PAC members accuse utilities of ‘robbery’

| 09/05/2018 | 78 Comments
Cayman News Service

Public Accounts Committee, May 2018

(CNS): Members of the Public Accounts Committee appeared particularly aggrieved about the cost of some utilities when witnesses from OfReg and one of the owners of internet service provider C3 appeared before them Wednesday to answer questions about the regulation of telecommunications, fuel, electricity and water. Focusing largely on the high cost and poor quality of the internet provision and gas prices in Cayman, PAC Chair Ezzard Miller and members Chris Saunders and Bernie Bush were concerned that regulators are failing to hold the players in these sectors to account while utilities are robbing customers blind. 

Miller was also “very disappointed” when he learned from J. Paul Morgan, the CEO of the Utility Regulation and Competition Office (OfReg), that, despite being up and running for more than a year, funding issues had delayed the office’s work on dealing with the pricing of fuel. Morgan revealed that work to examine pricing had only begun in the last few weeks and there would be few results on that issue until the end of the year.

Alee Fa’amoe, the former ICTA director who is now the deputy CEO at the new OfReg and the executive director for ICT, was the first witness in the hot seat. He was pressed by Saunders about what the new regulator was doing to deal with what he believes is the massively inflated prices for dismal internet service. Fa’amoe made it clear that his office is focusing on creating choice and quality of service but it is not touching rates.

Saunders said a list published by Forbes Magazine in 2014 on the comparative cost of accessing broadband in 196 countries showed that Cayman was one of the most expensive countries in the world, coming in at a shocking 190 on the list that started with the best value. He pressed the ICT regulator on what needed to be done to address what he said was tantamount to legal theft. He said a culture had emerged with some companies making massive profits from “sticking their hands in the consumers’ pockets and getting away with it”.

However, Fa’amoe said that OfReg is not going to be dealing with price control. “We regulate the service, not the prices,” he stated, noting that the aim of the regulator was to create a level playing field in the system and to facilitate choice and quality of service, which should drive down costs. He said competition was the key to lower prices and that the regulator would only interfere with competition when the market fails, which is why they were working on a government-built universal network that the telecom firms will pay for.

But Miller noted that since the introduction of competition, prices had increased, and that the market had failed and was not working for the consumer. He raised the issue of collusion, especially between the fuel operators and the telecom firms. When he appeared before the committee, Morgan admitted that the regulator has no power to deal with potential collusion but can try to create an environment where it will not happen.

Bernie Bush also accused the telecom and fuel providers of robbery and pressed Morgan about what the issue was. If the regulator has teeth, why is it not using them, he wanted to know, and if it does not, why aren’t they asking legislators for the teeth it needs.

“We need to address this highway robbery. It’s being going on for years,” Bush added.

In what appeared to be a very frustrating session for the three PAC members who engaged in the grilling of the witnesses, their efforts to get to the bottom of why the regulator is not acting failed.

With the private sector firms it regulates breaching their licence conditions, not providing the services required of them, charging massive fees, possibly colluding and undermining the competitive principle, Saunders urged OfReg to start fining people and said they should be “flogging people hard” to make an example of rogue companies and do something to help the consumer who is being ripped off.

Saunders pointed to the irony that although CUC is a monopoly, it was better regulated than all the rest and it was the fuel factor that pushed up the cost of electricity — though its licensing arrangement could be improved, he said.

Miller said he believed there was no real competition in the liberalised markets of the telecom and fuel sectors but described them as “multi-headed monopolies” who colluded to retain the high prices at the pump and made telecom services astronomical.

When Randy Merren appeared before the committee, he also pointed the finger at the regulator in failing to hold other people to account. Merren is an owner of C3, one of the internet service providers which is obligated to roll out a fibre optic network and, like the other ISPs, is in breach of its licence. Merren said his challenge related to the massive overpricing of Datalink, which owns the CUC poles, which the internet providers need to use to roll out their networks.

