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Cayman Islands: Government Rejects C&W Bid To Lower Rates

Mandy Robinson, Tax-news.com, London

05 September 2000

The Cayman Islands government has turned down Cable & Wireless's bid to restructure its prices. General Manager, Timothy Adam, confirmed in the Cayman Net News that the company's proposals for "rebalancing" the rates for residential and business consumers had been rejected by the government after lengthy discussions. He explained: 'We have made several proposals, beginning as early as September 1995, and followed up at various stages with meetings and presentations to the Ministry of Communications, the Executive Council, and backbench MLAs.'

Mr Adam said C&W's final proposal was submitted to the government in April 2000. The company said: 'We would like to again stress the importance C&W places on the need to rebalance our prices, and the need for your timely approval ... we continue to voluntarily reduce many of our product prices, but we consider (this price restructuring) is vital for the Cayman Islands as a whole. This price restructuring is urgently needed to encourage continued growth of the financial industry and the tourism industry, and it is essential for the successful introduction of e-business.'

Mr Adam said that as the government temporised, C&W amended their proposals on various occasions to 'accommodate the various concerns and questions the government raised.' But it was to no avail, even though the restructuring of prices would lead to a reduction of rates, which would be to most customers' advantage, while others would not notice a difference. Mr Adam notes that, as C&W's revenue would suffer a 'negative impact' as a result of price reductions, this would affect the 'licence fees we pay to the government.'

Reasons for the government's decision have, as yet, been unforthcoming, says Mr Adam. Minister of Communications, Hon. John Mclean, has so far been unavailable for comment. A clearly disappointed Mr Adams said: 'We have asked Government to give us reasons for the rejection of our proposal. To date, they have given us no reason ... [but have] not indicated to us that the rejection was due to a reduction in their royalty fees.'

C&W holds a monopoly on Internet and telelphone services on the Cayman Islands, and has come under increasing pressure to lower its rates, which many consider too expensive. Cayman Net News says the situation has been compounded by C&W's blocking of Net2Phone on the islands, and that the Cayman Islands' business community is currently preparing a petition in protest. James Knapp, President of SEGOES, an Internet trading company, has demanded a 'review of the monopoly agreement granted to Cable & Wireless, and the extent to which they have broadened its intended meaning' and wants the Government to name an independent commission to conduct such a review.

Jamaica has already revealed plans to break up C&W's monopoly and to establish a regulatory organization to supervise rates and monitor the utility's operations. Many Cayman Islanders would like to see the setting-up of a similar regulatory body. According to Cayman Net News, this has been demanded before; but any such decision is likely to be for the new government after the upcoming November 8 elections.

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