Jamaican Tribunal Confirms Mobile Operators' Dominance in Termination Services

Earlier this week, the Telecommunications Appeals Tribunal (TAT) of Jamaica dismissed an appeal by Digicel of a 2004 ruling by the Office of Utilities Regulation (OUR) that Digicel, Claro and LIME are dominant with respect to mobile voice termination services. As a result, the three mobile operators will continue to be subject to the more stringent regulatory framework applicable to "dominant public voice carriers".

The end result of this appeal is hardly surprising. The vast majority of regulators in Calling Party Pays (or CPP) jurisdictions in the Caribbean and around the world have reached similar conclusions. It is difficult to argue with the premise that all mobile operators are dominant in the provision of termination services. As the ITU noted in its ICT Regulation Toolkit:

The premise is that mobile operators are able to sustain high fixed-to-mobile prices because they have market power in setting prices for fixed-to-mobile calls. This market power derives from that fact that the fixed subscriber who places a call to a mobile subscriber has no influence over which mobile network is used. Mobile subscribers make this decision when they decide to join a network. Under Calling Party Pays mobile subscribers do not pay for fixed-to-mobile calls, so they may not take the price of these calls into account in selecting a network.

What is surprising, therefore, is not the ultimate conclusion reached by the TAT, but the manner in which the this conclusion was reached. In its 38-page decision, the OUR provided a detailed economic analysis to justify its conclusion. This analysis included a product and geographic market definition, as well as a detailed description of the factors affecting the mobile operators market power (including market shares, barriers to entry, prices, etc). As part of its appeal, Digicel questioned several aspects of this economic analysis, including the market definition. The TAT's decision, however, did not address any of these grounds of appeal. Rather, the TAT appears to have focused exclusively on whether the OUR's ultimate determination of dominance was consistent with other jurisdictions. Digicel submitted that the TAT should not rely on the the positions in other jurisdictions, given the differences with the Jamaican market, but the TAT disagreed.