Walking the Regulatory Tightrope: Interconnection - The Barbados Experience

1. Organisation of Caribbean Utility Regulators 8th Annual Conference Walking the Regulatory Tightrope: Interconnection - The Barbados Experience Dava Leslie, Senior Legal Officer (Ag.), Fair Trading Commission, Barbados

2. Outline • Reference Interconnection Offer (RIO)– Background • Overview of the Legislative Framework Governing Interconnection • Implementing a Consolidated RIO – The Process • Digicel’s Motion for Review • Issues • Guiding Principles for the Regulator • Conclusion

3. Referenced Interconnection Offer (RIO)- Background • Cable &Wireless ‘C&W’ as the dominant provider must file RIO with the FTC. • Previously, there were three separate RIOs: • Mobile • Domestic Fixed Wireless • International

4. Referenced Interconnection Offer (RIO)- Background • The liberalisation schedule completed in 2005 and there are three (3) active new competitors: • TeleBarbados Inc.; • Blue Communications Ltd. and • Digicel Barbados Ltd. “Digicel”. • Between 2007 and 2010, there was approximately 23.6% and 46.6%, increase in cell phones and ADSL uptake respectively. • Introduction of new telecommunications policies.

5. Overview of the Legislative Framework Governing Interconnection Section 25 of the Telecommunications Act ‘TA’ sets out the guiding principles of interconnection which include that such services should be made on terms that are: • transparent and non-discriminatory; • made available in a timely fashion; and • offered at charges that are cost-oriented.

6. Overview of the Legislative Framework Governing Interconnection • Pursuant to Section 27(3) of the TA, in deciding whether or not to approve the RIO, the Commission is required to: (a) consult with the carrier providing the RIO and any other carriers likely to seek interconnection to that carrier’s network; and (b) have regard to: • the interconnection principles set out in section 25; • the interconnection policy specified by the Minister; • the need to promote competition; • the long-term interests of end-users; and • the submissions, whether oral or written, of the carriers providing and seeking interconnection.

7. Overview of the Legislative Framework Governing Interconnection Where the FTC approves the RIO or part thereof: • It must declare the approval of the RIO and specify the date on which such approval takes effect according to section 27(4). • In order to approve RIO, the FTC must ensure that the RIO is not in its entirety or partially inconsistent with the principles in section 25 TA. • Inconsistencies, must be outlined to CW and reasons for this decision given.

8. Overview of the Legislative Framework Governing Interconnection Where the FTC refuses the RIO or part thereof: • Section 27 (5) requires the FTC, to consult only with C&W to resolve inconsistencies. • Thereafter, C&W is permitted to amend the RIO to remedy the inconsistency. • Provided that the Commission is satisfied and that the interconnection principles referred to in section 25 are met, then the FTC is required to approve the amended RIO.

9. Implementing The Consolidated RIO – The Process • The FTC requested that C&W file Consolidated RIO. • Public Consultation on Consolidated RIO. • Public consultation responses indicated that interconnection charges were too high. • C&W proposed 5% reduction in rates. • FTC held another public consultation on this C&W’s proposal to give public an opportunity to comment. • FTC examined this proposal, responses of public, factors set out at Section 27 (3) of the TA, before deciding whether to approve/ refuse the Consolidated RIO.

10. Implementing The Consolidated RIO – The Process • FTC consulted with C&W on the part of the RIO that was refused. • Inconsistency with TA: interconnection rates were too high. • FTC determined that a one-time 15% reduction in interconnection rates should be implemented and C&W submitted a revised tariff schedule. • FTC issued one Decision on the amended Consolidated RIO on February 22, 2010.

11. Digicel’s Motion for Review • Digicel filed a Notice of Motion for Review on March 16, 2010 on two main grounds. • Ground 1- It was alleged that the FTC followed an incorrect process in coming to its Decision. • Ground 2 – It was alleged that they were not given sufficient opportunity to comment on the 5% issue.

12. Issue #1 – Was the Mode of Procedure Transparent ? • Drafters did not bind regulators by providing explicitly stated procedures for varying reasons including: • Dynamic industry may require changing procedures • Regulators best suited to prescribe procedures as dictated by circumstance • Where the legislation does not explicitly state procedures to be followed, there is no ‘single’ correct procedure • Different procedures may be used provided that all must be founded on the principles of full disclosure, transparency and fairness

13. Issue #1 – Was the Mode of Procedure Transparent? Different procedures used • Domestic fixed & mobile RIOs • International & Consolidated RIOs • FTC believed that transparency obtained regardless of the procedures adopted by: • Giving reasons for decision • Informing public of consultation with C&W despite no legislative obligation to do so • Ensuring that the process was visibly transparent

14. Issue #2 – Not Acting Ultra Vires • Regulators must not act ultra vires • Digicel alleged, that the FTC acted ultra viresand suggested that the FTC should have followed a different process as below: • FTC requests and receive the RIO from C&W; • FTC request and receive comments to C&W’s draft from the industry; • Hold a meeting with the industry to discuss RIO;

15. Issue #2 – Not Acting Ultra Vires • FTC should provide its own comments to the industry and C&W on the RIO; • FTC should request and receive new revised RIO from C&W based on the industry’s and FTC’s comments; • FTC should receive industry’s comments on new revised C&W’s draft RIO; and • FTC should based on Industry comments and own view direct C&W on wording of new RIO which would be approved by the FTC.

16. Issue #2 – Not Acting Ultra Vires • (a) to (c) are consistent with the FTC procedures. • (d) to (g) varied from FTC procedures: • FTC is given another function as a participant- TA does not appear to provide for the exercise of this function • multiple rounds of consultations may signify a severely lengthened and/or circular process. • It is doubtful that the legislation would have intended such an incongruous result.

17. Issue #3– Was the FTC’s RIO Process Fair? • FTC gave the participants in the RIO, another opportunity to make comments on the 5% decrease although the legislation requires only one opportunity. • FTC took several factors into account. • Level of injustice suffered by the licensed carriers if denied the opportunity to comment. • The implications of RIO on the sustainability of a competitive market. • Not every question arising requires that parties are given multiple opportunities to comment.

18. Guiding Principles for the Regulator • General principles to be considered when assessing fairness: • Would a party suffer injustice if denied the opportunity to present their case? • Is it required by the principles of good administration? • Does it restrict the efficiency in making a decision? • Does the peculiarity of the circumstances warrant this? • The weight given to each of these principles depends on the circumstances of each case.

19. Conclusion • Regulators have to delicately navigate their own path when seeking to give effect to substantive elements of legislation in the absence of legislated procedures. • One minor error may be all that is necessary to offset the course of establishing legally sound processes. • Regulators can safeguard themselves and successfully walk this tightrope by giving effect to the concepts of transparency and fairness.

20. Thank You!