Investigation of telcos is a waste of time and money
LAST time I walked through Town I saw both a JT and a Sure shop. In fact, I also saw an Airtel-Vodafone shop. Admittedly, it was a couple of weeks ago, and as we all know with the rate at which shops in Town are closing they may well not be there any more. But to the best of my knowledge, all three are still there and all three are still offering telecoms services in various forms to customers in the Bailiwick. I believe from people in Jersey that the same applies there too. Can someone then please explain to me why the Guernsey ‘regulator’ seems to think JT and Sure have carved up the market and shared the islands between them? I will save that person the time. They have not. Oh, wait a minute, the ‘crime’ they have alleged to have committed is ‘having discussions’ which may amount to collusion. Not actually collusion itself. Laying aside the defence that the parties concerned were actually encouraged to do so by the regulator (they did what?), is that not akin to a thought crime?
My understanding is that a regulator is there to ensure efficient market operation. Presumably this is to protect the customer from being exploited and the companies concerned from earning ‘excess’ profits. How does this case do this? On the contrary, the money JT and Sure will spend in defending themselves will end up costing the customer via charge increases to recover those costs (Yes, that is how business works. Amazing, isn’t it?). Not to mention the costs to the taxpayer resulting from the regulator’s investigation. And for what? Assume the court decided in the regulator’s favour. What happens then? There is no actual collusion. There has been no market carve-up. We as customers of either – as far as I know – are not being exploited via dominant market positions of either JT or Sure in either island. In any case, if they had gone ahead and split the markets (and I cannot for the life of me work out how it would go undetected), is there not another operator for customers to choose from in the shape of Airtel-Vodafone? And presumably there is some provision in legislation to reassign the licence foregone by one of ‘the big two’ to a new entrant? But that is irrelevant because it has not happened.
What an absolutely staggering waste of time and money – most significantly, public money. At a time when we are falling deeper and deeper into deficit, this public body sees fit to spend even more on what surely must fall into Deputy Ferbrache’s ‘vanity project’ category?
The whole mishandled affair smacks of a TV drama about dodgy policing in 1970s London. Pull someone in on spurious charges, fit them up and massage the facts to make it stick.
Half joking aside, this is a serious matter for our economy. The question we should be asking is why would a regulator want to drift so far away from its remit of protecting the consumer to bring a case like this? I read Lord Digby Jones’ excellent article in the 29 April Guernsey Press, ‘We need to decide what kind of island we want it [Guernsey] to be’. I am pretty sure it should not be one where a regulator investigates thought crimes, wastes taxpayers’ money, risks product price rises and discourages investment. Hardly the kind of place where business would be attracted.
Seems to me it is not the Sure and/or JT operations that need to be investigated.
ALICE CLARKSON
Editor’s note: Michael Byrne, chief executive of the Guernsey Competition and Regulatory Authority, responds:
Thank you for the opportunity to respond to the points raised by your reader. Before I respond to the thrust of their letter, on a point of accuracy, your reader has misunderstood the nature of the behaviour that is under investigation. The GCRA investigation is not into collusion between retailers of mobile services. It is concerned with the way the market for network provision functions, which those stores ultimately rely on to retail their services. Guernsey’s competition law seeks to protect free, open and fair competition because it is good for Guernsey consumers and good for fair-dealing Guernsey businesses. The benefits of choice in a small island are particularly precious commodities and need to be all the more diligently protected. The impact of competitors engaging in cartel behaviour, in contrast, results in poorer value for money and less choice for consumers.
The issue under investigation is not based on any judgement about whether there should be more than one mobile network in Guernsey. Next-generation mobile technology and the interest of Guernsey may dictate that the island moves towards a single network provider given its special features. The existing retailers can then continue to offer choice and value for money whichever market structure develops at the network level. What the Guernsey competition law ensures is that whoever wins the right to build that key infrastructure should do so on the merits and not through a process of collusion. I suggest the kind of island we want is one where, while we might be a small society and our economy is smaller than most, we will not be open to cartels, price rigging or any other form of behaviour that suits some businesses but disadvantages consumers and the economy. That is surely a cause worth standing up for.