Merren said C3 really wanted to get the network out to all the of the Eastern Districts, which are currently suffering very poor and unreliable service, despite paying the same fees as those in the George Town and Seven Mile Beach areas who have high-speed broadband. Merren said he supported government’s plans for a universal network if it helped to get over the challenges the telecom providers faced rolling out the network.

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Category: Business, Politics, Private Sector Oversight, utilities

Comments (78)

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  1. Anonymous says:

    The E&Y Report according to me memory promised there would be cost savings by combining separate regulators into one multi-sector utility regulator. Would be interesting to read the Business Case for the formation of OfReg but so far cant find online, will need to FOI the ministry.

  2. Anonymous says:

    This is what happens in a country when there is no consumer rights. The business people do as they like and the government accept it. It’s not only the utility and the gas companies, what about the commercial banks, every time you look around they add a new fee, we have to be paying them to keep, and withdraw our monies and also have to be paying for their Compliance. I guess we all needs to start saving the old fashion way and see what these greedy bankers do.
    We as consumers do not know the power that we have, have we every hear about boycott, we need to come together and stand up for our rights.

  3. Freetrader says:

    The time has come to nationalise CUC.

  4. Anonymous says:

    And the big bad PAC huffed and it puffed, and it huffed and it puffed some more ( for the benefit of the public audience) and failed to blow down the house of the monopolies and cartels. Quelle surprise, monsieurs et Mesdames .

  5. Anonymous says:

    Have you ever asked yourselves why your government lets this happen to you the Caymanian people? You are sheep. They are the wolves being paid by you and everyone that feeds off of you. They have no reason to change anything for you. You are getting what you voted for. At least you got to vote.

  6. Anonymous says:

    If you read the fine print on what you are paying for with lime it says ‘speeds up to [number]’ for the plan you pay for. It is deliberately misleading. There are no advertising laws here that promote truth in advertising. Anyone can say they offer the best service without having to provide evidence.

  7. Anonymous says:

    See my previous answer.

  8. Anonymous says:

    Let me translate. Lodge run government entity calls out Lodge run “private” sector entity.
    Confused people take sides.
    Lodge wins again.
    Welcome the New World Order.

    They had this before. It is called the “Punch and Judy Show.”

  9. Anonymous says:

    fast fiber optic in newlands is shit, slow and not really a difference and when you ask logic they say everything is running fine paying 100 /mo for nothing!…

  10. Anonymous says:

    Flow rips customers off with their phone data. You get this high phone bill and when you query why it is so much? All they tell you is that it is the data that you used.

    They know that it is difficult for some people to track their data usage on the phone, unlike phone calls, where you can track the calls.

    • Whatcha Say says:

      Most phones will monitor usage for you. You just don’t understand that streaming music and videos all day, every day uses an enormous amount of bandwidth! Suck it up, buttercup!

  11. Anonymous says:

    Having more companies doesn’t lower prices, they’re all competing for a piece of an already small pie. Most everyone commenting on here has no clue what they’re talking about in regards to cost of doing business at an ISP. Canada has millions of people and they have some of the highest mobile rates in the world. OK sure the entire island doesn’t have fiber yet but most of the population does and the quality/reliability I’ve seen from Flow and Logic rivals any place I’ve been. The speeds might not be as high but that’s just because the cost to get bandwidth to the island is high and controlled by 1 entity! (C&W). Want another cable on island? guess what, that will cost millions… who will pay for it? The consumer because that’s how it goes. We can all complain about rising costs pretty much everywhere we go – the cost of getting my haircut has risen 40% in 10 years – I’ve got less hair now and I don’t get a discount :). But my ISP has lowered prices and given me higher speeds. Go figure.

    • Anonymous says:

      The key to the conversation on value for the dollar is as follows for consumers and businesses. The current telecom scarcity model, built around facilities based competition, both need to be binned.
      The new paradigm is that of abundance in a service based competition model. It costs the same to offer you 1000mb/s symmetrical service over fiber optics as it does 25 mb/s. In fact it costs more for installation of the slower speed in your home or business because the technician will have to ‘throttle’ down your speed to 25mb/s. Modern day electronics and modems come out of the box programmed for 1000 mb/s.

