CONSUMER CONCERNS….NO REASON TO INCREASE LANDLINE PHONE RATES

Mar 05, 2017 News

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by PAT DIAL

The Guyana Telephone and Telegraph Co. (GTT) which has a monopoly of the landline telephones is now lobbying with the Public Utilities Commission (PUC) and the responsible Ministry to have landline telephone rates steeply raised to between 40% to 50% in most cases and in some, the increase is even steeper as in the case of Directory enquiries which are now without charge but for which they intend to charge $120 for each enquiry!
When GTT came here, it came as a landline company and began harvesting enormous profits from the Guyanese consumers and their relatives and friends who lived abroad, especially in Canada, USA and the UK. The international rates were set higher than what obtained in the rest of the world so that the company could subsidize the landline rates. (See page 6 of GTT’s Tariff1/14). No accounting was available of how much of this international overcharge was spent on the landline.
The international rates have not fallen but the number of minutes of usage has fallen because GTT did not rouse itself to compete with the newer technologies such as Skype. Owing to this reduction in the number of minutes, GTT is claiming that it is not making the super profits as before and as such, is not able to cross-subsidize the landline and to honour their Contract.
GTT was slyly trying to have the PUC increase their landline rates and so unwittingly alter their Contract. It may be mentioned that it is this same Contract that GTT is claiming the Government of Guyana has breached by passing the Liberalization Act and hope to claim substantial damages therefor.
GCA has consistently pointed out that GTT had breached their Contract in a number of substantive instances, one of the main ones being the failure to establish universal landline throughout the Coast and operate full landline services in five named Interior Locations, some of which are in the mining areas.
It has also committed a number of other breaches such as their failure to print Telephone Directories on time and for two years not at all. It has voided their Contract a long time ago and cannot penalize the Government of Guyana on a void Contract.
The Guyana Consumers Association (GCA) feels that GTT should not be allowed to wriggle out of their Contractual obligations to maintain the landline at affordable rates and has stated the following points in several memoranda to the PUC of which GTT have full knowledge:-
(1) Telephone companies all over the world are facing the identical competition from the new OTT technologies such as Skype. What such telephone companies have done is to modernize their technology and meet the challenge in an adequate way. They have not attempted to surcharge the consumers for not being able to adopt the advanced technologies in good time. GTT, on the other hand, comfortable in its monopoly ivory tower, never felt the urgency of introducing cutting-edge technologies since they assumed the Guyanese consumer could always be surcharged for their failure to keep up with modern technology. This attempt to increase landline rates is to surcharge the consumer for their failing.
(2) When GTT claims they are not making enough profits, they are referring to the smaller regulated part of their business since the company as a whole remains very profitable. The greater part of their business is now cellular phones and DSL which are very profitable. Indeed, they have been astonishingly lucky to have had these services subsidized by Government who has allowed them spectrum, a valuable national asset worth millions of dollars. The ostensible reason for this allowance of spectrum was for them to establish 4G which is not so far functional in the countryside and many parts of Georgetown. The cellular and DSL are very profitable and could subsidize the landline and ensure that another breach in the Contract is not committed.
(3) GCA in its memoranda to the PUC shared with GTT, has consistently pointed out that the landline is owed substantial sums which have been withheld by the Company and which, when paid, could have subsidized the landline into the indefinite future. Three of these are: (i) The fibre optic and copper wires belonging to the landline are used to transmit cellular and DSL traffic but these pay no rental to the landline. We estimate this rental to be US$2. million per annum to be paid to the landline. (ii) The Undersea Cable costing over US$30.millions was transferred to a foreign company without the PUC’s knowledge and permission. A good proportion of this Undersea Cable money is due to the landline. (iii) GTT started as a landline operator and later the cellular business was grafted on to it. In establishing the cellular business, GTT used US$60 million generated by the landline. No bank loans were taken; landline money was paid for it. At 15% per annum, the annual interest on US$60 million would be US$9.million and for 10 years, it would be US$90.million which should be credited to the landline.
It is clear that GTT could maintain its Contract and not try to increase landline rates since if monies owed to the landline were paid and a subsidy is accorded from the cellular and DSL, the landline would be self-sustaining and affordable to the less privileged. The landline is the poor man’s telephone and is used by the old, sick and those who do not have money to pay for cell calls which is ten times more expensive than landline calls. It is anti-social to attempt to increase landline rates in these circumstances.

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