The changing landscape of telecommunications

Logic technicians lay fiber-optic cables near the Government Administration Building in George Town. - Photo: Taneos Ramsay

Just several years ago, companies like Digicel were largely known as mobile phone providers.

But with the exploding popularity of WhatsApp and other applications that allow people to text and make voice calls over the internet, telecommunications companies can no longer rely on selling prepaid and postpaid bundles of minutes to make the bulk of their revenue. Instead of minutes, consumers are clamoring for data.

This has affected the region’s various telecom providers in various ways.

At first, around 2014 and 2015, Digicel and Flow allegedly blocked WhatApp and other “voice over internet protocols” in many jurisdictions, including Barbados, Jamaica and the British Virgin Islands – no reports about this were found in Cayman. However, pressure from consumers and regulators forced those companies to reverse that practice.

Rather than “swimming against the current,” as Flow Interim Managing Director Danny Tathum put it, Digicel and Flow have diversified their products and services.

“We started diversifying about five years ago, but in the last 12 months we’ve taken far more aggressive approach,” said Raul Nicholson-Coe, the CEO of Digicel’s Cayman branch. “We can’t rely on just voice anymore.”

Nicholson-Coe said one of his company’s main areas of growth its is “cloud-based telephony” services, which allow a business with multiple locations to communicate via a secure off-site server. Digicel also provides data-storage services, with a data center in Camana Bay that serves major law firms and accounting firms in the territory.

“Enterprise customers are looking for value-added features. Can you provide advanced security solutions, resiliency, routing solutions?” said Nicholson-Coe. “We sit with the customer and find what their needs are.”

Flow provides similar services, with its three-story building on the corner of Eastern Avenue and Shedden Road housing millions of dollars of equipment that stores untold amounts of information of some of Cayman’s largest trust companies, law firms, and other financial institutions – along with Flow’s own data.

Both companies also provide video streaming services, and Digicel has even gotten into the journalism business with its “Loop News” websites for jurisdictions across the region.

While Digicel and Flow have taken a hit from WhatsApp and other voice over internet protocols, those bandwidth-consuming apps have been a blessing for other firms that focus on providing broadband internet services, such as Logic and C3.

And with bandwidth requirements doubling about every year due to other data-intensive products like Netflix and YouTube and WhatsApp, the importance of acquiring bandwidth from off island is growing exponentially.

“Bandwidth is a scare resource everywhere in the world, even in New York City,” said Nicholson-Coe.

To solve their hunger for data, telecom companies are looking for ways to directly buy off-island bandwidth instead of relying on Flow, which has historically had a corner on this wholesale market.

Flow’s parent company, Cable & Wireless, has been the dominant provider of subsea cable access since 1972, when it first completed the construction of a submarine cable link from Cayman to the Prospect Pen Earth Station at St. Thomas, Jamaica.

However, that could change soon.

C3 owner Randy Merren said it is his company’s intention to join Cable & Wireless in connecting straight to the Maya 1, which is owned by a consortium of more than 30 telecoms companies.

“Right now, if we want to buy capacity, we have to negotiate it through [Cable & Wireless],” Merren said. “We want to get into the Maya 1 cable to cross-connect into our cable system.”

Another option for telecommunications companies could be the planned “Deep Blue Cable,” an ambitious plan by billionaire Digicel founder Denis O’Brien to lay a new, 7,456-mile subsea cable that will connect to 12 markets, including Cayman, Jamaica and Puerto Rico.

The Deep Blue Cable’s website states that the company hopes to begin manufacturing and installing the cable in 2019 and 2020, respectively.

That is good news for Flow’s competitors.

“It will revolutionize the market because you’ll be getting additional capacity, and there will be competition,” said Nicholson-Coe.

“When you boil it down, we’re in the business of buying and selling megabits,” said C3’s  Merren. “The more choice we have to buy those, it will ultimately bring down costs of internet access in Cayman.”

Even Flow officials said they see the potential to benefit from having another subsea connection.

“If the Deep Blue does come, we would probably be interested in buying capacity from them, too, just to build resiliency and redundancy,” said Flow Technology Operations Manager Jonathan Martin.

While telecom providers are looking for ways to acquire more bandwidth from off island, government’s main focus is on making sure that data can be speedily transferred to customers throughout the territory.

Public officials hope to accomplish this by ensuring that fixed-line internet services are transmitted over fiber-optic cables everywhere. Currently, most residents in West Bay and George Town receive fixed-line internet over fiber cables, but the eastern districts mostly must rely on decades-old copper cables.

To accomplish this, Premier Alden McLaughlin proposed in March that government achieve universal broadband access by building its own fiber network in the eastern districts.

The premier said this is necessary because the telecoms companies have been dragging their collective feet in fulfilling their licensing requirements. All the telecommunications companies, besides Flow, have deadlines in their licensing agreements to expand their fiber networks across Grand Cayman and the Sister Islands, and those deadlines passed more than a year ago.

“All these years, we keep struggling unsuccessfully to get [the telecom companies] to deploy the fiber they agreed to, so we’re going to abandon that approach,” McLaughlin said on March 16 in the Legislative Assembly. “We’re going to build the fiber network and we’re going to charge the licensees for it.”

Just how that will be completed is not clear. OfReg published a press release last month stating that the regulator “has been formulating a plan and considering timelines for the installation of the [universal service network] accordingly,” but does not provide any other details about the project.

Currently, the regulator is in the consultation process of formulating a broadband policy, which will define the term broadband and set a target for licensees to make broadband available to all residents by a certain date.

That consultation period ends on April 18, and is a precursor to OfReg determining exactly how it will implement universal broadband service.

“Once this new definition of broadband is finalised [as a result of the consultation], if we as the regulator feel, that the local providers are unable or unwilling to build out their networks to meet the specified targets, OfReg is willing to leverage its powers under the [Utilities Regulation and Competition] Law to build a [universal service network] to achieve the desired end result,” OfReg stated in its Thursday press release, adding that it expects to make a final determination on this issue by the end of September.

If implemented correctly, many telecoms officials think that a universal service in the eastern districts would be more efficient than having multiple telecom companies build out their networks separately in a sparsely populated area.

“There are only so many homes here, which means that there’s a limited amount of sales available for the service. If you have multiple providers putting up multiple networks, you’ve got a lot more costs involved, when one network could be sufficient,” said Sacha Tibbetts, the CEO of DataLink – the firm that telecom companies go through to install their fiber cables on Caribbean Utilities Company-owned telephone poles.. “So the universal service can make a lot of sense if it’s done correctly.”