      Wholesale Conversation- Assuming Cable and Wireless control the fiber that is serving the island, they can certainly offer more capacity on it. They most definitely are operating under a scarcity model and this too can be changed. Two fiber optic cables can carry enough data for an entire city of 5 million persons.
      The companies controlling the fiber choose not to offer abundant capacities. I will bet that C&W likely has a marine cable of at least 24 cables, and likely far more.

  12. Anonymous says:

    The precedence of daylight robbery was set years ago Customers the big manopoliss Cable & Wireless and CUC as most were and still are regardless of rebranding have no competitive choice. The alternatives are poor service or go without or go off grid.
    This situation is too entrenched for OfReg to handle, they’ll most likely be engaging another industry consultant if public & political pressure dictates. I’m ok with that if we get value, action and positive results for consumers. Our Ombudsman in turn needs to closely monitor performance of this regulatory body especially to mitigate pandering to the utilities they regulate.
    We have the beginnings of. compettition at least in the telecom sector but antimonopolistic measures need to be in place and strictly regulated to allow existing an new competitors to flourish.

    After years of apathy and price gouging we sorely need a change and if that means a change of guard so. E it. At least we have some politicians up on their soapboxes.

  13. Anonymous says:

    Flow is definitely one of the worse offenders – $2 a month rental for a box i already own!!! It is absolutely daylight robbery

    • Lo-Cal says:

      $2 Dollars! I pay a monthly line fee of $15.00 in Lower Valley because internet via satellite is not in that area. This is even after my neighbor received Digicel plug and go. When asked about it the answer is always the same. Soon come.

      • Whatcha Say says:

        The DiGi “Plug and Go” uses the cellular network, so speeds are dependent upon how many in your “cell” area are online. Usually the bandwidth takes a nosedive after the script kiddies get out of school and on weekends.

        The running of fiber cable is very labour intensive and takes a lot of expensive multi-fiber lines to extend service. It is called GPON, which stands for Gigabit Passive Optical Network. In long runs it requires booster amplifiers to extend the signals for the longer distances. The operative word in all this is “PASSIVE” which means that as long as the “head end” of the system has power, and all the boosters have power, the system does not go down in a power outage. Each fiber cable ‘drop’ shares a one Gigabit connection between up to 144 customers (12 pairs of 12 fibers each).

        My neighbor has fiber and also a UPS power backup running his ONT (Optical Network Terminal – formerly referred to as a MODEM) so his laptop, running on battery can stay online for at least 3-4 hours, so that if (or more often WHEN) CUC goes down he can still work.

        When you understand the technology, you can comprehend why things develop slowly in such a far-flung area as East End and North Side. Just think how long it took Water Authority to extend service to those districts. Some in more isolated areas still do not have it! It is the same basic problem with fiber internet, as the fiber “pipe” to carry the data has to be strung from pole to pole to reach every potential customer.

        The devices to splice fiber cable cost between $1000-$3500 each, and the technician to do it is highly skilled and makes a high salary. It all figures into the cost of deployment of the network. The cable itself is extremely delicate to handle and quite expensive as well.

    • Anonymous says:

      I complained about that new “rental” charge for a box I already own and both Flow and the regulator blew me off. I expected that response from Flow, but not from the regulator. Agreed – outright robbery and no one cares.

  14. Anonymous says:

    Don’t forget the gas stations who put up the prices of their existing stock every time CNN announces an increase in world oil prices – long before any new shipment reaches Cayman! They never drop prices immediately as international prices drop! Also, some gas stations calibrate their pumps in US gallons! Rip off!

    Where exactly is OfReg??!!

    • Anonymous says:

      With the exception of Marinas, if that is the case about US gallon calibration please report the station immediately to OfReg because it is the law to calibrate and display price in CI/Imperial Gallon.

