The telecommunications sector has returned to a state of turmoil with the latest wave of public hostilities between Belize Telemedia Limited (BTL) and Speednet Communications (owner of Smart), who have now taken their dispute over their contractual agreements to the courtroom of Chief Justice Dr. Abdulai Conteh, following claims of Speednet, an Ashcroft company that BTL nationalized since August 25, is damaging its business.
Late this evening, Chief Justice Conteh ruled for Speednet, agreeing to grant the company an injunction against BTL, which would—as Speednet’s attorney, Eamon Courtenay, puts it—return things to the status quo, before the dispute began.
This means that BTL leaves intact all of Speednet’s privileges which it had before the nationalization, when the two providers were controlled by the same mastermind, British billionaire Michael Ashcroft.
However, the ruling troubles the chairman of the Public Utilities Commission (PUC), John Avery, who told Amandala tonight that the effect of the ruling is to force BTL to provide Speednet services below cost, which is directly contrary to the Telecommunications Act.
Returning to the status quo, said Avery, also forces BTL to grant Speednet unfiltered access through an E-1 connection, a type of broadband access that Avery said could open up access to foreign providers such as Vonage, violating the policies already established by the Commission as the regulatory agency over the telecommunications sector.
Smart had, before BTL discontinued the service, used this connection to route its international calls, which it was able to provide at cheaper rates than BTL.
“This is a very tricky, ticklish and delicate situation. We will have to tread carefully. We don’t want to create any animosity with the court,” said Avery, adding that the PUC think tanks would hold an emergency meeting Friday to decide the way forward.
“[The court ruling] helps one [Speednet] and hurts the other [BTL],” said Avery. “The implications of the order are wide and far-reaching. It is telling BTL to break the law, by telling BTL to do something the PUC does not approve of.”
The BTL reps we spoke with immediately after tonight’s ruling were also perplexed as to how the ruling would be implemented, because while Speednet has called for the status quo, the parties had already agreed on an alternative arrangement for international calls, with Speednet routing its calls through BTL’s switch at a nominal rate of 10 cents a minute on top of charges Speednet would pay to international carriers.
According to the PUC chairman, there is no existing agreement between BTL and Speednet for the use of the unfiltered E-1 access, and the PUC would never sanction it because it is contrary to its policy to filter access to protect the industry. He still expects the parties to renegotiate the 4 agreements in dispute, which he told us are also illegal.
The PUC, said Avery, gave the parties until December 23, and if they don’t comply, the PUC could impose an agreement on the two companies and can furthermore revoke their licenses for not complying with the PUC’s order. (Under such a scenario, the government could take control of a licensee’s assets and appoint people to run the company, said Avery.)
In concluding his ruling tonight, the Chief Justice appealed to both BTL and Speednet to act in the best interest of all consumers.
Notwithstanding Telemedia’s continued assertion that under Ashcroft’s control, BTL was made to subsidize Speednet through the set of four agreements that give it an unfair advantage over BTL, the Chief Justice ruled, after hearing both parties on Tuesday and Thursday, that the status quo before the dispute should remain until further order of the court, or until the full hearing concludes. (No date has yet been set for further court hearings.)
Avery told our newspaper that under the law, subsidies are not allowed, and even within a company, it is illegal for a company to use the proceeds from the sale of one service to subsidize another. Services must be provided based on cost, and that’s not just in line with Belize’s laws and policies, but in line with global public policy that Belize has adopted through its affiliation with the International Communications Union, as a part of the United Nations framework, he added.
BTL’s attorney, Lois Young, was stunned by the Chief Justice’s decision, because she holds the view that it was Speednet that had filed a complaint on November 17 with the PUC, which has ordered the parties to renegotiate the agreements by December 23. According to information presented in court today, the PUC had conducted a review and determined that the agreements were not cost-based and could be discriminatory, and therefore ordered the review of the contracts.
The Speednet-BTL dispute is seen by some pundits against the larger backdrop of the ongoing faceoff between the Barrow administration and Mr. Ashcroft, which ensued after the Barrow administration took the position not to honor a series of sweetheart deals the former administration of Said Musa gave to the political bankroller.
“I back Telemedia completely,” Prime Minister Barrow told Amandala on Wednesday morning, when we asked him for his stance on the Speednet lawsuit against BTL. “This is part of the larger struggle to ensure that we don’t allow this man [Ashcroft] to force us to live on our knees.”
“They will fight like the devil, but Telemedia is equally prepared to fight them so the privileges are not maintained,” said Prime Minister Barrow.
In the recent weeks, BTL’s disconnection of Speednet/Smart’s international services on November 20 triggered a series of standoffs between the two telecommunications rivals, which, despite a call from the Public Utilities Commission for the two to come to the negotiation table, has, instead, landed the parties in court this week.
It is Speednet that has taken BTL, which it calls the dominant services provider, to court, claiming that BTL is abusing its power in the industry to quash the competition.
Speednet complained that BTL had dropped its international services, as well as severed connections at Ladyville and the Benny’s complex in Belize City.
However, BTL contended that it was Smart that refused alternate offers that were economically fair for the parties, and that Smart had benefited from what it claimed were illegal connections at the tower sites in question.
In fact, in her affidavits to the court, BTL’s chief operations officer, Karen Bevans, said that Smart had requested that BTL disconnect its Ladyville connection and furthermore, she does not know of any connection Smart had at Benny’s.
Last week, when the parties agreed to a temporary solution to have international calls restored, it appeared that the dispute had quelled; but things came to a head this week when Speednet summoned BTL to court.
