For many years, Cayman has enjoyed first-class telecommunications with the outside world. On an island surrounded as it is by water, especially one so heavily involved in global commerce, telecommunications are critical.

Thus, the decision by the Cayman Islands Government to liberalise its communications infrastructure – in line with many other jursidictions – is an important step towards maintaining the islands' ability to keep ahead on the information superhighway.

In a letter to Cable and Wireless (C&W) dated 23 October, the Minister of Health & Information Technology, Linford Pierson, “gave formal notification of Government's wish to enter into immediate negotiations with C&W to terminate the company's existing exclusive agreement, and to substitute an appropriate non-exclusive license”, in accordance with the timetable announced earlier this year.

The debate over C&W's monopoly on long-distance service has been extensive. Government's timetable is the result of careful consideration and relies on the notion that competition has a healthy effect on the telecommunications industry.

Market entry
Bermuda, for one, would not disagree. It allowed a second long-distance supplier to enter its market, depriving C&W of a 100-year monopoly on service, some five years ago. Protected by Government in its early years, TeleBermuda, the new company, now has close to half the market. Long- distance rates have dropped by an average of 60%. Threats by C&W to sue the Bermuda Government, which abrogated an agreement with the company in order to set the ball of competition rolling, evaporated. Today, C&W Bermuda is a locally-owned company, one of several licensed to provide long-distance services.

The Cayman Government has set up a timetable that calls for the establishment, by February 2002, of a telecommunications authority. By June, the authority is to become operational, having recruited the necessary technical staff. July is the target date for completion of negotiations with C&W, and August will mark what Mr Pierson referred to as the start of the “phased liberalisation of telecommunications” in the Cayman Islands.

At a press conference earlier this year, Mr Pierson said that the proposals had earned the “overwhelming support” of his colleagues in government. He announced that he and his colleagues believe that the strategy will be “in the best interests of these islands”, adding that “surely, many people here in the Cayman Islands will agree (with) or, at least, will whole-heartedly welcome, the opportunity to choose their telecommunications provider.”

He did say that the timetable for telecommunications liberalisation does not as yet include a definitive date on which the process will be finalised. He also said that legal action is “expected”.

In discussions at the press conference, the Minister revealed that C&W had raised questions over the legitimacy of liberalisation. He said that the process had begun after the election of November 2000, at which time he “opened a dialogue with C&W, with a view to reducing their prices for international telephone and data services”. Mr Pierson then tasked the legislation sub-committee of the e-Business Advisory Board to draft “a new Bill to replace the existing broadcasting, radio and telephone laws”.

The Minister said that substantial efforts had been made to work with C&W. He also said that the company was not satisfied with price reform proposals submitted to the Executive Council in May. The Minister said that he believed the company did not make any “material” rate reductions that would benefit users. The proposals, he said, were not acceptable and C&W was asked to re-examine its options.

Mr Pierson reminded those present that proposed legislation had been laid on the table of the Legislative Assembly, and encouraged public input. He expected the necessary Act to be ready for consideration by the House during the November 2001 sitting.

When asked about other telecommunications companies which might be considering offering service in Cayman, Mr Pierson did not disclose names, referring to them only as “big players”. He said that Government was executing marketing strategies to reach out to foreign companies and that “many” of the currently interested parties came forward without encouragement, suggesting that several companies are looking at the provision of service in Cayman.

Excellent track record
The Minister stressed that C&W has established an excellent track record of hiring and training Caymanians, from entry-level positions to the highest echelons, and reminded his audience that 90% of C&W staff in the island are Caymanian. The hiring practices of new companies, he said, would be considered. He pointed out that employment opportunities might be available in new service providers for skilled employees that C&W has recently made redundant.

Finally, Mr Pierson revealed that Government has ordered an audit of Cable & Wireless (Cayman Islands) Ltd's. operations over the past ten years.

The liberalisation of telecommunications in Cayman appears to be inevitable. As the Minister rightly stated, the times have changed. With information and its transmission at the heart of the new economy, the Government has a responsibility to allow the benefits of competition to spread to individual and business users.

What is being suggested is a change in, rather than the end of, the service provided by C&W. As has been demonstrated in other jurisdictions, the company is capable of operating as a leading service provider, rather than as the only one.