas (FTAA), including an opening
agreement on trade in services.
Speaking from his own experience in the insurance business, Thwaites pointed to the track record of large multinationals in respect of smaller
but less competitive markets. Big entities come in, he said, collar the market, and then proceed to ratchet up prices, that's the general formula.
Can the same be said of mobile telecoms that can be said of insurance?
Digicel has arguably best positioned itself to meet the Cingular challenge. Indeed, it has the most in common with Cingular, having been the
first “outside competitor” to land in the Jamaican market almost four years ago, grabbing the lead share of a mobile market that C& W spent
years condescending to, languidly doling out services and product as it saw fit.
Digicel is also hitting Cable & Wireless throughout the Anglophone Caribbean, with “Little England” itself, Barbados, being its most recent conquest.
As this issue goes to press, Cayman is expected to become the latest Digicel outpost, bringing the company almost back full circle since its 2001
inception in Jamaica (it has yet to go to Trinidad & Tobago, the other major Anglophone Caribbean territory)
The Irish-Jamaican company is now seeking to wrest control of yet another telecoms segment that was formerly the exclusive preserve of C&W.
Until now, Internet service providers (ISPs) must route their traffic through the Cable & Wireless Network in order to facilitate the instant
access to worldwide information for their customers.
But with a proprietary fiber-optic between Miami and the Caribbean, all that could soon change. To this end, Digicel has also made a
foray into North America, incorporating Digicel USA in Miami several weeks ago. Its intended to serve as the hub through which Digicel intends
to route incoming calls to Jamaica, initially via satellite, then in about two years, the company projects, via the fiber optic cables.
Digicel is presently scouting for investors with whom to partner on the venture and expects to make an announcement roughly around the end
of the next quarter. Ocean floor-embedded fiber optic cable, in addition to being costly, has proven controversial for Digicel’s rival C&W.
It's Montego Bay link was the subject of media headlines charging it was having deleterious effects on the coral reef in the Montego Bay Marine Park.
Digicel is not slowing down though, on any front. It launched three years ago with 119 cell sites on air in Jamaica. As at January 31 2004,
Digicel had nearly 600 sites, and is closing in on its one-millionth Jamaican subscriber with all the relentless inevitability of an orca on
a wounded bull seal. To put the growth in context, the company hit 78,000 subscribers within two months of launch, a figure it has taken
MiPhone some two years to attain.
Across the Caribbean, its varied launches have yielded similarly impressive results. St. Lucia and St. Vincent (March 2003 launch) now have in excess of 90,000
subscribers; Aruba (launched July 2003) now has in excess of 30,000, a similar total to Grenada, which began receiving service only in October 2003.
Oceanic Digital (parent of MiPhone), has already begun to show its vulnerability to the C-Day onslaught. The third player in the market,
has recently hit out at the Government's decision to allow AT& T to come in and at a much lower cost than its initial parent was charged.
Oceanic Jamaica CEO Craig McBurnett, in a recent radio interview said that his company is unfazed by concerns about its ability to gain
the kind of market share necessary to sustain it in a rapidly maturing market. But its clear they're running short of both time and
operating room.
Several Jamaicans currently carry more than one handset to compensate for the incompatibility and rate differential between the top
two mobile providers. Cingular, once it arrives will operate on the GSM platform, now common to both C&W and Digicel. Unless Oceanic can
find some powerful incentives to convince customers to stick with its CDMA format (other than voice clarity), things could get very
sticky for Mi-phone.
And there are other arenas within the local markets that are, shall we say, simmering. In the provision of wireless service Go-Tel
appears to be getting a handle on the service and capacity bugs that threatened to upend it almost as soon as it began. The company
is not yet perceived as a substantial threat, but a noteworthy upstart.
The emergence of Voice Over internet Telephony (V/OIP), in the major overseas markets (covered in our last issue) signals the next
frontier for telcoms. Granted, Internet penetration is still too low to make such projects really feasible, but there is a market to
be had among the highest-end corporate users. Imagine, replacing 50 or more fixed lines with VOIP solutions and you've got a tempting
scenario for banks, airlines and other high volume phone users, provided a reliable service can be provided at a reasonable price.
In this segment too, Cingular would have a distinct advantage.
Sheer capacity aside, service quality is going to be a big determinant in which telcoms survive the current dust-up. In a recent
customer satisfaction survey commissioned by Digicel, but taking in several service providers inside and outside the industry,
Digicel beat C&W (the survey does not specifically distinguish between C&W and C&W Mobile) in every category that the two were
compared, and all by significant margins.
For users, disgruntlement has long been a feature of C&W customers, and along with its “fellow utilities” the Jamaica Public
Service Company (JPSCo) and the National Water Commission (NWC) has frequently earned the ire of Jamaican consumers, with “indifference”
and “lack of knowledge” and "unhelpfulness" being the complaint most frequently registered.
Oceanic doesn't have much record of complaints by comparison (it wasn’t tracked on the survey) but with its islandwide roll-out,
the “new kid” should begin to experience some of the fire of unsatisfied Jamaicans. The other limitation is that Oceanic does not
as yet offer data services on its phones, and is competing largely on the basis of low rates and incentive offers (buy X
amount of minutes - get phone free).
In reference to a similar phenomenon in a different place and time, the “gold rush” is pretty much over. The existing prospectors
are now reassessing their claims as the infrastructure moves from the "boomtown" type into greater permanence.
Amidst all this clamour, its easy to forget that wireless cellular communication for every individual wasn’t always our reality.
Scarcely twenty years ago, people were grappling with the idea of a computer on every desk and a facsimile in every office. Juxtapose
that with today's image of handcart men, higglers (and not a few panhandlers) toting cell phones.
 For those of us who have witnessed this great telecoms build-out and are able to compare it to the clunky, feature-free past,
there’s a sense of being left out of breath. No sooner did we adjust to the Star-Tacs and entry-level Nokia’s than we
were hit with the next generation - picture screens - short messaging, GSM, WAP, internet-in-your hand, PDAs and the
whole array of jargon and accoutrements that have since flooded our consciousness.
Well, forget about all that. That was just the opening act. The real dogfights and dust-ups in mobile telecoms - indeed the entire
industry as lines continually blur - are about to begin. With critical mass now pretty much achieved in terms of penetration
(we don’t have a PC on every desk, but there's a "cellie" on almost every hip), the proverbial big guns are already locked and loaded.
It’s not going to be pretty.
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