Bermuda’s telecommunications sector is stuck in a trend of falling revenues, according to data published by the industry’s regulator.

The Regulatory Authority, in its 2017-18 workplan document, published on its website last Friday, revealed that the sector’s taxable turnover had fallen by more than 12.5 per cent over a two-year period starting in April 2014.

The regulator expects the trend to continue and is expecting revenue to fall 7 per cent in the fiscal year 2017-18 to about $177 million.

The plunge in telecoms firms’ turnover has prompted the RA to request an increase in the rate it charges the industry to fund its own operations — from 1.75 per cent of taxable revenue to 2 per cent from April 2017.

The RA’s numbers refer to Integrated Communications Operating Licence holders, who between them offer the full range of telecoms services, including wireless network, internet and pay television.

The RA states: “The Authority noted a continued downward trend in the actual relevant (taxable) turnover during the financial years 2014-15 and 2015-16 of approximately 4 per cent and 9 per cent respectively and anticipates that this trend will continue during 2017-18.”

While the document offers no reasons why the sector’s revenue has fallen so sharply even at a time when the latest data suggests the economy has stabilised, it is likely that the advance of technology may also be hurting some of the industry’s traditional revenue streams.

Just as mobile technology hit landline and voice revenues, overseas web-based streaming video services are likely to be taking a bite out of cable and satellite TV operators’ income.

A survey by research firm GfK in July found that nearly a third of all US households subscribed to a streaming TV service, such as Netflix, Amazon Prime Video or Hulu, and that “cord cutting” — consumers cancelling their pay TV services — was accelerating.

Also, liberalisation of the Bermuda market in recent years, through the dismantling of a licensing regime that had restricted the services that carriers were allowed to offer, has led to more “bundling” and greater pricing competition.

The RA is also due to take on oversight of the electricity sector, although a date for the handover of this responsibility from the Energy Commission has yet to be announced by the Government.

The regulator’s proposal for a $6.92 million budget for 2017-18 is based on the assumption that it will be responsible for electricity by the start of the next fiscal year on April 1, 2017.

The RA estimates it will need a budget of $3.55 million to fund its telecoms activities — up 5 per cent from the year before, mainly because of the need to buy new radio spectrum equipment costing $230,000. And it estimates it will need a further $3.37 million for electricity-sector regulation.

Residents are being urged to have their say on the RA’s strategic plans, goals and budgets in a public consultation with an October 28 deadline for submissions.

In order to take on electricity oversight, the RA estimates it will increase its payroll from nine employees to 13, and to add two commissioners to the three it has already.

Employees’ responsibilities include collection of Government and RA fees, strategic analysis, compliance, consumer affairs and enforcement.

Among the RA’s stated priorities is a quality-of-service investigation” aimed at establishing enforceable standards for internet speeds.

“The Authority will implement measures to prevent significant disparities between consumers’ expectations of broadband performance and their actual experience,” the RA stated.

A review of billing practices of telecoms firms and efforts to increase consumer awareness of internet and mobile services are also on the RA’s agenda.

In its electricity-sector work, the RA will look to ensure fair and competitive pricing, carry out consumer perception surveys on quality of electricity services and evaluate the scenarios in the Integrated Resource Plan, a study of the island’s future power needs and the mix of sources that could be used, to “identify least-cost, high-quality options for Bermuda”.

See the full RA workplan document under the ‘Related Media’ heading on this webpage.