On Mon­day, a sig­nif­i­cant per­cent­age of this coun­try’s ca­ble, in­ter­net, and tele­phone users be­gan pay­ing more for these ser­vices.

Al­so on Mon­day, a large chunk of this coun­try’s ca­ble, in­ter­net, and tele­phone users learned that they will be pay­ing more to use these ser­vices next month.

In April, Flow an­nounced it would be rais­ing its rates by 3.5 per cent on May 1, the very day that Dig­i­cel in­formed its cus­tomers that it would be rais­ing the rates be­tween $15 to $60 for a num­ber of its pack­ages start­ing from June 1.

The com­mu­ni­ca­tions sent out to cus­tomers bore oth­er sim­i­lar­i­ties apart from the punch­line that the cus­tomers would pay more.

Flow stat­ed in their April com­mu­nique that “the cur­rent ex­ter­nal eco­nom­ic pres­sures are now such that as a busi­ness we must un­for­tu­nate­ly slight­ly in­crease our prices by 3.5 per cent per month.”

Dig­i­cel was a bit more de­tailed in ex­plain­ing those eco­nom­ic pres­sures, stat­ing, “The costs of in­ter­na­tion­al tele­vi­sion con­tent con­tin­ue to rise, and over-the-top (OTT) apps (such as Net­flix and What­sApp) are grow­ing in pop­u­lar­i­ty, in­creas­ing in­ter­net pres­sures and fur­ther dri­ving up our op­er­a­tional costs.”

In­deed they were not the on­ly lo­cal provider that al­lud­ed to in­creased op­er­a­tional costs af­fect­ing their ser­vice as Princes Town-based provider Air­link Com­mu­ni­ca­tions sim­i­lar­ly not­ed the in­creased costs prompt­ed them to drop some of their ser­vices at the end of March.

Dig­i­cel reached out to the Busi­ness Guardian fol­low­ing Flow’s no­tice to cus­tomers, as it sought to ex­plain that the en­tire in­dus­try in­deed had been reel­ing from in­creased costs and ad­di­tion­al bur­dens in the wake of the pan­dem­ic.

The com­pa­ny told the Busi­ness Guardian: “Just to set some con­text, all tele­com op­er­a­tors are af­fect­ed by in­fla­tion risks and in­creas­ing op­er­at­ing costs caused by both in­ter­nal and ex­ter­nal fac­tors.

“It is im­por­tant to note that while op­er­a­tors at­tempt to in­crease sub­scrip­tion rates to off­set in­creas­es in op­er­at­ing costs, the abil­i­ty to do so is de­ter­mined by com­pet­i­tive pres­sures, con­sid­er­a­tion of the im­pact on cus­tomers, and the re­al­i­ty that as op­er­a­tional costs es­ca­late, the rev­enue from these small in­cre­men­tal price in­creas­es is soon out­stripped.”

The com­pa­ny ex­plained that providers have suf­fered from the in­creased cost of in­ter­na­tion­al links, or the ca­pac­i­ty to con­nect to the in­ter­net, par­tic­u­lar­ly since the on­set of the COVID-19 pan­dem­ic.

Dig­i­cel said, “Over the past three years, dur­ing the pan­dem­ic, in­ter­net us­age has dou­bled on our net­work, mean­ing that the av­er­age per­son us­es the in­ter­net twice as much when com­pared to pre-pan­dem­ic lev­els. Please note that this coun­try does not man­u­fac­ture in­ter­net; we pay in­ter­na­tion­al com­pa­nies for ca­pac­i­ty or ac­cess links to the in­ter­net via un­der­sea ca­bling that runs from the US. The more in­ter­net used is the more links that have to be paid for.”

The pan­dem­ic in­tro­duced in­creased use of stream­ing ser­vices, which in it­self in­creased due to the emer­gence of sev­er­al new play­ers in that mar­ket, and voice call­ing ap­pli­ca­tions that were spurred by the pan­dem­ic placed fur­ther strain on the band­width of the lo­cal providers.

Dig­i­cel said, “The in­creas­ing preva­lence of OTT apps (over-the-top ap­pli­ca­tions) like Net­flix, YouTube, and What­sApp, for ex­am­ple, have un­der­mined tele­com’s abil­i­ty to earn rev­enue from tele­vi­sion sub­scrip­tions or voice calls on the mo­bile side. How­ev­er, they re­quire lots of in­ter­net to work but do not con­tribute to the cost of pro­vid­ing this con­nec­tiv­i­ty. Cus­tomers are now stream­ing movies at high­er qual­i­ty than ever be­fore and this re­quires con­stant in­vest­ment to im­prove our ca­pac­i­ty to de­liv­er.”

