The telecoms and broadcasting sector in Trinidad and Tobago continues to have a positive outlook, despite market operators’ predictions of consolidation. Opportunities have presented themselves, allowing operators to make inroads in fulfilling long-term strategies on the course towards digital transformation. The downturn in economic growth has affected telecoms, and its contribution to GDP eased by 0.4 percentage points to 3.4% in 2017, or $758m in revenue, according to the 2018 annual report from the Telecommunications Authority of T&T (TATT), the latest available at the time of press.
Mobile
There are two mobile operators – Digicel, an international operator, and bmobile, a division of Telecommunication Services of T&T (TSTT) – which share a relatively saturated market: mobile voice penetration per 100 inhabitants stood at 151 in the first quarter of 2018, a 2.1% decline from the same period the previous year. Over this period, the number of mobile subscriptions fell from 2.09m to 2.05m, which made 2017 the first year in the country’s history to deviate from the trend of consistent growth in mobile telephony. Gross revenue has been decreasing, having fallen from TT$574m ($85.1m) in the first quarter of 2017 to TT$506m ($75m) one year later, an 11.8% year-on-year (y-o-y) decline. Average revenue per user (ARPU) also eased over this period, though it did so to a more moderate degree. In the first quarter of 2018 ARPU was TT$250 ($37.08) in the mobile market, down 8.4% y-o-y. The declining market seems to have prompted some price adjustments, as daytime rates fell by 15% in 2017, while evening and weekend rates increased by 53%. In that same year, prepaid mobile voice subscriptions dominated the local market with a 77% share, compared to post-paid subscriptions, with 23%.
Fixed-Line Market
In the first quarter of 2018 there were 307,000 fixed-line voice subscriptions in T&T, representing 13.9% y-o-y growth. However, this translated to a 3.7% decrease from the final quarter of 2017. This brought fixed-line voice penetration to 23.5 per 100 inhabitants and 66.3 per 100 households, a 16.9% and 23.5% y-o-y rise, respectively. While subscriptions numbers increased y-o-y, gross revenue and ARPU both fell during this period. In the first quarter of 2018 gross revenue in the fixed-line telephony market was TT$160.4m ($23.8m), a 5.7% y-o-y reduction. Meanwhile, ARPU fell to TT$525 ($77.87), a 16.4% decrease from a year before. This is largely in alignment with the global downward trend of fixed-line voice connections.
Paid & Free-to-Air Services
While mobile and fixed-line telephony fell somewhat over the course of 2017, paid-TV connections saw robust 27.3% y-o-y growth in the first quarter of 2018, reaching 248,000 connections. This brought paid-TV penetration up by 26.4% y-o-y, with 59.6% of households having a TV subscription. The rise of paid-TV connections outpaced revenue growth, indicating that the market is reaching a point of saturation. Gross revenue for paid-TV providers increased by 0.6% y-o-y to TT$180m ($26.7m) in the first quarter of 2018, though ARPU took a notable hit, decreasing by 18.9% to TT$737 ($109). Largely in line with other telecoms segments, free-to-air radio and TV saw 14.2% and 13% y-o-y declines in gross revenue to TT$43.3m ($6.4m) and TT$16m ($2.4m), respectively. This is likely at least in part due to the increasing use of internet streaming for radio and TV services. In the paid-TV market, prices have risen by 4-12% across all services providers; however, this is largely due to exchange rate fluctuations, which have resulted in higher costs for foreign content.
Mergers & Acquisitions
Meanwhile, there have been a number of mergers and acquisitions in the sector in recent months. Regional publishing and broadcasting firm One Caribbean Media (OCM) acquired a 51% stake in local fixed-line internet and paid-TV service provider Green Dot in May 2017. This comes on the back of an earlier diversification effort by OCM in 2015, when it acquired 40% of T&T software development company Novo Technologies. In addition, TSTT completed its TT$215m ($31.9m) acquisition of the fixed-line broadband and paid-TV provider Massy Communications in July 2017. This gave TSTT control over 900 km of fibre-optic network infrastructure, 6000 residential customers, more than 50 corporate data circuit customers and 34,000 homes, thereby growing its potential coverage to 54,000 households. The new entity has been rebranded as Amplia Communications, and the purchase should help the TSTT achieve its medium-term target of providing fibre-optic connections to 200,000 homes by 2022.
Emile Elias, then-chairperson of TSTT, told international press at the announcement of the acquisition in May 2017 that this move would further benefit the local economy, as it would save around TT$20m ($3m) in foreign exchange – the cost that TSTT would have incurred had it built this infrastructure itself. Ronald Walcott, CEO of TSTT, told local media in March 2018 that its fibre-optic network expansion agenda has already seen notable success, with coverage reaching 100,000 homes seven months after the acquisition, putting it well on schedule to achieve its 2022 goals.
In January 2018 TSTT consolidated its retail operations with the closing of nine bmobile-branded stores in a move described as integral to its retail and digital transformation strategy, as 70% of transactions at these stores were bill-related. Customer service can now be accessed at any of its 86 full-service bmobile partner locations across the islands, and its online platform continues to offer bill payment as well.
