Frustrated consumers in Bermuda often blame service providers for their inability to offer bundled telephone, cable television and Internet services, but it's actually our legislative framework that keeps the services separate.

The legislation governing the provision of public telecommunications services is the Telecommunications Act 1986 (the "Telecoms Act"). The Telecoms Act prescribes that no person shall provide public telecommunications services without a licence, and currently there are four distinct licences available:

¦ Class A for international telecommunications services (to and from Bermuda);

¦ Class B for domestic telecommunications services (within Bermuda);

¦ Class C for Internet Service Providers (ISPs); and

¦ CATV licences for the provision of cable television.

For the most part, a company holding one class of licence is not able to obtain an additional class of licence, thus restricting the ability of the companies to provide multiple services.

For the consumer, the current licensing regime means that in order to receive local and long distance telephone service, the Internet and cable television, we must contract with four separate entities and therefore receive four separate invoices at the end of the month.

However, the Minister of Energy, Telecommunications & E-Commerce (the "Minister") promised that reform is on the way and that process began in 2005.

The 2009/10 Budget Speech by the Minister of Finance explicitly referenced the reshaping of the telecommunications regulatory regime and the establishment of an independent regulatory authority, so it appears that reform will be coming sooner rather than later. However, rather than being consumer-driven, the reasons behind the reform are commercial in nature. Advancements in telecommunications systems and equipment are geared towards streamlining packaged goods and services, thereby better utilising the capacity available on such systems and equipment.

Some telecommunications service providers in Bermuda have reached a point where the capital expenditure required for the upgrading of their systems is not commercially viable. This is due to the wasted capacity on such an upgrade as a result of the restrictions placed on their business activities by our licensing regime.

Essentially, technology has advanced to enable different services to be bundled together, and the licensees in Bermuda are currently unable to utilise such equipment to its full potential. The proposed reform consists, among other things, of the introduction of new legislation, the Communications Act, and abolition of the current class system of licensing in favour of a single 'communications licence'.

The communications licence would allow each licensee to provide all public telecommunications services. Where ISPs now only compete with other ISPs, under the Communications Act an ISP will be able to bundle its service with local and long distance telephone services and will be in direct competition with all other licensees.

The implementation of a single communications licence raises a number of issues. Among them is the potential for the emergence of a dominant licensee. Under the current licensing regime, the Minister of Finance has granted some licensees an exemption to the 60/40 rule of ownership, the main advantage of which is greater access to foreign investment.

Such exemptions are not an issue now, as those entities with exemptions compete solely with each other within their particular licence class. However, under the communications licence they will be competing with all other service providers.

It remains to be seen how successful the to-be-formed regulatory authority will be in addressing the issues of dominance and ownership exemptions for some licensees.

Some of the proposals include an initial restriction on the granting of communications licences to entities not currently holding a licence pursuant to the Telecoms Act, monitoring of dominant business practices, competition regulation and robust consumer protection policies.

The Minister has stated that the reform will benefit consumers in Bermuda by providing us with more service options, competitive pricing, and licensees offering the latest telecommunications technology available. While we all look forward to better service and value for money, I, for one, am looking forward to fewer bills to pay at the end of each month.

Attorney Christopher Brough is a member of the Corporate and Commercial Practice Group at Appleby. A copy of Mr. Brough's column can be obtained on the Appleby website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.