EDITORIAL – A clear signal to government on errant internet plan

Comments on the high-speed internet proposal by the Utility Regulation and Competition Office (OfReg):

“Nowhere in the Consultation Document does OfReg explain why three years is a reasonable period to achieve these very high proposed speeds and make them available universally.”
– Flow

“Before proposing any such limits, OfReg needs to conduct a more fulsome examination of the demand-side requirements.”
– Digicel

“The first objective of the broadband policy is to assure that all the residents of Grand Cayman have access to at least two providers … Until that first objective is achieved, the Broadband Policy can’t be considered as meeting any of the other objectives.”
– C3

“If forced to do the uneconomic, a licensee will ultimately fail, and underserved households will remain unserved, while the broader market will lose the competitive benefit of that licensee. Customers and the broader public will be worse off if licensees go out of business.”
– Logic

In perhaps what is a rare, even unique moment, four deeply competitive rivals are speaking in harmony on a highly technical subject that is crucial to the economic future of the Cayman Islands. Government regulators must not, indeed cannot, ignore their messages.

We are supporters of big, bold ideas for our country, and OfReg’s plan to compel local telecom companies to provide faster internet service, faster, is, if anything, bold.

In a vacuum, it is a somewhat attractive proposal that Cayman consumers obtain universal access to internet connection speeds that are multiple times faster than that in major first-world nations, and on an extremely expedited timeline (of 3 years, compared to 10-15 years in Canada, 9 years in the EU, and no deadline in the U.S.).

However, the reality is that such sophisticated and capital-intensive infrastructure cannot simply be willed or “magic wanded” into existence out of nothing by government fiat. We would recommend regulators re-read the fairytale “Rumpelstiltskin” in which the miller, in order to ingratiate himself with the king, makes a false claim that his daughter can “spin straw into gold.”

Of course she cannot, nor can regulators operate outside the realms of physics and finance – two very real constraints on what all of us wish our world might look like.

The comments cited at the top of this editorial were part of a consultation process that OfReg began in March and ended in September.

When it was announced in the spring that the government, via OfReg, intended to force local telecoms to pay for a fiber optic network bringing high-speed internet service to the eastern districts, we called the idea a “landmark intrusion … into a highly competitive area of the private sector.”

We wrote: “Cayman’s telecom sector is competitive, nimble, resource-intensive, highly technical and integral to the functioning and future growth of the country’s economy. To treat such an essential industry in such a cavalier manner borders not only on arrogance – but on regulatory folly.”

Amid a series of scandals, dustups and unacceptable financial revelations, the embattled regulator is hardly in a position to proselytize about best practices or world-class ambitions for the private sector. OfReg should instead be focused on getting its own fiscal and managerial house in order – if, as it seems, the supervisory Cabinet is unwilling to do it for them.

Now that OfReg has (ironically but predictably) missed its own deadline to provide critical details about mandatory internet speeds and deadlines for completion, it seems appropriate for officials to pursue a “3 Rs” strategy on the broadband proposal: Reconsider, revise, or reject altogether.

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  1. This serves to underline that those in charge of OfReg don’t have a clue how to regulate the communications sector. The service providers certainly need to improve in a number of areas but this ridiculous proposal defies all logic and practicality.