Cable Bahamas (CBL) and Bahamas Telecommunications Company (BTC) have laid out their wholesale dedicated internet access (WDIA) prices in a newly released consultation document from the Utilities Regulation and Competition Authority (URCA).
Smaller internet service providers (ISPs) complained last year to URCA about what they claimed were exorbitant prices charged by CBL and BTC for their WDIA, which they claimed were more than 100 times the price in the United States.
For example, in the US, WDIA can cost around $1,000 per month for 100 megabits per second (MBPS); whereas BTC charges $3,693 per 100 MBPS per month and CBL charges $4,856 per 200 MBPS per month.
The prices go up to $36,933 per gigabit per second (GBPS) per month in the case of BTC and $23,514 per GBPS per month in the case of CBL.
As a result, last year, URCA issued new regulations requiring the internet giants to comply with specific obligations, including that BTC and CBL submit their proposed price and non-price terms for their point of presence (PoP) based WDIA services.
“In general, BTC proposes WDIA price terms based on a “retail-minus” discount factor approach, based on BTC’s account separation information, supported by benchmarking data. Whilst BTC recognized that its approach does not result in cost-based WDIA charges, as required in ECS (electronic communications sector) 13/2020,” URCA said regarding BTC’s pricing.
“In BTC’s view, its approach represents the only currently existing tool to establish WDIA prices. However, BTC has indicated to URCA that it is willing to determine the cost-based WDIA charges in the future.”
The document continued, “Based on this information, BTC derived the ratio of non-network costs to total costs for these services over a five-year period, resulting in a non-network cost ratio of around 25 percent over that period. BTC then reduced the non-network cost ratio by 15 percent to reflect non-network costs associated with WDIA service (i.e., to account for service provisioning, customer support, billing, bad debt costs). This results in BTC’s proposed retail-minus discount factor for WDIA services of 21 percent.”
As for CBL, URCA stated that the broadband provider has developed its monthly recurring charges for regulated WDIA services based on analyses of cost data in its latest separated accounts.
“This primarily aims to separate the relevant costs for regulated WDIA from those associated with broadband internet services within CBL’s separated accounts. This involved the following key analysis steps: The starting point is the costs allocated to the broadband internet service category in CBL’s audited separated accounts for fiscal year 2019/20,” URCA stated.
“Cost categories that are exclusively attributable to dedicated internet access (DIA) services are entirely attributed to the DIA services. Cost categories that are not used by DIA or not recovered via a recurring charge are discarded from the analysis. All remaining cost categories (i.e., those shared between DIA and other broadband internet services) are individually allocated either based on the share of bandwidth used by DIA services, the share of revenue generated by DIA services, or a mark-up for common business costs such as information technology, finance and human resource functions.”
Last year BTC accused URCA of being unfair and noncompliant with the Communications Act, 2009 for imposing new regulations on the broadband market.
URCA maintained that given BTC’s and CBL’s position of economic strength and because of potential challenges to competition, the broadband giants be held to the new regulations.