GTT makes case for landline rate hike

Nov 12, 2016 News

After appealing a recent rejection of its application for a rate hike for certain services, the Guyana

GTT’s CEO, Justin Nedd

Telephone and Telegraph Company (GTT) is pleading with the regulatory body, the Public Utilities Commission (PUC), to expedite the process, since the situation is only getting worse.
This was the assertion of the Company’s Chief Executive Officer (CEO), Justin Nedd, at a hearing that was held at PUC Headquarters in Queenstown, Georgetown.
The CEO, who was accompanied by other company representatives, related that GTT’s rates for local landline services have not changed in over 15 years. He added that even 15 years ago, the rates were below cost.
Nedd stated that the Commission is ‘well aware’, that since 1991, local landline services have been subsidised by high margin long distance revenue.
“In order to illustrate the trends of our business, GTT commissioned two studies, and it showed that the cost module that we provided, shows that GTT’s domestic services are below cost…The model clearly shows that current tariffs do not allow for GTT to earn any returns – let alone an adequate return to maintain the landline services,” Nedd said.
He cautioned that the situation will only worsen, with other revenue sources being substantially diminished by competition; legal or otherwise.
Nedd continued that since 2001, inflation alone has almost doubled the company’s domestic cost, increasing the cost of goods by 90 percent.
During that period also, the Guyana dollar depreciated by nine percent and currency devaluation has resulted in an increased in cost for goods and services purchased outside of Guyana, particularly network and capital costs, he added.
“GTT’s history of below cost services has been supported by margins associated with GTT’s exclusive lines of business, particularly international inbound bypass. However, our international long distance revenue has declined substantially due to illegal bypass and technological substitutes such as Skype and Whatsapp voice. These activities have, and continue to substantially reduce building international usage.”
Nedd expounded that international long distance can no longer be relied upon as a major profit centre for GTT, and as such, international long distance service is no longer supporting the below-cost domestic wire dial tone service.
The CEO said that the rental rates for dial tone service requested in the company’s filing will begin the process of moving the rates to a level where sufficient revenue is accrued to make the local network self-sustainable since “it is not self-sustainable in its current dispensation.”
“Average minutes of landline use have dropped by 55 percent. Fewer customers on the landline network means that the cost associated with maintaining the network are spread across a diminishing base because we have a high fixed cost to maintaining the network.’ Nedd said.
The matter was adjourned to a later date to facilitate the submission of additional documentation to aid the process.

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