Communications providers have been reassured by regulators that revoking their licence for non-payment of fees “is a penalty of last resort” given that “many have flouted the obligation” to pay what is due.

The Utilities Competition and Regulation Authority (URCA), unveiling the results of its public consultation on planned changes to the terms of communications industry licences, yesterday argued it had been left with no choice but to “address this untenable situation” given that these fees represent the most important source of income for financing its work. No culprits were identified.

However, the industry supervisor reassured that any licence suspension or revocation would only occur after “due process” and comply with “the principles of natural justice”, while also accounting for the impact on Bahamian consumers and industry competition following push back from Cable Bahamas and the Bahamas Telecommunications Company (BTC) as well as satellite service providers.

The two carriers are URCA’s largest communications fee licence payers, and Cable Bahamas, in particular “emphatically objected” to changes in the language of condition 5.4 (ii) in the standard operator licence giving the regulator the ability to revoke a company’s ability to operate where it “repeatedly contravenes or fails to cure” its failure to pay due fees in full and/or on time together with any penalty interest.

The BISX-listed communications provider, warning that The Bahamas would suffer grave economic and reputational damage if a major carrier such as itself was forced to totally shut down its network, argued that the change was “unwarranted” as URCA already possessed sufficient powers to address non-payment while the language seemingly allowed it to act “arbitrarily”.

BTC, too, asserted that licensees should receive a “warning” if they fail to meet their fee obligations and be allowed to work out a payment plan with URCA. It also argued that operators should be allowed to pay their licence fees in quarterly installments, rather than as a “lump sum annual payment”, as this would give them “more predictable cash flow control”.

And the Global Satellite Operators Association (GSOA), representing companies such as multi-billionaire Elon Musk’s Starlink, which is already providing services in The Bahamas, also voiced fears about the disruption to its members’ services from licence suspensions or revocations. It joined Cable Bahamas in calling for condition 5.4 (ii) to be revised.

The licence consultation was released as Nicole Watkins, BTC’s former in-house attorney, Board secretary and head of legal and regulatory, started in the post of URCA’s director of electronic communications to replace Rupert Pinder. Juan McCartney, URCA’s corporate and consumer relations manager, confirmed both Ms Watkins’ appointment and that she started in the post yesterday.

URCA, justifying its tougher approach to licence fee defaulters, stated in the consultation results: “It has been URCA’s experience, since the inception of the Communications Act licensing regime, that many licensees have flouted the obligation to pay licence fees resulting in the accrual of significant outstanding licence fees.

“URCA must take the appropriate regulatory action that will effectively address this untenable situation going forward. URCA has also implemented payment plans for licensees to settle payment of outstanding licence fees over a reasonable period.

“As such, licence revocation is a penalty of last resort and URCA’s decision to suspend or revoke a licence has particular regard to ensuring sustainable competition in the electronic communications sector and the likely adverse impact such decision may have on consumers.”

Turning specifically to Cable Bahamas’ concerns, it added: “URCA notes the Cable Bahamas group’s objection to the addition of condition 5.4 (ii) in the individual operator licence (IOL) without reference to a proviso, due process and natural justice.

“URCA considers it sufficient to state and assures the Cable Bahamas group that, while the proposed condition allows for the possibility of suspension or revocation of the licence in the event of non-payment, any such action will be taken strictly in accordance with due process.

“This means that URCA will adhere to the principles of natural justice, including providing licensees with a reasonable opportunity to address or make submissions on any issues of suspected non-compliance before deciding to suspend or revoke a licence,” URCA continued.

“URCA clarifies that the intent of this proposed condition is to ensure that there is a clear mechanism for addressing repeated defaults in payment of outstanding licence fees, which is critical to URCA being able to perform its statutory functions and mandate effectively and efficiently under the Communications Act.”

No figures were given for how much URCA is owed, or has been owed, in outstanding and past due licence fees but this can be gauged from its most recent 2023 annual report and financial statements. They show that, at end-December 2023, the regulator had some $1.637m in accounts receivables due from the communications sector - a modest decline on the prior year’s $1.647m.

Of that $1.637m, some $1.097m or 67 percent - two-thirds - had been provided for as “doubtful accounts”, with the latter dollar sum representing a 50 percent increase on the prior year’s $731,187. Cable Bahamas, though, warned that the revised language gave URCA too much discretion to suspend or revoke an operator’s licence given that there were too few checks and balances on such action being taken.

“The Cable Bahamas group stated that a suspension of an IOL of a major licensee effectively shuts down a significant portion of the entire communications network of the country, and is not limited to the licensee but to other providers both within the country and transiting in and out of the country,” URCA said of the company’s feedback. 

“It noted that, in an economy whose first two pillars are tourism and finance, such an arbitrary suspension could be an international embarrassment, and any shut down of an IOL licensee is a drastic and detrimental action to take with dire consequences for the commercial well-being of that licensee and the challenges of any subsequent restoration of services.”

Cable Bahamas said its research had shown licence revocations in other countries were limited to radio broadcasting and only used for “major unresolved breaches” including the non-payment of fees. 

“The Cable Bahamas group considers that should URCA proceed with this provision minus due process and ‘immediately’, notwithstanding the possibility of obtaining an injunction, such injunction would be after the fact and the damage will have been irretrievably done,” URCA added of the BISX-listed communications provider’s feedback. 

“The Cable Bahamas group questioned how does one suspend a licence and how does a licensee recover from the suspension of its licence which, by every scenario, is a catastrophic event? The Cable Bahamas group is of the view that the ultimate effect of the suspension of an IOL licensee will result in lost revenue, reputational harm, loss of subscribers’ confidence and resulting churn to another and extending to an impact on the socio-economic standards of the country itself.

“The Cable Bahamas group stated that a suspension is not a discretionary power to be wielded lightly or at all, and the inclusion of due process, regulatory procedure, provisos and caveats are essential. The Cable Bahamas group noted the statutory mandate for regulatory measures to be proportionate to their purpose and transparent, and the possibility of URCA being held liable for damages in such an event.”

Cable Bahamas argued that the ministers responsible for URCA and electronic communications should have the final say in approving the suspension of a licensee, meaning itself or BTC, and argued that there should be “lesser penalties on an escalating scale which do not disrupt services prior to initiating revocation or suspension”.

The Global Satellite Operators Association, meanwhile, “expressed that URCA’s proposed system of penalties for non-compliance around fee payments could have significant operational impacts on satellite operators.

“Suspension or revocation of licences could disrupt essential satellite services, including those serving critical sectors such as transportation, maritime and emergency communications,” it warned. “GSOA suggested that URCA implement reasonable grace periods before imposing penalties, as well as transparent dispute resolution mechanisms to address any disagreements over fee payments or compliance issues.

“It noted that, before imposing a sanction, a warning should be considered, and a period of time should be granted to regularise the non-compliance. Regarding circumstances where penalties must be imposed, GSOA stated that satellite operators should have sufficient time to mitigate the impact on their services to prevent disruption of critical communication links.”