Wednesday, October 28, 2009

LIME filed a $100-million lawsuit against Digicel on Monday, claiming that the Irish-owned telecom unfairly priced its landline-to-mobile rates by as much as $2.48 per minute below the rate it charges LIME to terminate its landline calls.

But the amount now being sought by the British-owned telecom is dwarfed by the $3.9-billion lawsuit it brought against Digicel earlier this year - a case which is scheduled to be heard on Friday - only days after the current action was filed.

LIME Jamaica's country manager, Geoff Houston makes a point at a press conference held yesterday at his company's head office. Listening in is Camille Facey, regional vice-president, legal regulatory and corporate affairs.

In that suit, LIME is claiming for the difference between payments per minute versus per second in respect of Fixed-to-Mobile (FTM) Interconnect Traffic. By LIME’s account, Digicel unilaterally changed the payment regime in 2003 in breach of the interconnection agreement.

Up to yesterday, the Business Observer was unable to get more details of the case to be heard on Friday, except that in the case, which will be heard in court chambers by Justice M McDonald-Bishop and clerk S Rainford, one party will argue for a stay of proceedings.

Now, LIME claims Digicel has set a much higher termination rate for LIME to pay when its landline customers call Digicel mobiles, which it says has squeezed margins and makes it difficult to compete.

“As things stand now, before LIME even looks to cover its own costs to set up a call from a landline to a Digicel mobile customer it has to cover Digicel’s termination charge, which depending on the time of day, may range from $6.48 per minute for a local peak time call, to $4.76 for a local off-peak call. It is therefore impossible for us to cover our costs and meet or beat Digicel’s $4 retail rate,” said LIME’s country manager Geoff Houston at a press conference held at the company head office in Kingston.

LIME claims the alleged breach started in January 2009.

In February, LIME said it filed a complaint with the Fair Trading Commission (FTC) but the lack of response by the regulator up to now ‘forced’ it to “invoke its rights under the Fair Trading Competition Act and has taken Digicel to Court in an effort to protect its landline customers from Digicel’s discriminatory practices.

FTC competition bureau chief, Kevin Harriott said that it was not unusual for cases such as these to continue over protracted periods but said that the FTC would not be able to make its determination until its investigation
was complete.

“Normally when we receive a complaint the decision taken is based on fact… it takes time to collect the facts,” Harriott said in response to Business Observer questions. “Therefore this limits how quickly we can respond. We can’t take a decision unless the facts support it one way or the other.”

“It is not uncommon across the world for cases like this to go on for two years.”

Since its liberalisation in 2001, the telecommunications industry has been characterised by legal wrangling in the courts and this latest action by LIME adds to at least 11 legal matters that remain unresolved up to October.

What’s more, Digicel also filed suit against LIME earlier this year. In that case they are claiming from a total of $1.65 billion in bad debt, which is eight per cent of the FTM retail rate, which has been approved by the OUR in LIME’s reference interconnect offers (RIOs) since 2001.

In a late response yesterday, Digicel’s described the suit as an act of desperation on the part of LIME, and expressed confidence that “the basis of the claim is a work of fantasy and entirely without merit”.

Digicel’s CEO, Mark Linehan said: “C&W/LIME should stop wasting our and the Court’s time and focus instead on its poorly served customer base and its next rebrand. Quite simply, having watched Digicel’s performance in the mobile arena over the last eight years, LIME is running scared now that the last remnants of its monopoly are under threat.”

Incidentally, Digicel Jamaica has eight cases against LIME compared to the three LIME now has against it.

Source:  Jamaica Observer