By Jonathan Kent

The Regulatory Authority has dismissed Logic Communications’ complaint that Digicel’s ‘free internet’ promotion was predatory.

Digicel Bermuda CEO Wayne Caines welcomed the decision last night and said his company was “the champion of competition”, adding that it was incumbent upon operators to offer value.

In January this year, Digicel offered free internet for a year to all new, or recent, postpaid subscribers to mobile voice and data services.

Logic boss Vicki Coelho wrote to the Regulatory Authority (RA), which regulates the telecoms industry, complaining that the promotion was “predatory and anti-competitive” and in breach of telecoms industry rules.

And she accused Digicel of using its financial muscle from its mobile services to pay for a promotion that other firms were unable to compete with.

Yesterday, the RA published its response to the complaint on its website.

“Based on the RA’s investigation, the cost analysis, the RA finds that Digicel’s free internet promotion is not predatory in nature,” the RA stated. “It is concluded, therefore, that Digicel is not in breach of its obligations under part 7 of the RAA.”

The RA found that Digicel was not using revenue from non-internet services to compensate for the cost of the free internet promotion, and nor was it using its market power in the mobile industry to become a dominant player in the internet service provider (ISP) field.

“The parameters of the promotion and Digicel’s small market share indicate that the ISP market is unlikely to be dominated by a carrier, especially since the market has been deemed competitive,” the RA statement reads.

“As mentioned before, there have been new entrants into the ISP market, and more are expected to enter in the near future. T he increase in competition due to new entrants will cause a redistribution of market share, which will makes it even less likely that Digicel will be able to gain dominance over the ISP sector.”

The RA found that it was improbable that Digicel’s five-week promotion, which had a limited number of eligible customers, would cause any deterrence to entry to the ISP or mobile markets for any rival carriers.

“With regard to the ISP market, there have been two new entrants in recent months that offer internet promotions,” the RA stated. “The RA expects that other carriers will enter the ISP market in the near future. Thus the limited scope and length of the promotion is unlikely to cause a serious effect.”

Commenting on the RA’s decision, Mr Caines said: “As the champion of competition in Bermuda, Digicel welcomes the Regulatory Authority’s ruling. Digicel has been — and remains committed to — delivering on its promise of putting its customers at the heart of everything it does.

“Indeed with that in mind, the response from customers to the launch of the home internet offer has been extremely positive — further cementing Digicel’s belief that it is incumbent on operators to offer value in an effort to increase broadband penetration for the benefit of customers — and Bermuda as a whole.”

Logic did not respond to our request for comment by press time.

The RA statement ended: “The complaints raised by Logic against Digicel have highlighted the importance of this work to the industry and, in light of this fact, the RA has determined that, in due course, a consultation concerning the definition of predatory pricing and the method the RA will use to determine whether or not an operator’s conduct can be categorised as predation.

“The consultation will also include information that the RA will expect to be submitted by the carrier alleging anti-competitive behaviour.”