PUC blocks GTT’s application for increase in bundled landline rates

Guyana’s utility services regulator, the Public Utilities Commission (PUC), has denied the application by the Guyana Telephone and Telegraph Company (GTT) to increase a number of landline charges.  According to the PUC, on October 1, 2018 GTT applied for an increase in landline access charges from $750 to $800 for each residential line, and from $1,500 to $1,600 for 2 or more additional lines.

pucBusinesses would have been required to pay $2,500 per month for 1 to 4 lines, up from $2,250.

GTT also asked for approval to bundle five residential landline services (incl. call forwarding, voicemail and call waiting), with all-inclusive access that would have cost $6,500 per month.  The company added the “friend and family” unlimited bundle for five persons that would have cost $1,850.

According to the PUC, after reviewing arguments put forward by GTT and the Guyana Consumers Association (GCA) which was objecting, the Commission concluded that the telephone company did not present convincing evidence to support the proposed rate hike.  “Therefore, the application is denied in its entirety,” the PUC said in its order dated Tuesday, December 11, 2018.

Representing the PUC at the public hearing on the ‘Approval of a Tariff Regime for Access and Landline Metered Charges’ were Chairperson, Dela Britton with Commissioners Maurice Solomon and Rajendra Bisessar.  Also in attendance were PUC Secretary Vidyahar Persaud, Moorsalene Sankar, and Yogwattie Sookram, both Financial Analysts.

Representing GTT were Mark Reynolds, Director, Legal and Regulatory Affairs; Delreo Newman, Director, International Regulatory, Government and Legal Affairs; and Mark Singh, Vice President, Finance Corporate Control.

For the GCA, President Patrick Dial and Advisor Yog Mahadeo were present.

GTT argued that with the advent of Liberalization, it would become necessary for the company to re-balance rates to bring it in line with operating costs.  “To this end, the company … intends to do so in stages and over a protracted period in order to avoid creating rate shock to its consumers.”

With respect to the five bundled services, the company’s representative said that the customer would have the option to choose any bundle s/he perceives as advantageous, and the prerogative to opt out of any bundled package at any time.

The GCA had expressed its reservations on the proposal noting that in the absence of precise data that could be easily collated, “it would be difficult to be guided by the model (presented) … and the GCA is of the view that the guaranteed rate to which GT&T speaks, is an entitlement,” a representative of the consumer watchdog stated.

The PUC’s order explained that GTT should have provided data on the anticipated impact on subscribers, and the accrual of anticipated incremental revenue to the Company.   The PUC was therefore not convinced that the expenditures reflect accurately on a cost-efficient utility, considering the size and the scope of GTT’s operations.  The regulator also questioned the values of the non-current assets as stated in the company’s financial statement, querying whether they were acquired at market value at the time of acquisition.

In addition, the PUC said that it had to consider whether GTT had adhered to the tenets of its license which set out requirements for Universal Service, especially to rural areas.

GTT has been accused often of refusing to process applications for rural areas, and has concentrated instead on mobile network expansion. With landlines being the key to DSL Internet service, this factor became a sore one.

PUC said that the company purported to have invested heavily in non-current assets for more than a decade, but this is not reflected in expected profit progression or in the quality of the company’s services to its customers.

“Having regard to all the factors, it is the view of the Commission that the Company has not presented a convincing case for the proposed price increases for its landline services. Therefore, the application is denied in its entirety,” the order stated.

In the interim, Government has announced a year-end break of GTT’s monopoly of landline and overseas services, with the broad objective to introduce new investors into the local telecommunications industry.  Discussions and negotiations between the two entities have continued for 2 years, and critics have placed the blame for slow development of the technology sector on poor internet service.