The Utilities Regulation and Competition Authority (URCA) has made a final determination regarding wholesale fixed and mobile termination charges between significant market power licensees of electronic communications in The Bahamas.
URCA initially proposed the termination rates in September 2019 and following a lengthy consultation period issued a determination in December 2019 that forward-looking, long run incremental cost (LRIC) is the appropriate basis for setting fixed and mobile termination charges; and that there was a need for, and level of, interim termination rates.
“URCA determines that, going forward, wholesale termination charges in The Bahamas should be set as follows: fixed termination rates shall be set based on a Bahamas-specific fixed core network bottom-up (BU) LRIC model, complemented as necessary with off-model or additional analysis as may be required; and mobile termination rates shall be set based on a benchmarking of pure LRIC 15,16 rates observed in other jurisdictions,” the recently released determination paper states.
The corporations these changes would apply to include Bahamas Telecommunications Company (BTC), Cable Bahamas, IP Solutions International Limited (iPSi) and Aliv.
Wholesale termination is an essential service that all holders of individual operating licenses (IOLs) providing voice or messaging services must purchase from each other in order to allow their customers to call or message customers on other public networks, URCA explained.
Termination describes the service whereby one operator (the terminating party) accepts traffic that has originated on another network, but which is destined for customers on its own network and delivers that traffic to those customers.
URCA considered three potential options for setting forward-looking, cost-oriented termination rates including: developing BU LRIC models for The Bahamas; a targeted costing exercise of termination services; and benchmarking of BU LRIC-based termination rates.
“URCA has determined that fixed termination rates shall be determined based on a Bahamas-specific core network BU LRIC model. URCA shall publish the details of the consultation process for the development of this model in due course,” the paper notes.
“Mobile termination rates shall be determined according to the benchmarking exercise… which was used to set interim termination rates.”
Until it sets the new termination rates, URCA stated that the current rates, which came into effect last year, would remain in place.
Across the board rates will drop significantly.
The current rate for fixed call intra-island termination is $0.41 and is expected to drop to $0.24 cents after December 2020 and to $0.07 in December 2021 and onwards. The current fixed call inter-island charge of $0.62 will drop to $0.36 in December 2020 and down further to $0.11 in December 2021 and onwards.
Mobile call termination for domestic calls is currently $1.57 and will drop to $1.12 in December 2020 and drop further to $0.66 in December 2021. SMS (short message service) termination rates that are currently $1.12 will drop to $0.98 in December 2020 and drop again to $0.84 in December 2021. While outbound international mobile call termination is currently $2.92, it will drop to $2.08 in December 2020 and drop to $1.23 in December 2021.