  15. Anonymous says:

    Down here in West Bay we only have flow for BroadBand. We have no choice and the bill just keeps rising. We paying like 91 for internet alone while SMB with choice pays like 50.

    Its crazy, keeps poor people poor just like east end! we need this to educate our kids too you know probably more to level thw playing field. Do something.

    • Anony says:

      And when you pay extra for faster speed? FLOW is inconsistent in supplying it. Frequently when my Netflix goes down it is because my speed went down from the 15GB that I pay for to 5GB – where is OfReg? FLOW only says…hmm….we don’t see a problem, especially over a 3 day weekend, where then on Tuesday of the following week they say – oh, yeah, the problem was at the street! That’s the West Bay scoop!!!!

    • Anon says:

      Logic is in West Bay. Much cheaper.

      • Anonymous says:

        Not all of West Bay. Only down Northwest Point Rd on one side and The Shores on the other side.

  16. Anonymous says:

    If OfReg is not doing their job to hold these ISP’s accountable then i think they need new leadership.

  17. Anonymous says:

    My daddy always said that if you have to ask how much it is you can’t afford it.

  18. Rick says:

    FLOW gives poor service, fail to rectify, and when the customer simply gives up trying to rectify, they cut the service and pad the bill with monthly ‘service’ fees. Our useless government allows them to do it. I hear the ‘competition’ is no better.

  19. Anonymous says:

    FLOW are the biggest crooks on the island! I pay a fortune for LTE cell phone service and it constantly drops to 3G and no signal at all. Never mind the data issues… they can’t even keep a phone call connected! The amount of dropped calls I get a week is infuriating.

    FLOW you should be ashamed and at very least offer compensation and an apology to your customers!

    Is there a better option on the island or are the other cell phone providers just as bad??

    • Anonymous says:

      FLOW =following lime old ways !, so said a very good friend. Suits them to a T

    • Anonymous says:

      Agree! And forget about understanding what is on your bill especially with regards to data usage!! OfReg should require customer bills to be clear and simple to understand but maybe they will need to hire expensive consultants to help them with that as well!

    • Anonymous says:

      Digicel offers dropped call compensation that is added as credit against your final monthly bill; thankfully, I’ve never had a single dropped call with them. However, not to say they don’t have their own issues, but they are FAR more user-friendly than Flow, in my experience. I’d highly recommend them.

  20. Anonymous says:

    Check Little Cayman, paying for “superfast 10”, what we are getting is superslow “5” if we are lucky, all of that for CI$ 79.00. Fibre optic was promised 10 years ago!?

  21. West Bay Premier says:

    I think OFReg is full of black – pot on the pot and kettle in the caboose . Did OFReg get any money out of SOL for the hundreds of hours that they spent to investigate the fire , that was so carelessly caused by SOL negligence .

  22. Anonymous says:

    It just shows you the incompetence of the decision makers from the get go of the so called market liberalisation which has failed the country. When we had just C&W we had one company to deal with and could hold them accountable for service. The service was way better then and they could be pushed for investment, but the prophets from abroad had to come and sell their ideas to all and sundry who believed them. OfReg is a joke with a lot of fluff and no action.
    The real question is WHY, when CUC is doing so well before and after any regulator.

    Give me back the old time days.

  23. Anonymous says:

    there’s satelite internet guys! it’s just $100usd for a 100 megs unlimited! bracka

  24. Anonymous says:

    So dumb getting every provider to lay their own fiber so the consumer pays for 3 lots of infrastructure. CIG should have built the network once and providers licensed to lease it off them.

  25. Anonymous says:

    everything in cayman is 5 star price for 3 star quality

  26. Cable-guy says:

    CUC should be brought back into local ownership then it could be compelled to provide access to the poles for the telecommunication companies.
    It all worked well 40 years ago before the Canadians got involved.

