Dec 15, 2016 News
A consumer body battling US-owned Guyana Telephone and Telephone Company (GTT) over an application to raise rates, is refuting claims by the latter that citizens are no longer interested in owning a landline.
According to the Guyana Consumers Association (GCA), GTT’s claim is “preposterous from our experience as consumer advocates”.
The arguments are part of the consumer’s body submissions to the regulator – the Public Utilities Commission (PUC).
GTT has applied to hike rates for its landlines and for international calls.
However GCA is objecting, accusing the telephone company hiding its true profits and employing creative accounting practices to hide its assets and true profits.
In addition to calling for the administration to launch a forensic audit, GCA also accused the company of easing its landline expansions in favour of the more lucrative mobile services.
Several new housing schemes have been complaining of waiting years for services…in vain.
“GTT does not repair consumers’ telephones in good time, sometimes for months. People are therefore forced to buy cell phones. More importantly, thousands of people have applied for landline phones, but GTT does not ever supply them. Sometimes applications are in the system for several years,” GCA said in its objections.
“Many parents have come to us complaining that they have applied for landline phones so as to allow their children to use the internet to help them in their studies but GTT never supplies the landlines. It is our understanding that GTT deliberately does not supply the landline phones and this forces people to buy cellular phones.”
The consumer body is challenging GTT to test the “truth” of the landline market by prominently advertising in the press, and on TV, that the company would be able to supply all applicants for landlines within two weeks or a month, and that it would repair customers’ phones with immediacy.
“If GTT does this, this would be the first time in 10 years they would be marketing the landlines. We are asking the PUC to request GTT to test the truth of the landline market by reasonably quickly supplying the landlines and effectuating the repairs and doing the suggested marketing.”
GCA said that the telephone company, in its application, has expressed a presumption that if the PUC increased the landline rates, consumers will use it more.
“We are anxious to see the survey, market analysis or study that they would have undertaken to come to this conclusion. We would ask the PUC to also request a copy of this study. If the mobile rates were to be decreased to a more reasonable rate, would its usage increase or decrease?”
The advocacy body also noted that GTT has claimed it had proposed a 50% decrease for most international calls.
“They have done nothing of the kind, and we are looking forward for the lowering of international rates. International rates are falling everywhere and in Guyana, GTT is the only supplier with high rates. And even if they reduced by 50%, their rates will still be higher than all other local suppliers.”
GCA in its submissions said it is also formally asking GTT to supply a comparison of termination costs that the company pays to other operators to terminate calls.
“This data should be presented on a year by year basis, so that we can see how termination costs have moved over the years.”
GCA also denied the company’s claim that its service quality for landline has improved.
“This boast is empty except GTT could provide empirical evidence. To the Consumers Association and the Guyanese public, there has been no improvement in quality of service. Indeed we think quality of service has further deteriorated since the company illegally moved its billing, call centre and internet trafficking businesses to offshore companies.”
Also being disputed by the GCA are claims that the company is under-earning.
“Does the term “under-earning” refer to the 15% minimum of assets plus the “Advisory Fees” or does it refer to the increase in rates which is the subject of this filing. We are interpreting the term to refer to landline rates, since that is the subject of the filing. We reject the allegation that the landline services are under-earning.”
As a matter of fact, GCA said, the landline is owed US$90M interest for financing the cellular phone services.
“GTT started out as a landline operator and its cellular business was grafted on to what was then its core landline operations. In this process, GTT used about US$60 million of funds generated by the landline to invest in the cellular business. No bank loans were taken; landline money was used. At 15% per annum, the annual interest accruing from this US$60 millions is US$9m and for the last ten years it is US$9m x10 = US$90 millions,” GCA argued.
The battle between GTT and the consumers’ body would take significance at this time, as Government has passed new laws to open the market to other players in the telecoms market.
GTT’s officials from the US met with Government last week to start negotiations to end the current monopoly it enjoys in landline and international calls.
The telecoms market is said a highly lucrative one, with Government eyeing the potential of expanding it rapidly with new companies and services.
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