By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A niche provider says wholesale direct Internet access (DIA) rates charged by The Bahamas' two telecommunications giants are "in excess of 150 times" greater than comparable US prices and squeezing out competition.

Theofanis Cochinamogulos, chief executive of Wicom Bahamas, in a May 27, 2020, letter to sector regulators argued that there was "little rationale for these elevated costs" from Cable Bahamas and the Bahamas Telecommunications Company (BTC).

Arguing that these prices had not reduced for ten to 15 years, Mr Cochinamogulos called on the Utilities Regulation and Competition Authority (URCA) to set a fixed rate "at no more than ten times' the cost" so that niche Internet Service Providers (ISPs) such as himself can compete in the resell market with their larger rivals.

"As a small start-up ISP, monthly recurring costs dictate the success and failure of the business month-to-month," he wrote. "Because of that fact, early on we sought out DIA pricing locally, regionally and internationally. That research led us to confirm that the cost of purchasing DIA between New York and Japan, some 5,600 miles away, is less costly by 10 times in comparison to purchasing DIA for resale in the Bahamas.

"Furthermore, the cost of purchasing DIA from the Network Access Point of the Americas (NAPS) in Miami varies between $0.22 per Mbps (megabits per second) for a 10,000 Mbps (10G igabit) and $0.30 per Mbps for a 1000 Mbps (1Gigabit) link.

"Currently, Cable Bahamas and BTC's DIA internet rates stand at a whopping $52 per Mbps and $48.50 per Mbps, which is in excess of 150 times the cost provided to us from providers at the NAPS and other Data Centre Interconnect Facilities in Florida. With these facts in mind, there is little rationale for these elevated costs even when subsea fiber operations, and maintenance are considered."

Mr Cochinamogulos added: "Given this, we would like for URCA to consider a fixed per megabit rate benched marked at no more than 10 times' the cost for small ISP resellers. This would yield a per megabit rate of approximately $3 per megabit up to a 1Gigabit link, and $2.20 per megabit on any link in excess of 1Gigabit.

"These parameters would provide a reasonable margin for sustained operation as our current DIA pricing is consistently proving to suffocate our financial flexibility on a monthly basis." Describing Wicom's challenge as "an extremely daunting and formidable one", he said: "Our analytics reflects a 99 percent decline in Dedicated Internet Access (DIA) rates in the USA between 1998 and 2015.

"This made clear the nearly indistinguishable pricing of Cable Bahamas and the Bahamas Telecommunications Company (who share significantly different legacy costs) that there has been no reasonable consideration for smaller ISPs or other licensed operators.

"With that in mind, it would be a great benefit to our business if the SMPs (Cable Bahamas and BTC) provided some structured bandwidth packages that speak to the wholesale needs of other licensed operators within the retail sector. Historically, we have been grouped with commercial retail consumers at an enterprise sales level with no preferred pricing or consideration," Mr Cochinamogulos said.

"We at WiCom Bahamas feel that we deserve a reasonable chance to provide the Bahamian public with reliable internet service. Unfortunately to achieve that we would first need to secure a cost effective wholesale bandwidth agreement that would ensure that we can establish and sustain our market share for many years to come, while supporting the Significant Market Power we interconnect to."

Mr Cochinamogulos' letter illustrates how hard it can be for small, niche players to break into a market dominated by BTC and Cable Bahamas with their already-established network infrastructure.

BTC, though, has argued that such feedback as that submitted by Wicom is untested, and that URCA's proposed regulatory remedies represent an "unfair, inappropriate and discriminatory" consultation process that did not permit itself and Cable Bahamas to respond to allegations of excessive pricing, margin squeezes and supply refusal made against them by small, niche internet service providers (ISPs).

Slamming the "one-sided" process, BTC argued that URCA's consultation process violates sections four and five of the Communications Act which mandates that the regulator can only implement new regulations in a way that is "fair, transparent and non-discriminatory". As a result, it is claiming that the regulator has acted illegally and breached the law underpinning all industry activity.

BTC hit out after URCA unveiled its plans to impose additional regulations upon both itself and Cable Bahamas in the wholesale broadband internet market, which is where smaller Bahamas-based ISPs buy capacity or bandwidth on the two dominant players' networks so that they can deliver services to their clients.

Based upon the complaints from niche players such as Bahamas WiMax, Wicom Bahamas and Coakster, URCA aims to force both BTC and Cable Bahamas to make a specific wholesale dedicated internet access (DIA) product available to these niche players at prices and commercial terms that are pre-approved by the regulator.