Telephone competition doesn't make sense for Guyana right now
- discussions in train with government
By Gitanjali Singh
January 12, 2000
The local telecoms company is willing to pursue a plan "of opening up to competition", says chairman Cornelius Prior, but does not feel that this makes sense until its phone penetration rate exceeds 25 per cent.
The company's penetration rate is now only eight per cent, moving from two per cent when Atlantic Tele Network (ATN) bought into the local operations.
"We are prepared to (open up to competition and) we already had several discussions with the government on how this will play out over say a 10-year period," Prior told reporters on Monday at a press conference.
He indicated that GT&T intends to pursue the discussions it has been having with the government but for now is urging the government to abide by the agreement.
"I urged the government to agree with Dr (Roger) Luncheon (Head of the Presidential Secretariat) that this contract was made in good faith and that Guyana has obtained the beneficial results that it expected from that contract and that it should continue to observe that contract," Prior said.
He also argued that on the social level, there are very strong arguments for the contract (described as an iron-clad monopoly by Dr Luncheon to Stabroek News but disputed by communications expert Joseph Tyndall) to be maintained.
Arguing that the investment has to pay for itself, Prior also noted that in those countries in which competition was introduced, the beneficiaries were the large businesses as they are the ones the competitors target and not the persons at the grass roots level.
"The result of opening up to competition is that no one is going to want to provide lines to people in West Ruimveldt and what happens (is) you have a trade off with competition. You trade the ability to provide low cost service at US$1.50 per month (local rates), for having lower rates for the business community and large international users," said Prior.
He insists that there will be very few new phones added in the competition game and the "poor residential customers" who are stranded will find their rates climbing.
As such, GT&T is arguing for a measured approach to opening up to competition in Guyana.
Put to him that GT&T does not have an iron-clad monopoly and the government can grant a licence for another telephone service provider, as argued by Tyndall, Prior said ATN intends to continue its discussion with the government on opening up.
He maintains that in the huge trade off if you allow competition, however limited, you will have to figure out where the increased rate is going to come from if competition syphons off the highest paying customers.
"As long as everybody understands what is involved, we are willing to pursue a plan of opening up to competition," Prior said, alluding to the US only opening up to competition on January 1, 1984 when AT&T had a 50 per cent penetration rate and Canada opening up only in October 1997.
"So competition is an interesting, very good idea, and we are not against it in principle. But we don't think it makes sense for Guyana at this time," Prior said.
He suggests that when GT&T's penetration rates get to about 25 per cent, the media reconvenes with him to talk on the issue.
However, Prior noted competition in the informatics sector and in the provision of cellular services. Prior's contention, however, is that GT&T in 1991 signed a contract with the government to grant it a monopoly in exchange for which the company would invest a substantial sum in Guyana. He said the company has gone beyond the sum initially envisaged, having to date ploughed US$115 million into plant.
While he agrees that it will be nicer for more persons to get phone services, he also queries which competitor will want to spend US$2,000 to install a new line to get US$1.50 in return as its local rate per month.
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