  27. Anonymous says:

    This is smoke and mirrors by Alee and Ofreg. They claim no money and yet as soon as they were established new vehicles were bought for the CEO and Alee been traveling all over the world (and not economy) like Singapore. Fact is they should have sorted the regulatory fees but they didn’t. Now blaming everyone but themselves whilst blowing money on inflated salaries and perks.

    • Anonymous says:

      True, maybe PAC should have questioned compensation and benefits for board members, senior staff, as well as other expenses. Heard that new offices are being fitted out as well.

  28. RICK says:

    Another day in Banana Republic

  29. Anonymous says:

    OFREG was created just 2yrs ago and already begging for funds from Govt!

    I had an issue/complaint and needed to speak to someone. I know there was a process of filling out the complaint form online, but I was directed by another Govt agency to contact them directly. I was transferred to 3 different persons on different days and was notified they were all out of office travelling. I also visited their office on different days and got the same notification. When I was being ignore, I started to research who worked at the Authority and their positions. I see now why nothing can’t get done.

    There is no wonder why OFREG can’t get these project off the ground as there staff is never in office long enough to accomplish anything.

    I’m so surprise that PAC didn’t ask about their extensive spending. The parking lot at Alissta Towers looks like the showroom at Advance Automotive…….no, actually OFREG have more CHEV SUV in their fleet!

  30. Anonymous says:

    Put it in the licenses that they can’t collude or discuss pricing. Don’t need to wait for a law.

  31. SSM345 says:

    Anal rapage every single month from not 1 but every single service provider on this Island; from water, to electricity, to groceries; the cost of living is regulated by the Mafia. FACT.

    • Anonymous says:

      No we are civilized in Cayman, you cannot refer to them as the Mafia, please use the appropriate term, the Lodge.

  32. Anonymous says:

    75 square mile Island, and can’t run a simple cable from one end to the other, just because of greed.

    • Anonymous says:

      Should all be underground anyway. Short term pain, long term gain, and esthetics and hurricane resilience for free!

    • RICK says:

      Was your garbage collected ?

    • You do not deserve what you can not afford says:

      Simple cable ?

      You obviously have no clue how much and what considerations have to be made before a “simple” cable is installed.

    • Anonymous says:

      agreed and whats more. We are basically 190 out of 196 countries with the most expensive internet. Meaning. There are only 6 countries more expensive than ours for internet. In the world! So the telecomes are making massive profits and the excuse that cabling the east end is too expensive. Is hogwash. Use the profit you have been raping the average joe on, for the last 20 years. And build that fiber to east end.

      gas. Gas just went up to 70 a barrel but was hovering at 30 for the last year and a half. Realistically we should have seen a 50% drop in gas prices. But we did not. If that is not collusion of price fixing. I have no idea what is.

      • Anonymous says:

        Agree cost of living is very high here, but consider this. Talking about collusion, place an identical order to the USA for a 20 ft. container of goods, 1 from Cayman and 1 from any of our neighbors and see the difference in prices. The Cayman container FOB costs will be much higher. The prices to us are inflated because the suppliers are aware of the difference in our economies. Utility costs cannot be compared with each other. A CUC bill cannot be compared with a telcom. bill as CUC will receive and retain 100% collected whereas the telcom. bill have to be shared with other providers locally and internationally. We also need to accept that most of our expenditure is totally in our hands and we must be more responsible as there is a huge difference between what we NEED and what we WANT. We and we alone are responsible for the choices we make. Why is it that so many of us and world wide choose to blame others for the results of the choices we make and actions we take. Lets be more responsible and frugal. Just saying. Why make 4 trips to GT a week when we can achieve the same result with 1 trip with a little thoughtful planning.

      • Whatcha Say says:

        When gas was $2+ in the US, it was $3+ here. I have records going back 35 years on this. Now when gas was $2 and under the US in many cases, we were still over $4. Nothing but THEFT and GREED!

      • Anonymous says:

        ‘190 out of 196’…I thought that was our ranking for the Fifa World Cup ^_^

    • Anonymous says:

      75 sq. mi. Island, It is Islands not Island.

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