On Tuesday, Chief Justice Conteh had granted Speednet’s request for what he described as “a holding order,” restraining BTL from taking any further action to restrain Smart’s international telecommunications, to remove any of its equipment or to block access to any BTL sites where Smart/Speednet has its equipment.
Today, the parties were back in court for a full airing of the request for an injunction, which Speednet hopes would protect the agreements granted while both telecommunications companies were under Ashcroft’s control.
Speednet claims the agreements have been in force for more than 4 years, and there were no problems until after the Barrow administration took control of BTL.
Prime Minister Barrow acknowledged that Speednet’s owners can afford the best attorneys at whatever the cost.
“They’ve got all the legal resources they need to be easily paid for,” said Barrow. “They will fight to maintain the extraordinary and unfair privileges Ashcroft gave them when he owned two companies, with the intent of making it up from the people of Belize.”
Mr. Barrow was referring to the accommodation agreements the Musa administration gave to BTL to ensure that if the company’s investors did not make a 15% rate of return, they could take tax holidays to make up the difference.
This agreement is among the factors that led the Barrow administration to nationalize BTL. Shortly after, the government-appointed board unearthed the lucrative Speednet agreements, which they claim forced the company to subsidize Speednet, with the veiled intent of having taxpayers make up the difference—a win-win situation for Mr. Ashcroft, who at the time of nationalization had controlling interest in both companies, according to public statements by Prime Minister Dean Barrow.
Speednet complains that to date, its services in the Ladyville area have still not resumed, and BTL has given it up to the end of the day, or at the most until December 15, to enter into a new agreement for international services for one year, through which the revenue sharing formula would be adjusted from 75-25, in favor of Speednet and BTL, respectively, to 60-40 in favor of BTL, if Smart accepts the proposal.
However, in court Thursday morning, Speednet’s lead attorney, Eamon Courtenay, SC, of Courtenay & Coye, begged Chief Justice Dr. Abdulai Conteh to maintain the status quo.
Speednet’s legal team also includes Ashanti Arthurs-Martin, of Courtenay’s law firm, and Andrew Marshalleck of the Barrow & Co. law firm.
The government is represented by Lois Young, SC, and her daughter, Deanne Barrow, also the daughter of Prime Minister Barrow.
Courtenay had the opportunity to lay out Speednet’s case to the court Thursday morning.
BTL has threatened that the tower lease agreement is next, which would bring down Speednet’s business, he told the court. He added that BTL has indicated that on seven sites, Speednet’s towers are at the wrong height.
BTL has also imposed a new site access policy on Speednet, Courtenay told the court.
BTL is violating section 42 of the Telecommunications Act, which clearly sets out provisions to protect competition in the telecommunications sector, in the absence of anti-trust and anti-competition laws, the attorney furthermore contended.
“The evidence shows that the claimant will continue to suffer damage if the defendant is allowed to continue, as we say, in violation of section 42,” Courtenay told the court.
It will result in damage to Smart’s reputation, loss of revenue, and a severe loss of its opportunity to compete in the existing environment, he summarized.
In making his case for an injunction, Courtenay said that an award of damages is not an adequate remedy in such circumstances.
Citing public statements made by Prime Minister Barrow that the BTL-Speednet agreements are “scandalous,” a statement by BTL chairman, Net Vasquez, that Speednet should come to the table to talk about the four agreements of 2004, and a declaration from the PUC that because the contracts are not cost-based and may be discriminatory, they should be renegotiated by the parties, Courtenay opined that, “the coincidence of views is neither luck nor happenstance.”
Speednet’s case today relied on affidavits from Chief Executive Officer, Ernesto Torres; Chief Finance Officer, Rolando Zetina; and Director of Network Services, Abraham Teck.
On Thursday afternoon, Senior Counsel Lois Young had her chance to respond to Courtenay. Her defense hinged on the claim that the PUC is already engaged in settling the dispute between Speednet and BTL, and a process is already in place for the resolution of that dispute.
She pointed to elaborate provisions in law that could later include a public hearing of the issues at hand, which, said Young, could give a true indication of whether claims made by Smart that many of its customers had been threatening to switch to BTL because of the suspension of international services is really true.
Young told the court that under the law, it is only after the PUC process to review the very technical aspects of the dispute is exhausted, that Speednet should then be allowed to go to the Supreme Court to seek redress on points of law, because the court does not have the expertise to look into the more technical issues such as the cost of service and the question of whether BTL is really the dominant provider.
In her presentations to the court, Young also claimed that the facts were not as Speednet had made them out to be.
She also gave the undertaking that Telemedia would not discontinue Smart’s international services due to the company’s not meeting the aforementioned deadline to reach a new agreement.
After this evening’s ruling, Amandala tried to get a sense from BTL’s Chief Operations Officer, Karen Bevans, of how BTL would implement the Chief Justice’s order. Bevans told us that they would have to consult with their attorney, Lois Young.
One issue that will have to be resolved, said Young, is whether Speednet will continue to accept the arrangement for international services, through which BTL routes international calls for a charge comparable to the local interconnection rate of 10 cents, or whether they will revert to the E-1 connections where they had direct access to the external communications connections.
That’s a technical dimension of the dispute and one that customers care about only from the perspective of whether they will have reliable service at a reasonable cost.
In wrapping up his decision today, Chief Justice Conteh said that both BTL and Smart, as telecommunications companies, provide a lifeline for the Belize economy, and so it is incumbent on those in power to act to bring stability to the sector.
This was one of the Barrow administration’s stated aims in nationalizing BTL. The court said that PUC could be joined as a party or could intervene to provide important information and input to the court on the matter when the case is more fully ventilated inside the courtroom.
Today’s ruling was made immediately after preliminary injunction hearings, because Speednet asked the court to treat the case with urgency.