Net­flix ef­fect

The com­pa­ny not­ed that while in many cas­es some of these ap­pli­ca­tions earn rev­enue from sub­scribers in Trinidad and To­ba­go, they re­turn lit­tle to the coun­try’s cof­fers while com­pa­nies like Dig­i­cel and Flow are ob­lig­at­ed to pay tax­es to the state.

Dig­i­cel said, “These apps are not pay­ing their fair share for the de­mands placed on the net­works. For ex­am­ple, sub­scrip­tions paid to Net­flix, YouTube, or What­sApp, among oth­ers, do not con­tribute to tax­es paid to T&T, nor do they spon­sor com­mu­ni­ty de­vel­op­ment projects in the mar­ket, nor do they con­tribute to the ad­di­tion­al costs in­ter­net ser­vice providers in­cur due to de­mands for more pow­er­ful in­ter­net that’s faster and more re­li­able to ac­cess the con­tent on these OTT’s.”

The com­pa­ny al­so not­ed that the cost of pro­vid­ing in­ter­na­tion­al TV con­tent and copy­right, sport­ing, and en­ter­tain­ment events has in­creased for all telecom­mu­ni­ca­tions providers.

Flow and Dig­i­cel fa­mous­ly joined forces to se­cure rights to show the Eng­lish Pre­mier League in 2019, but both cur­rent­ly do not show the league af­ter the com­pa­nies were out­bid for the rights by Ver­ti­cast last year.

Dig­i­cel al­so not­ed that amid these in­creas­es the com­pa­ny still had to find means of im­prov­ing its tech­nol­o­gy, which meant ad­di­tion­al costs for in­vest­ment, while in­fla­tion­ary pres­sures al­so mean that the com­pa­ny must al­so pro­vide com­pet­i­tive salaries for staff.

“Cus­tomers’ ex­pec­ta­tions have changed as it re­lates to the re­li­a­bil­i­ty of their in­ter­net ser­vice. It used to be that large busi­ness­es, whose soft­ware was crit­i­cal to al­ways be con­nect­ed, would pay a pre­mi­um to en­sure re­dun­dan­cy in ca­pac­i­ty but to­day all cus­tomers ex­pect that qual­i­ty grade ser­vice, “ said Dig­i­cel, “In­ter­nal fac­tors like salaries- Due to the ef­fects of in­fla­tion, com­pa­nies have to ad­just em­ploy­ee’s salaries and oth­er cost cen­tres. This has al­so dri­ven up op­er­a­tional costs.”

Dig­i­cel Trinidad and To­ba­go no­tably re­trenched 126 work­ers in March, af­ter it opt­ed to shift its call cen­tre to Ja­maica, while the Dig­i­cel group en­tered in­to a debt re­struc­tur­ing deal in April.

How­ev­er, the chal­lenges out­lined by Dig­i­cel are not new and in­deed both Flow and TSTT have all down­sized staff sig­nif­i­cant­ly in the last decade amid grow­ing chal­lenges and de­clin­ing rev­enues in the in­dus­try.

No­tably all three providers (Dig­i­cel, Am­plia, Flow) have ad­just­ed the prices of their pack­ages and raised the cost (and speed) of their base fi­bre op­tic pack­ages since 2019.

Fol­low­ing the an­nounce­ment of the re­struc­tur­ing of TSTT and the re­trench­ment of hun­dreds of work­ers last year, TSTT CEO Lisa Agard not­ed that rev­enue from both fixed and mo­bile calls fell off a cliff dur­ing a pan­dem­ic. She added that while cus­tomers still turned to these com­pa­nies for in­ter­net ser­vices, it did not serve as enough of a sub­sti­tute for that lost rev­enue.

How­ev­er with stream­ing ser­vices al­so re­plac­ing the need for ca­ble sub­scrip­tions, an­oth­er rev­enue stream has been lost for these providers.

Dig­i­cel agreed, stat­ing: “Dur­ing the COVID-19 pan­dem­ic, we have seen huge in­creas­es in peo­ple’s re­liance on the in­ter­net and use of the in­ter­net. In­ter­net us­age has dou­bled, the de­mand placed on the tech­nol­o­gy has dou­bled, and the ex­pec­ta­tion that every­thing will work, as it should, has in­creased but the rev­enue earned has not in­creased. In fact, we have seen voice rev­enue de­cline sig­nif­i­cant­ly, as cus­tomers now use OTT apps like What­sApp to place calls.

“When con­nect­ed to the broad­band in­ter­net, cus­tomers are not charged to make these calls over the net­work. There­fore, you have a sit­u­a­tion where the ser­vice provider pays a li­cense fee for a phone num­ber that is be­ing used to make calls. How­ev­er, the com­pa­ny is not earn­ing rev­enue from that call, even though it is hap­pen­ing over a net­work that said provider is al­so pay­ing to have up and run­ning.”

