At a business forum in Washington DC this week, Prime Minister Kamla Persad-Bissessar said that the T&T Government was giving consideration to the introduction of a third mobile phone operator in this country. In a generally well-crafted and informative speech, the Prime Minister re-traced some of the history of the liberalisation of the telecommunications industry in T&T, starting with the establishment of the Telecommunications Authority of Trinidad and Tobago in 2005.
Some achievements to note, in 2005, the Telecommunications Authority of Trinidad and Tobago (TATT) was established and the telecommunications sector liberalised.Since then, competition has blossomed across the broadcasting landscape with 30 radio stations and nine television stations established throughout the country. New entrants have also penetrated the mobile and broadband sectors. While acknowledging that Trinidad and Tobago had "one of the highest mobile penetration rates in the world and offers some of the cheapest broadband rates in the region," Mrs Persad-Bissessar went on to add that the "Government is currently exploring the possibility of going beyond this and increasing the level of competition in these fields, particularly the introduction of a third mobile operator to the market."
Having achieved one of the highest mobile penetration rates in the world and some of the cheapest broadband rates in the region, does the local mobile telephony market need the increased level of competition that will come with the arrival of a third mobile operator? The latest quarterly market update on the local telecommunications industry published by the Telecommunications Authority reveals that the mobile market is now mature with the number of mobile voice subscriptions growing by only two per cent to 1.8 million subcribers between the March-June quarter of 2009 and the corresponding quarter in 2010. Total gross revenues for mobile service actually declined by two per cent in the period, while the average revenue per user declined by three per cent.
The Prime Minister also said: "We believe that a truly competitive telecommunications environment will stimulate innovation while benefiting the consumer as service providers will have to maintain their competitive edge, constantly improving on their services." With total revenues and revenue per user in slow decline, it is unlikely that the two existing mobile operators are going to be able to earn the profits that would allow them to make the necessary re-investment into their business, with the addition of a third operator. Without the necessary investment in upgrading mobile platforms from to 3G and 4G, it is quite possible that added competition in this space will lead to a deterioration in the quality of service rather than an improvement.
Rather than stimulating innovation, a third operator is likely to stimulate a short-term price war, during which the mobile operators ramp up their marketing budgets and focus on roping in the few toddlers in this country who do not now have mobile phones. It is possible, in the context of an overly aggressive price war in which all three operators lose money, that one or the other of the major players may simply decide that taking money from potential innovation and actual shareholders to subsidise already-overmobiled consumers makes no sense. If competition leads to one of the major players pulling out, the end result would not be more competition, greater innovation and constant improvements in service but less competition, less innovation, a decline in service quality and much higher prices.
Instead of looking to attract a new competitor to the local mobile market, the Government should focus its efforts to ensure that the possibility of anti-competitive behaviour is eliminated. Having achieved most of the benefits from the existing level of competition, the Government should not believe that more of a good thing is necessarily in the national interest.