If it ain’t broke, why fix it?

That’s the message to Government on the telecommunications industry from internet service provider (ISP) Transact Ltd., which says a proposed regulatory overhaul would lead to “unmanaged chaos” on the market.

Transact argues that Bermuda is already “one of the top communication domiciles in the world”. And the regulatory changes put forward by the Ministry of Environment, Telecommunications and E-Commerce (METEC) could cause job losses, less competition and higher prices for consumers, says the company.

Under the reforms proposed in a Government consultation paper, the 60:40 rule, which limits the permitted proportion of foreign ownership of a company, would no longer apply to the industry.

The current licensing regime, which restricts operators to one clearly defined sector of the market, would also be dismantled, allowing holders of a unified licence to supply a range of services.

METEC suggests the result of the changes would be to increase foreign investment in new technology and open up the market, creating greater competition and lower prices.

But Jamie Thain, chief executive officer of Igility, Transact’s parent company, said yesterday the proposals would throw the future of the industry into turmoil.

“The amount of unmanaged chaos that might be created with the new legislation is not definable,” Mr. Thain said yesterday. “We always believed that the previous Minister (Michael Scott) would have thrown out the document once he understood it, and we hope the current Minister (Neletha Butterfield) will follow that course of action.

“The risk of job loss, industry collapse, and mass consolidation, is just too great of one for Bermuda to take.”

The reforms would allow international service providers, like Cable & Wireless (C&W) and TeleBermuda International (TBI), which are already allowed to be 100 percent foreign-owned, to compete openly in other sectors of the market with operators under predominantly local ownership.

But they would retain their right to buy capacity from submarine cable owner Brazil Telecom and sell it on to smaller competitors.

Transact argued: “It is like the local baker being forced to buy flour from the global cookie maker, who has just been granted local bread rights.”

Mr. Thain said the Bermuda telecom market did not need an influx of foreign investment as it already boasted cutting edge technology.

“The issue is providing faster speeds and better pricing,” Mr. Thain said. “ISPs would be able to provide that if they were able to buy capacity direct from Brazil Telecom, rather than having to buy from C&W and TBI.”

METEC’s latest proposal was published earlier this month, after a period of consultation with the industry. It has drawn criticism from ISPs North Rock Communications and Fort Knox, as well as former Telecommunications Minister E.T. (Bob) Richards, whose policies broke the Cable & Wireless monopoly that existed until the mid-1990s. All three fear it could lead to a duopoly or monopoly with locally-owned companies being wiped out.

A statement issued by Transact yesterday said the introduction of the new unified licence would “turn the Government’s managed competition into a competitive chaos where the outcome will be, at best, unpredictable”.

“We do not believe anyone in a senior position in Government has had an opportunity to look at this seriously, because, by anyone’s definition, our telecommunications system is not broken,” the statement continued. “Under (former Telecommunications Minister) Renée Webb’s leadership, the Government created managed competition which has been wildly successful. Phone, long distance, and internet rates have all fallen to an all-time low.

“Managed competition has created an environment where Bermuda is one of the top communication domiciles in the world. We have five internet service providers, two business providers, three mobile carriers, two wire line carriers, two cable TV providers, three television stations, and two redundant transatlantic cables, in a country with only 60,000 people. The industry has over 400 jobs represented in at least 14 licensed carriers.

“The Government is essentially dismantling what it has built, hoping that the new licensing system won’t produce unmanaged chaos that could include hundreds of jobs lost, mass consolidation, reduction of competition, increased prices with no real tangible benefit for the consumer.”

The Government of former Premier Alex Scott had “paid token lip service” to local vendors, said Transact, while the current administration “might ignore the document while it becomes legislation”.

The company argued the proposals had been drawn up by outside consultants. “We believe that once the new Minister has had time to review the process, that it will be shelved and replaced with fine tuning the current legislation,” the statement added.

“We don’t believe that the Government would allow this unpredictable legislation that could cause the collapse of the industry, overthrow 60:40 legislation and produce mass consolidation and job loss to continue without intense scrutiny by the Minister and Cabinet. We are just worried that they will be too busy to see how dismantling the current system will dismantle the sector.”

Foreign-owned giants could buy out local operators and the result would be jobs moving out of Bermuda in the name of efficiency. “Most of Bermuda’s telecoms could be easily run from centralised Network Operating Centres (NOCs) from other parts of the world,” Transact added.