This has led lo­cal providers to even in­clude these stream­ing ser­vices in their pack­ages to main­tain sub­scribers.

Dig­i­cel said: “We have seen more de­mand for OTT stream­ing ser­vices, as cus­tomers want more Video-On-De­mand in place of sched­uled TV con­tent. How­ev­er, it is im­por­tant to note that these stream­ing ser­vices re­quire high-speed in­ter­net con­nec­tiv­i­ty for suc­cess, yet they do not pay tax­es, fees or con­tri­bu­tions to pro­vide such in this mar­ket.

“In ad­di­tion to this, many of these in­ter­na­tion­al chan­nels have been in­creas­ing sub­scrip­tion costs to providers for their con­tent (ca­ble TV) but we do not trans­fer these costs to the cus­tomers be­cause it would lead to huge price in­creas­es. This sit­u­a­tion has led to tel­cos now of­fer­ing a-la-carte ac­cess to these OTT en­ter­tain­ment providers like Dis­ney+ and HBO Max amongst oth­ers.”

Dig­i­cel al­so ac­knowl­edged that the re­duced spend­ing pow­er of the pub­lic has not helped as con­sumers are al­so cut­ting back on their spend­ing, fur­ther re­duc­ing the rev­enue of these com­pa­nies.

The com­pa­ny said: “These de­clines in rev­enue are jux­ta­posed to the in­creas­es in in­fra­struc­tur­al in­vest­ments re­quired to meet high­er net­work util­i­sa­tion as more cus­tomers con­sume more band­width due to changes in work from home, on­line class­es, etc. Cus­tomers pay much less for Megabits per sec­ond (Mbps) as com­pared to just five years ago.”

It added that it al­so had seen the cost of do­ing busi­ness in­crease as a re­sult of the pan­dem­ic.

Dig­i­cel said: “The COVID-19 pan­dem­ic and mit­i­ga­tion mea­sures have caused, and con­tin­ue to cause, ad­verse im­pacts on glob­al sup­ply chains and eco­nom­ic con­di­tions. We’ve seen de­lays in ship­ments of mo­bile phones, prod­ucts, and tech­ni­cal equip­ment need­ed for the net­work. These things all in­crease the costs of do­ing busi­ness.”

Flow did not re­spond to any of the texts, emails, or calls from the Busi­ness Guardian con­cern­ing their fare in­creas­es, while TSTT/Am­plia opt­ed not to com­ment on the sit­u­a­tion.

Reg­u­la­tor re­sponds

How­ev­er, CEO of the Telecom­mu­ni­ca­tions Au­thor­i­ty of Trinidad and To­ba­go Cyn­thia Red­dock-Downes said the Au­thor­i­ty was not pleased with the an­nounce­ment of the price in­creas­es but had lit­tle say due to the open telecom­mu­ni­ca­tion mar­ket.

She said, “The au­thor­i­ty does not wel­come in­creas­es in rates, par­tic­u­lar­ly at this time when cus­tomers are fac­ing a dif­fi­cult time gen­er­al­ly. The dif­fi­cul­ty for TATT, of course, is that the mar­ket is open. And ac­cord­ing to our Telecom­mu­ni­ca­tions Act, chap­ter 47:31 Once a mar­ket is com­pet­i­tive, then the au­thor­i­ty is un­able to in­ter­vene to fix prices, we do not have the au­thor­i­ty to in­ter­vene to fix prices.”

TATT said it was cur­rent­ly in the process of col­lect­ing da­ta con­cern­ing the ac­tu­al mar­ket dis­tri­b­u­tion of telecom­mu­ni­ca­tion providers in the coun­try.

Red­dock-Downes how­ev­er ad­mit­ted that the cost of in­ter­na­tion­al con­tent for providers has in­creased, and they had lit­tle say in those price ad­just­ments. She al­so not­ed that the mar­ket was al­so im­pact­ed by il­le­gal IPTV providers who don’t pay these in­ter­na­tion­al copy­right fees.

“That’s of con­cern to us. Yes. And the rea­son why is that those peo­ple, we are not aware that they have le­gal right to con­tent. And if they don’t have the le­gal right to con­tent, it means that they’re not pay­ing for it. And if they’re not pay­ing for it, it means that they’re not in­cur­ring those costs that oth­er ser­vice providers will have to come in. Be­cause as li­censed broad­cast­ers they have to pay for the con­tent,” Downes ex­plained.

She said TATT had been large­ly suc­cess­ful in shut­ting down these il­le­gal ser­vices once they were made aware of them, but she ad­mit­ted these “providers” had a knack for re-emerg­ing.