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Opposition favours two-tier approach to telecoms spectrum allocation
…questions presence of Greenidge on Govt’s negotiating team with GTT
Opposition Leader, Bharrat Jagdeo, yesterday said he supports a two-tier approach to the allocation of the lucrative telecoms spectrum to avoid disenfranchisement of locals.
Jagdeo said that Guyana runs the risk of a large foreign company buying up the entire spectrum.
“If big companies want preferential spectrum, there can be a different pricing structure for maybe foreign companies versus local companies or based on size.
“So you don’t exclude the small man who has one television station that has limited coverage because he uses spectrum too,” Jagdeo said in response to a query.
He warned that auctioning the spectrum can also push up cost.
“If somebody bids a high price for the spectrum that person will recover it in terms of services. That is why historically we did not go to a bidding process. And then you exclude most of the locals almost immediately,” the Opposition Leader noted.
Jadgeo, who once held the portfolio for telecommunications, has been roundly criticised for his willy-nilly distribution of radio and television licences to family and close friends while in government.
Now he is suggesting another approach.
“It could be a combination of higher fees for bigger users and smaller fees for smaller users, mainly the telecommunication companies that use a lot.
“I am not too big on auctioning the spectrum right away.”
The Government is preparing for high-level talks with US-owned Guyana Telephone and Telegraph Company (GTT) early next month on liberalization of the sector.
The talks will take place at a time when the rest of the world has moved towards auctioning of lucrative telecoms spectrums to get value for money.
GTT, which has a monopoly on landlines, is said to be using spectrum allocation as a bargaining chip in the ongoing liberalization talks.
Government is said to be awaiting a proposal from GTT, which has requested that spectrum allocation be included as part of a liberalization deal.
Several countries have been going the route of auctioning the spectrums for telecoms companies. The reason for this is that there are limited frequencies available in each country.
Governments are therefore under pressure as to which companies to give out those spectrums to, making it an expensive bargaining chip on the negotiation table.
Jagdeo stated that he finds it strange that Minister of Foreign Affairs, Carl Greenidge, is leading the talks on behalf of Government since he was Finance Minister at the time when the telecommunication company was privatised without public tender.
According to Jagdeo, 80% of the company was sold for less than $20M while the company had in receivable and bank account balance of about US$5M.
“In the first couple years of operation, the company made back all the money it paid. That company in the negotiations got an advisory of six percent fee on gross revenue.
If the parent company aboard made one call a year to Guyana to the local company that entitled them to six percent of gross revenue of the company as advisory fee,” Jagdeo stated.
He also noted that in the initial deal, the company secured a 15% guarantee rate of return on assets and an essentially secured a 40-year monopoly.
“That was done when Greenidge was the Minister of Finance and so now he is being called upon to liberalize or to negotiate the liberalization of the sector when he gave that long monopoly for which we are still paying; that is what I find very unusual,” Jagdeo noted.
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