Digicel weighs options after court orders halt to long distance service

The Bermuda Supreme Court halts Digicel’s long-distance service following rival TeleBermuda International’s legal action.

HAMILTON, Bermuda, Thursday, November 3, 2011 – After weeks of legal wrangling, the Jamaica-based Digicel is bracing for the financial fallout from the Bermuda Supreme Court’s decision late last week that it had to cease providing Bermudeans access to its internet-based long-distance service.

“This will cause us an enormous amount of financial harm and who is going to pay for that?” demanded Digicel’s lawyer Victor Lyon, QC, following the judgement handed down by Judge Ian Kawaley.

While Kawaley did not rule that Digicel or internet service provider Transact were in any way in breach of their licences, he mandated them to stop offering the service to wireless subscribers until legal action on the matter was resolved and he set the case down for a full hearing on that issue next month.

Late last month, the turf war between and other major telecommunications providers on island took a legal twist when TeleBermuda International (TBI) launched proceedings against Digicel to stop it offering its new long distance service.

The other telecoms accused Digicel of by-passing government’s liberalisation agenda and complained that Digicel was being given an unfair head start in terms of positioning itself ahead of its rivals before the expected liberalisation of the industry, which is expected to begin this month when the necessary legislative package of telecommunications regulatory reform is tabled by government.
 
The suit filed by TBI on October 17 was to restrain Digicel from offering long distance service and TBI president Greg Swan called Digicel’s launch of long-distance service a “slap in the face” to government’s telecoms regulatory reform process. Swan said the Ministry of Environment, Planning and Infrastructure, had been very clear that regulatory reform was imminent and he found it hard to believe the ministry allowed Digicel to offer the new long distance service before reform.

Initially it seemed that the case would be decided in Digicel’s favour when Judge Kawaley ruled after hearing the first day of legal arguments that Digicel was legally entitled to market the service under its brand unless the government mounted any objection to the contrary within seven days.

While Digicel characterised the ruling as a “victory” expressing confidence that government would mount no objection because it had done nothing wrong, they were apparently blindsided when two days later word came from the Attorney General’s office that did not support this view.

In the statement issued by the Attorney General’s office, it was pointed out that Digicel had a Class B Telecommunications Licence, authorising it to provide wireless voice services; Transact, with a Class C Telecommunications Licence, was authorised to provide Internet services; but following its recent acquisition of Transact, Digicel had blurred the lines by beginning the process of providing long distance service.

“This move has caused consternation within the telecommunications industry, with carriers seeking relief and clarification from the Courts. The Government re-iterates its position that it has not changed its policies regarding telecommunications licences. Its position remains that companies holding more than one licence must operate those licences separately,” said the statement.

Last week, government’s lawyers took this position to court, going before Judge Kawaley to state that the Ministry of Environment, Planning and Infrastructure (Telecoms) firmly opposed the Digicel/Transact service and accused Digicel of jumping the gun on imminent Telecoms regulatory reform.

Consultant Crown counsel Maurice Cottle told the Supreme Court: “All parties have known reform is imminent. Digicel is the only party that has broken ranks in seeking to do what it is doing ahead of reform ... to get an advantage.”

Further outlining the Government’s case, he suggested it was the Ministry’s view that Digicel had only been given a “conditional” go-ahead to offer the service and had still to satisfy certain conditions including separate billing and accounts. He said Digicel may have a different interpretation of what Government had told them.

Wayne Caines, CEO of Digicel Bermuda, still said following the latest decision by Kawaley that he “strongly believes that once the facts of our case are fully presented before the Court that it will be evident that Digicel and Transact are operating within the law and the boundaries of our respective licenses”. Click here to receive free news bulletins via email from Caribbean360. (View sample)