OUR slashes MTR

31 May 2013

Jamaican telecoms watchdog the Office of Utilities Regulation (OUR) has approved measures to reduce the mobile termination rate (MTR) to JMD1.10 (USD0.011) from the current interim level of JMD5. The Jamaica Gleaner writes that Digicel and its smaller rival LIME have both announced plans to cut tariffs following the implementation of the new rate on 1 July 2013. LIME CEO Garfield Sinclair said: ‘Today is a historic day for Jamaican consumers who are poised to benefit from reduced calling rates. This move by the regulator will help to establish Jamaica as a mature mobile market and enable LIME to stay ahead as "champions of value”.’ Digicel Jamaica issued a similar statement, with its CEO Barry O’Brien commenting that the cellco had been ‘feverishly working to come up with plans,’ adding that ‘Digicel will be passing on significant parts of the value [to customers].’ Digicel also announced plans to launch a fixed line offering using GSM technology, in a bid to challenge LIME’s dominance in the fixed line telephony space.

As noted by TeleGeogrpahy’s GlobalComms Database, MTRs were a bone of contention between Digicel and LIME, following the former’s controversial takeover of America Movil’s (AM’s) local Claro unit in late 2011. LIME accused Digicel of abusing its dominant position in the market. LIME claimed that Digicel was charging disproportionate interconnection fees, paying just USD0.01 to terminate calls on LIME’s network, but charging its competitor USD0.07 for the same. Further, LIME accused its rival of ‘ringfencing’ its enlarged subscriber base by making calls to LIME prohibitively expensive to end users. A change of legislation in May 2012 granted the OUR greater powers, including the right to set MTRs and the following month the watchdog set an interim MTR of JMD5 (USD0.011).

The new MTR was determined by a long run incremental cost (LRIC) model, although the OUR noted that the model gave an MTR that would increase rather than decrease. Consequently the OUR decided for simplicity to set the MTR at the rate for 2017, the last period of the study. The new rate will be in effect until 30 June 2018 and will be charged on a per-second basis.