Sure to cut cost of high capacity lines

Sure (Guernsey) announced the move this week, following a wholesale price control consultation initiated by the Guernsey Competition & Regulatory Authority in January.

Its consultation paper described prices locally as ‘excessive’ and substantially higher than those in Jersey and the Isle of Man.

The move means the cost of on-island leased telecommunication services that support business communication within Guernsey and to the rest of the world, and are particularly important to the financial services sector in the island, are to fall by as much as 44% and 52%, said the GCRA. The price changes will come into effect from next week.

‘These price reductions will have a direct cut-through to the cost of doing business in Guernsey and is an excellent outcome for the sector,’ said GCRA chief executive Michael Byrne.

‘I want to commend Sure for the approach it has taken, and I am sure its customers will appreciate the significant reductions it has committed to and how swiftly it intends to implement them.’

The move by Sure to amend pricing in this area comes after the GCRA’s consultation paper, published last month, that said the telecoms provider was dominant in the wholesale market, and said a previous price control applied in 2015 had not worked.

Sure’s Guernsey chief executive Justin Bellinger said lower prices would allow businesses to afford the extra capacity needed to thrive.

‘Reducing some of our prices is great news for the Guernsey business community and our island’s digital economy, and is another demonstration of Sure striving to fulfil its purpose of connecting our island communities for a better future,’ he said.

The competition regulator considered that very-high bandwidth – 1 Gbps and above – retail leased line prices in Guernsey were ‘significantly higher than comparable jurisdictions and are excessive’. Sure’s wholesale prices exhibited a ‘similar pattern’.

‘The 1 Gbps leased line prices in Guernsey are materially higher than all comparator countries. For example, the price of a 1 Gbps line in Guernsey is more than twice that in the Isle of Man,’ the GCRA said in its consultation paper.

The Guernsey price of £1,909 per month was 1.7 times the Jersey price and nearly 10 times that charged in the UK.

The price comparison for products with bandwidths greater than 1 Gbps showed that Guernsey prices were higher than in Jersey and Isle of Man – but by a smaller margin than for the 1 Gbps product.

‘The Guernsey price of £5,087 per month for the 10 Gbps product is 1.2 times the Jersey price of £4,133, but still 10 times the £506 charged in the UK,’ said the GCRA.

The local financial services sector is a significant user of very high broadband leased lines. The GCRA warned that ‘excessive’ retail prices risked reducing the island’s ability to compete in this key economic sector with major offshore competitors including Jersey and the Isle of Man.

Rival telco Airtel-Vodafone said the outcome of the review was 'far too little too late'.

It noted that this issue was highlighted in the States of Guernsey policy letter “Delivering Next Generation Digital Infrastructure” published in September 2021.

‘The policy letter endorsed “Wholesale products and prices should be similar to those available in similar sized jurisdictions in which Sure operates, to ensure Guernsey remains competitive” as a broad principle to be followed in coordinating the Sure fibre broadband roll-out solution.’

Excessive wholesale pricing of VHB leased lines also impacted the provision of cost-effective backhaul solutions for current generation mobile network operators, said the GCRA, and may constrain the future cost-effective rollout of 5G infrastructure.

The watchdog said in its consultation paper that it was considering replacing the current price control on VHB leased lines with a price cap – benchmarked against JT (Jersey) current wholesale prices.

The company said that it appreciated the exercise by the Guernsey Competition & Regulatory Authority, however it said that it would have negligible benefit for telecom businesses such as itself buying such lines to offer reliable high-speed data services to retail mobile customers.

‘This price review exercise has finally happened after many years and was a great opportunity to address the extortionate price imbalances that exist in the leased line market when compared to other jurisdictions such as Jersey and the UK,’ said Avdhesh Chauhan, head of technology at Airtel-Vodafone.

He said that even after the price reduction, Guernsey prices were still much higher than Jersey and the UK. It is also expected that prices in Jersey will reduce further, following an ongoing regulatory review.

The outcome of the Guernsey price review exercise did nothing to ease the cost of business connectivity, he added. The company described the GCRA’s final decision as a ‘huge disabler to competition in the island’ and is ‘a massive set back to invest in newer technology such as 5G which is contingent on reasonably priced leased line connectivity.’