Legislative Review
The Telecommunications Act, one of the sector’s key rulings, is under review, with one of TATT’s main concerns being pricing for consumers. Tariffs are currently set by providers, with little regulation of market forces. If a firm is using its market position to raise prices unduly, TATT must first prove market dominance and abuse of it. This is a relatively inefficient structure that can take anywhere from one to three years before the regulator can impose price-control mechanisms. The anticipated legal reform will give the authority increased power to act in a shorter time frame. Another change expected in the near future is the introduction of administrative penalties on concessionaires when they are in breach of their concessions. This represents a considerable easing of consequences from the current policy, which requires breached contracts be revoked. The proposed amendments will also require that broadcasters contribute to the Universal Service Fund, the financing arm of a framework that seeks to provide telecoms and broadcast services to sectors of the population without access. The revisions would also give TATT more power in reviewing mergers and acquisitions to ensure they are appropriate for the local industry, considering the potential impact on both consumers and existing service providers.
Roaming
In line with concerns regarding consumer pricing, the high cost of mobile roaming, particularly data roaming, came to the fore in 2017 with the widely reported instance of a minister accumulating excessive data charges while roaming within a Caribbean territory. TATT has undertaken consumer surveys into mobile data packages by customers when they roam in other territories, finding that up to 80% would not use data roaming and would instead use Wi-Fi connections and over-the-top (OTT) apps for their communications needs. TATT has piloted the issue of roaming via participation in the International Telecommunications Union’s Study Group 3, in which members of the union develop recommendations for various fields in the sector, with the hope of finding a single rate for roaming in the Caribbean. Such a solution may be akin to the EU’s Roaming Regulation 2012, which stipulated that additional roaming fees no longer accrue for EU customers roaming between any country in the bloc.
Significant work would be required to achieve this, including the implementation and observation of legislation across territories. In steps towards greater integration, at least one provider now reminds customers of the charges they may incur when using roaming features as they connect to international networks.
OTT & Net Neutrality
In another potential boost for consumers, in November 2017 TATT held a public forum to discuss OTT apps under the broader concept of net neutrality and recent developments that led to the US Federal Communications Commission’s decision to repeal net neutrality. Digicel voiced public support of this decision, urging Caribbean regulators to take note of the ruling. TATT is considering various net neutrality models, including that of the European Commission, the executive arm of the EU. After holding a public consultation process and taking into account all possible structures, TATT may choose a hybrid approach that does not disenfranchise either side.
“TATT is developing a position on net neutrality,” Kirk Sookram, executive officer of technology and engineering at TATT, told OBG. “The Ministry of Public Administration, which also has a vested interest in this matter, is keen on reviewing TATT’s eventual position and examining how it would impact future government policy development.” The defined position on net neutrality is expected to be made public by late 2018.
White Space & Spectrum Management
TATT has produced an Authorisation Framework for the Accommodation of White Space Radiocommunications Devices to satisfy prior expressions of interest from persons seeking to use white space devices (WSDs) for point-to-point or point-to-multipoint applications. This outlines the regulatory framework for licensing such devices and sets the rules for operating them, while also specifying the frequency bands and the process of becoming a database administrator for WSDs. The potential applications of the devices in T&T include rural broadband use and distribution technology immediately preceding last-mile transmission.
Sookram told OBG that TATT’s spectrum management activities were working towards greater sector development, highlighting that the authority approved a plan for public mobile telecommunications in November 2017. This finalised initiative announced a switch from the US 700-MHz to the APT 700-MHz band plan, as well as the introduction of the Advanced Wireless Services Band. The APT 700-MHz band plan can accommodate up to three different operators, and there is an additional spectrum allocation for the Public Protection and Disaster Recovery (PPDR), which is reserved for use by the Ministry of National Security. As an example of how the PPDR band can potentially be utilised, AT&T in the US has recently been selected to build out a wireless broadband network for exclusive use by first responders, which was implemented using 4G LTE technology.
Disaster Relief
Given the devastating effects of hurricanes Irma and Maria in the region in 2017, the importance of telecommunications in times of disaster preparedness and management cannot be understated. In June 2017 the Economic Commission for Latin America and the Caribbean examined possible ways in which national disaster offices can be assisted by local and regional telecommunications providers and regulators. This work has since been endorsed by the Office of Disaster Preparedness and Management, which referenced its recommendations within TATT’s 27th ICT Forum in November 2017, entitled “Resilient Communications: Staying Connected during a Disaster”. TATT, the Office of Disaster Preparedness and Management and the Tobago Emergency Management Agency are all involved in preparing a National Emergency Communications Plan, which focuses on infrastructure, functionality and communications in disaster preparedness and management. In the aftermath of hurricane Maria, the Post-Disaster Needs Assessment from Dominica concluded that the storm resulted in total damages of $931m and losses of $382m, or 226% of GDP in 2016. Both TSTT and Digicel offer products and services to the local market in the data centre and cloud services segment, which were affected during the storm. Jean-Paul Dookie, executive vice-president of government services at Fujitsu Caribbean, which also offers data centre and cloud services, told OBG that there are opportunities for Caribbean islands to utilise services from each other to establish off-site backups of data and hosted services for disaster risk management and business continuity purposes.
Outlook
The issue of a third mobile provider is awaiting approval by the government, with TATT having made its recommendation in 2015. Given the recent changes to the 700-MHz band plan, three operators can be accommodated comfortably within this frequency, which also has the best propagation characteristics for 4G LTE. Additionally, the divestment of shares representing 49% ownership of TSTT by Cable and Wireless – now Liberty Global – remains unresolved.
As TSTT continues to expand its 4G LTE network launched under the bmobile brand in 2016, Digicel began the rollout of its 4G LTE network in early 2018, promising eventual island-wide coverage. However, local operations for the company are facing a potential consolidation phase over 2018 and 2019, as the group’s transformation programme mandates a global 25% reduction in its workforce. This trend of consolidation is anticipated to persist in other large companies, as operators introduce measures to advance their long-term strategies in pursuit of digital transformation.
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