The family is in bed, and I should be too. It's hot here in this vacation apartment. "Air conditioning in every room" turned out to mean "noisy, unreliable aircon unit in bedroom only." I've ripped the cord out of the bottom of the phone in the bedroom, used a socket doubler in my laptop bag to improvise an extension splicer, attaching my travel phone cable, which just sneaks out from under the bedroom door into the kitchen with the added reach. On dial-up -- oh, it's just like the good 'ol times (not). But I'm willing to endure this hardship for you, dear reader. (You're still reading this, aren't you Mum?)
Anyhow, here in Barbados there are four licensed mobile operators, three with operating networks. Some even have groovy names, like bMobile. Competition is real, and there are plenty of deals being plied on the car radio. (But then again, one station keeps emphasising that stereo sound is what makes them so great, so some things are just a bit behind the times here, too.)
Landline calls within the island are free, with Cable & Wireless having a traditional stranglehold over long-distance telephony at extortionate rates. C&W still have a lot of influence, but things are being opened up slowly. Most locals make few international calls, and it's served as a very efficient way of segmenting the market and doing price discrimination.
The mobile operators have replicated the same tariff structure, with high off-island rates.
Now broadband is slowly seeping out, although prices are high. Want 1mbit DSL? Yours for USD166 a month. But the cheaper low-speed packages would do Skype just fine, and could be easily justified as a toll-bypass for C&W's usurious PSTN rates. Broadband rates appear to be based on unmetered packages with no differential pricing for on-island and off-island data.
Where things get interesting is what happens when toll bypass using VoIP becomes common, and how price discrimination for IP networks might evolve. In a competetive market like mobile telephony, price discrimination serves to extend markets downwards into otherwise unservable market segments. (Because if everyone could pay that low price, the system couldn't pay for itself. In uncompetetive markets, price discrimination merely serves to transfer wealth from consumers to producers.) Some people in Barabdos -- many of whom are monetarily poor -- only have phone service because of price discrimination and political positioning by C&W. C&W pretends to benevolently provide more universal affordable service in return for a stranglehold on international traffic.
As VoIP encroaches, the pact may fall apart. (C&W are being fully exposed to competition over the next year or so, anyway.) This will cause political upset. If someone isn't being over-charged any more, there's no money in the pot to curry poliical favours by offering cheap basic telephony. Or is there?
You could still price discriminate IP traffic into on-island and off-island. Give basic access to low-end users at cheap rates, but cap or surcharge off-island IP traffic. The only question in my mind is "can you make it stick?" -- is it too easy for some users to relay traffic on behalf of others in ways that are effectively untraceable. After all, you could set up your router to only see on-island IP addresses, some of which will be Skype nodes of people with cheap international access, and you can work out the rest.
Another wildcard is that it isn't hard to cover the more populated bits of Barbados with wireless broadband. Can you make your pricing regime stick if someone else can bypass the copper? I've seen quite a few C&W trucks out mending copper lines slung through the sugar cane fields. You only need one direct hit by a hurricane and suddenly wireless looks like a very attractive proposition.
These Caribbean islands have had a very stable telecom monopoly position, but are rapidly becoming laboratories in which the future of telecom gets played out at high speed. The sheer number of islands and different governments ensures diversity of experiments. We're likely to see both pricing and technology innovation here. It's one thing to propose covering the USA with wall-to-wall Flarion, quite another on 166 sq miles of coral outcrop.
Maybe I should take a break from the beach and hunt down some local telecom execs to interview? Just don't tell my wife. I might have my laptop privileges rescinded.
Posted by Martin Geddes at 1:16 AMTrackBack URL for this entry:
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