Telecoms company bosses have expressed shock and concern that wireless services provider Digicel’s acquisition of internet service provider Transact was approved by Government.Executives of TeleBermuda International (TBI), KeyTech and North Rock Communications all said the deal appeared to be at odds with the principles of Government’s telecoms reform process.They are concerned that Digicel seems to have claimed a head start in positioning itself for the expected liberalisation of the industry that has been proposed by Government.KeyTech CEO Sheila Lines said it seemed that Digicel had been allowed to “shortcut” reform requirements relating to industry dominance assessment.TBI president Greg Swan said he was “shocked” by Government’s approval of the deal, especially given that regulators had turned down a previous attempt by his company to make an acquisition.North Rock Communications general manager Vicki Coelho said she was “at a loss to understand” how the acquisition was permitted before reform.An e-mailed response to our questions from the Department of Telecommunications, which is part of Walter Roban’s Environment, Planning and Infrastructure Ministry, stated yesterday that Government’s position had not changed.“The Government has not moved away from its previously stated reform plans,” the statement read.“Its position remains that until reform has been implemented, licence classes will remain separate, and companies holding more than one licence class must operate those licences within separate entities.“The Government continues to prepare the legislative package that will introduce telecommunications regulatory reform and fully anticipates that legislation will be tabled in November.”Current regulations restrict telecommunications companies to offering only the services that their licence allows.But proposed telecommunications reform that has been in the works for the past five years will tear down the licensing regime and allow companies to offer a wider range of services.“The takeover announcement plans by Wayne Caines of Digicel are a little surprising,” said Ms Lines of KeyTech.“Mr Caines’ statements seem to be in contrast with the Ministry’s previous statements on the regulatory reform process. It would appear, from Mr Caines’ comments, that Mr Caines believes that the transaction has allowed Digicel to shortcut the Ministries reform requirements regarding the assessment of dominance and the subsequent treatment of any company presumed to be dominant.”Ms Lines statement goes on to quote Mr Caines from an interview with VSB News when he said the acquisition allowed Digicel to offer telephone, long-distance and ISP services, and to become “a one-stop shop for the majority of your telecommunications”.She then quoted Mr Caines as saying: “It allows us to dash out in front ahead of our other competitors in the country.”Ms Lines said: “The Ministry’s dominance reform requirements are designed to facilitate an opening of the licence classes in a way that allows even playing field competition for all carriers.“Without further clarification from the Ministry, the takeover impairs the credibility of the Government’s reform plans and previously stated reform intentions.”KeyTech’s group of companies includes the Bermuda Telephone Company and internet service provider Logic. It also has a stake in wireless services provider CellOne and television provider CableVision Bermuda.Mr Swan of TBI shared Ms Lines’ concerns about Digicel’s acquisition. TBI is licensed to provide long-distance services, a market that Digicel says it intends to move into through internet-based voice over IP technology.“We [TBI] had actually requested Ministry approval for an acquisition in the not so distant past and it was declined,” Mr Swan said.“We accepted the reason for that at the time, pending regulatory reform.“What I’m concerned about is the ramifications that this decision could have for the entire telecoms sector.“I don’t know the full scope of the acquisition details and I don’t know whether any restrictions have been placed, but Mr Caines has clearly indicated what Digicel’s intentions are. They’re not hidden.“In his comments, Mr Caines has said Digicel intends to offer a full suite of voice and data services, to residential as well as cellular customers.“To me, that seems a bit far-reaching and it seems that the scope of his licence does not permit that.”New technologies have allowed telecoms players to enter markets that their licences had been designed to exclude them from.Long-distance service providers, in particular, have suffered from this as voice-over IP services such as Skype and Magic Jack have taken a bite of their market, which could amount to something like 40 percent of their business, according to Mr Swan.Mr Swan said he didn’t think any of Digicel’s competitors would consider the allowing of the Transact acquisition as a good idea.“I think the telecoms sectors in general has been very patient with regard to the reform process,” he said.“So I just find it difficult to understand what the motivation was to allow the acquisition of the smallest ISP which I would guess represents less than 15 percent of the ISP market prior to the completion of regulatory reform.”Transact, rejuvenated by Digicel’s capital and a commitment to improve its technology, will likely be a stronger competitor in the ISP market.One of its rivals, North Rock Communications said it was very concerned about the impact on the Bermuda consumer from the takeover.“The Ministry of Telecommunications stated on August 25, 2011 that the new proposed telecommunications regulatory framework would be tabled in the House of Assembly in November,” Ms Coelho said.“Then three weeks later a Licence Exemption was given to allow Digicel to purchase Transact.“We are at a loss to understand how this purchase could be permitted on the basis that Government has consistently said no major applications will be permitted before there is a new regulatory framework in place.“We cannot understand why there is this major development immediately before the framework is about to be put into place and to allow vertical integration between different categories of carriers.”CellOne chief operating officer Frank Amaral said of the Digicel deal: “At this time the exact terms of the transaction are not yet fully understood so it is difficult to comment on implications for customers and the industry as a whole.“CellOne continues to support the Bermuda regulatory reform process in light of the expected benefits to the consumer and we look forward to offering new and expanded services.”Digicel’s Mr Caines said on announcement of the Transact deal that his company would compete “on value and customer service” in the ISP market, without giving further detail on whether this would mean lower prices for internet consumers.Asked whether she expected Transact to threaten Logic’s market share, KeyTech’s Ms Lines said: “Logic has always faced competition in this dynamic marketplace but has fared well because of Logic’s commitment to consumer product needs and outstanding customer service. We don’t think that this will change with Digicel’s announcement.”