By NEIL HARTNELL

Tribune Business Editor

THE Utilities Regulation and Competition Authority's (URCA) chairman has described Internet penetration in the Bahamas as "a major challenge", noting that broadband subscriber numbers per 100 persons fell by 22.1 per cent between 2009 and 2010.

Noting that the decline in broadband Internet penetration indicated that Bahamians were not fully exploiting information and communications technology (ICT) opportunities, a sector seen by many countries as a vital to economic growth, Wayne Aranha said progress on online access would aid the development of industries such as e-commerce, tele-medicine and e-banking.

The former PricewaterhouseCoopers (PwC) partner and accountant, writing in URCA's 2012 report, said: "A major challenge for the Bahamas is to get more people online, particularly given that penetration decreased between 2009 and 2010.

"This would enable society to take advantage of many applications of ICT, such as telemedicine, e-commerce, e-banking and e-government. URCA has a keen interest in ensuring that Bahamian consumers have access to new technologies at affordable prices. Consumers should take advantage of the many opportunities that these new information and communications technologies create."

He pledged that in 2012 URCA would embark on initiatives designed to increase the use of ICT in the Bahamas, such as the opening of wireless spectrum bands and implementing the Universal Service Obligations (USOs) imposed on the Bahamas Telecommunications Company (BTC) and Cable Bahamas.

Due to their respective Significant Market Power (SMP) designations, BTC has the USO responsibility on telephony, while Cable Bahamas has the same for cable TV and Internet.

While both Cable Bahamas and BTC provided Internet services, URCA's data showed that total broadband penetration in the Bahamas dropped from 18.48 subscribers per 100 persons in 2009 to 14.4 subscribers in 2010.

"Although below the 2009 estimated average of 18.48, half (7.2) of the 2010 subscribers received services via cable access, and the remaining half were high speed (DSL - digital subscriber line) subscribers, compared to 12.6 cable access subscribers and 5.88 DSL customers in 2009, signalling an increasing trend toward the high speed segment of the market," URCA added.

Elsewhere, URCA disclosed that Cable Bahamas had "exceeded" its cable TV network digitisation targets for 2011 on three of the four islands covered by its system.

On New Providence, the BISX-listed communications provider had digitised 56 per cent of its network by end-2011, ahead of the 45 per cent target. It had made similar progress on Grand Bahama, where 57 per cent of its network was digitised as opposed to a 30 per cent year-end target, and on Abaco, where it was 55 per cent finished - ahead of the 50 per cent goal.

Only on Eleuthera was Cable Bahamas behind target, being 16.67 per cent complete - well behind the 50 per cent target. URCA revealed that it had approved a November 2011 Cable Bahamas request to extend the digitisation timetable for Eleuthera into 2012, on the grounds that work had been delayed by Hurricane Irene.

The regulator mandated that Cable Bahamas digitise its network because it wanted the BISX-listed company to untie, or unbundle, its cable TV and Internet offerings. Under the old analogue product, Cable Bahamas' Internet subscribers also had to purchase its cable TV product - they could not just purchase the former - and URCA feared this was anti-competitive.

The URCA annual report also disclosed that, by year-end, Bartlett-McWeeney Communications, operators of the Gems radio station, had only paid $1,500 of a $5,000 fine levied on it as a result of non-compliance with a regulatory investigation into possible violations of the Broadcasting Interim Practice Code. The station operator also had yet to hand over to the regulator taped copies of two of the three programmes subject to the investigation.

When it came to the Bahamas' other communications markets, URCA said that while 2010's 22.16 subscribers per 100 persons ratio for Pay-TV was slightly down from the 22.9 subscribers level achieved the previous year, it was in line with the 2006-2010 average.

On cellular, where BTC has the monopoly, penetration rates hit 124.84 subscribers per 100 persons in 2010, up from 105 persons in 2009 and well above the 76.77 subscriber average hit in 2006.

Subscriber numbers also rebounded slightly on fixed-line services, hitting 37.71 per 100 persons in 2010 compared to 37.34 the year before. Both figures, though, were down on the previous three years, with subscriber numbers per 100 persons all above 39 between 2006-2008.

And total communications industry revenues for 2010 were below the levels achieved between 2007-2009, despite standing at $430 million or 5.6 per cent of Bahamian gross domestic product (GDP).

On the financial front, URCA said it earned $1.048 million in total comprehensive income for the 12 months to end-December 2011, well ahead of the budgeted $9,238 loss - a positive difference of $1.058 million.

"Due mainly to the recognition of deferred (non-cash) revenues payable under the Communications Act, fees earned by URCA during the year surpassed budgeted amounts by 7.1 per cent," URCA said in its annual report.

"During fiscal year 2011, URCA billed $5.32 million in URCA fees and $79,659 in other fees, while earning $67,489 in interest income. Total income exceeded budgeted revenues for the year by 8.3 per cent. By comparison, actual expenses for the year were less than the budgeted allocation by 11.66 per cent."

The reduction in annual expenses was aided by the August 2011 departure of former chief executive Usman Saadat, while anticipated new hirings did not take place.

URCA added, though, that it incurred a $158,579 provision for doubtful accounts due to the need to "substantially write-off" fees owed to its predecessor, the Public Utilities Commission (PUC), during the year.