JA$2.00 Cross-Network Rates expected from OUR in May 2013 - Postpaid Renaissance, Pain and Gain for Digicel Prepaid in LIME's Ender's Game

“The office (OUR) seems most keen to regulate mobile termination Rates to the lowest level that it can based on its latest actions. The Rates we have seen suggested in the latest model would represent by far the lowest mobile termination in the world in a calling-party-pays environment; something of the order of one-fifth of the lowest Rate in any other country. In fact, the office's proposal seems to be very close to a policy of bill and keep”

Excerpt from Digicel in its 12-page as mentioned in The Jamaica Gleaner dated Sunday January 20, 2013

Aside from the coming Telecoms Auction of the 700MHz Spectrum as chronicled in my blog article entitled “Spectrum Management Authority moves up 700MHz Spectrum License Auction to Wednesday May 22 2013 - Everything is Possible despite 5 year Mission Impossible Ghost Protocol”,  it Looks like there’s more May Madness on the way in the form of Lower Cross Network Rates.

This as Minister of Science, Technology, Energy and Mining, Phillip Paulwell, has declared on Wednesday April 24^th 2013 during his contribution to the Budget Debate that Lower Mobile Termination Rates aka the Cross-Network Calling Rates are coming by May 2013. This as stated in the article “Lower mobile termination Rates coming”, Published Thursday April 25, 2013 2:41 pm, The Jamaica Gleaner.

This was expected of course. Ever since the OUR (Office of Utilities Regulation) had implemented the Cross-Network Calling Rates of JA$5.00 per minute plus the Telecoms Tax on Sunday July 15^th 2012 as stated in my blog article entitled “OUR's JA$5.00 Cross Network Flat Rate ratified by Judge Ingrid Mangatal  - GOJ's Telecoms Tax applied and Digicel's victory in FTC Case assured”, they’d promised lower Rates.

This as the assessment of the LRIC (Long Run Incremental Cost Model) by the OUR is currently ongoing. Then since January 2013, mumblings began going about suggesting that the Cross-Network Calling Rates would drop to about JA$2.00 per minute plus the Telecoms Tax as mentioned in OUR's Management Accountability Framework Business Plan and Budget.

Telecom Provider Digicel didn’t take this well apparently as stated in the article “Digicel critical of new model to set mobile Rates”, published Sunday January 20, 2013, The Jamaica Gleaner. This means that On-Net Rates may fall as low as JA$1.00 per minute plus the Telecoms Tax as I’d predicted back in 2003 during a Redundancy Interview with Nurse Gunning back in 2003.

Telecom Provider Digicel’s complaint is that the LRIC would result in Lower Cross-Network Calling that translates to them making less money and it discourages Telecom Providers from having very Large Networks.  A preliminary response to the OUR's Management Accountability Framework Business Plan and Budget made this abundantly clear and is an echo of previous sentiments expressed back in July 2012.

To quote from Telecom Provider Digicel’s 12-page response, quote: “If implemented in its latest iteration, [it] guarantees under recovery of investments for termination for a real (full size) network and incentivises mobile operators to reduce the size of their networks.” Which is of course sorta the idea; Telecom Providers needs to be more efficient in making revenue on Postpaid Services, instead of having huge spreads of Prepaid Customers.

Plus Telecom Provider Digicel is not being fair in their arguments; Jamaica doesn’t have the lowest Cross-Network Rates in the World, even when compared dollar-to-dollar without Exchange Rate conversions.

Especially when a World Bank Survey indicates for Jamaica:

1.      In 2005, 4.3% of Jamaican householder's income is spent on Mobile

2.      In 2010, 3% of Jamaican householder's income is spent on Mobile

In 2010, Jamaican is ranked 15th in the Caribbean in terms of our spending on Mobile Products i.e. Mobile phones, SIM (Subscriber Identification Modules), Prepaid and Postpaid Plans, and Calling Rates. The percentage of income spending on Mobile by the various Caribbean nations was as follows:

1.         0.6% for Costa Rica

2.         0.9% for Bahamas

3.         0.9% for Trinidad and Tobago

4.         1% for Barbados

5.         3% for Jamaica

Telecom Provider Digicel, which is mostly Mobile Voice and Data Services, is purely dependent on Prepaid Voice and hasn’t developed it’s Postpaid Services as I’d hoped in my blog article entitled “OUR Records Voice Decline for the Fourth Quarter of 2010 - Postpaid, Data Services and Fixed Line Mobile and Landline Saturday Night Fever for Telecom Providers”.

This prediction for the rise of Postpaid was further echoed in my blog article entitled “OUR Telecom Provider Stats indicate JA$14 billion profit for Second Quarter of 2011AD - Telecom Providers Stacking up all Faces on the Argo Video Calling and VoIP on smartphones”.

Telecom Provider LIME is quite ok with the coming Rate change as stated in the article “LIME readies to lower Rates again”, Published Wednesday January 30, 2013, The Jamaica Gleaner. This as they’ve got a more diversified portfolio of products as they’re a full-service Telecom Provider, as evident from their name LIME: Landline, Internet Mobile and Entertainment.

So they can take a hit in their Mobile Business that’ll benefit them in terms of increased Mobile Terminations via the reduction of these artificially high prices, to quote Garry Sinclair, Managing Director of LIME Jamaica: “We can bring down the Rates in a market when everything else is increasing because they were already too high. The fact of the matter is that they were artificially high”.

Already both Telecom Provider Digicel and Telecom Provider LIME are benefitting from increased Voice Traffic, causing congestion to the point of causing Voice Mail problems, for which advertising presents a monetization opportunity as noted in my blog article entitled “LIME and Digicel Networks routing Callers to Voice Mail - Hit and Run Advertising while Test out Free Voice Calling”.

So many Jamaicans will welcome the Lower Cross-Network Calling come May 2013, predicted to be JA$2.00 per minute plus the Telecoms Tax by Garry Sinclair, Managing Director of LIME Jamaica as stated in the article “Sinclair predicts J$2 termination Rates”, Published Wednesday March 27, 2013, The Jamaica Gleaner, as it means that On-Net Rates will be lower as well.

Bur one thing that’ll definitely happen is that Postpaid will get a boost, as at JA$2.00 per minute plus the Telecoms Tax Cross-Network and JA$1.00 per minute plus the Telecoms Tax On-Net, Postpaid will achieve mass adoption as predicted in my Geezam blog article entitled “Digicel intros the Anywhere Plan for Postpaid”. Postpaid Renaissance, Pain & Gain (2013) for Digicel Prepaid in LIME's Ender's Game (2013).