FileA sign advertising Flow in Kingston. While the company is now the dominant name in the sector, small players continue to emerge.
Susan Gordon, Business Reporter
The expectation that Flow's entry into the Jamaican cable market would have transformed the face of the sector, force its players to consolidate, and drive down prices to consumers has not happened, said the chief spokesman for small operators.
Instead, Collin Innis, president of head of the Jamaica Association of Community Cable Operators, says more players have actually entered the market and that the monthly charges to subscribers have remained at an average of $2,000 per month.
Innis is the owner of Inntech Communications Limited.
"I have not seen any significant changes in the number of operators in the system since the advent of Flow, nor has any significant number of mergers taken place," Innis told the Financial Gleaner.
The Broadcasting Commission's September 2007 report on the industry pointed to 48 operators - including the seven acquisitions made by Flow - only 23 of which were fully compliant.
But on Wednesday Innis said there are about 54 operators.
Far from monopoly<
Innis' argument is essentially the same made by Richard Pardy, chief executive officer of Columbus Communication, trading in Jamaica as Flow, that the company was far from being the monopoly consumers fear it is becoming.
Pardy in a Financial Gleaner interview this week indicated that Flow was going after just over 187,000 subscribers within three years, by 2011, or about a quarter of the 750,000 households that comprise the cable market.
On market entry, Flow had promised boldly to revolutionise prices in the industry - referring to its triple play services of voice internet and cable.
Now Pardy lays claim to competitive prices in the latter sector, saying Flow's cable packages alone are priced within a range of $750 to $4,495, plus tax, per month.
Favourable comparison<
The $2,225 charge for 150 channels, he said, compares favourably with the rest of the local market, and "is about half" that of the prices in the United States.
Innis said that the operators had begun the process of combining operations, noting that "ironically", Flow's first acquisition SAUCE was the product of a merger of five of cable service providers, as were Allied Cable and JACS.
"More than 90 per cent of the companies were inclined to merge," he said.
The Broadcasting Commission meantime appeared not to have its finger on the pulse of the sector, requesting time to research information to queries submitted a week ago on the current status of the sector it regulates.
Flow is not the first to be granted an all-island cable licence. The forerunner in that regard was internet service provider N5 Systems, whose digital cable licence was issued in 2005, the Commission's executive director Cordel Green noted at a press conference last week.
The licence was subsequently revoked.
Only one merger has taken place in Westmoreland, Innis said, since Flow's acquisition programme.
The desire to consolidate was often expressed at JACCO's meetings, said the association president. But Flow appeared always to be a step ahead.
"But by the time the next meeting comes around, you hear one man has gone to Flow, so there's a constant depletion of the number," Innis said. "You can never tell who's going next."
Flow has acquired seven operators over two years. Its eighth acquisition Entertainment Systems Limited was blocked by the Broadcasting Commission on procedural grounds.
A court injunction issued February 20 blocking both ESL and Flow from completing the deal, expires next week, at which point the court will hear arguments from the parties.
But outside of the stifling of mergers, the president of JACCO believes the operators have been operating fairly well and living up to the competition, which Flow has provided.
"They are focusing on the more lucrative area of the region they serve," he noted.
Pardy, who says he has already amassed a third - or about 62,500 households - of his targeted market - admits that the service is selectively deployed, adding that Flow had no intention of crowding out the players.
Viable players
"The Kingston market will have one or more viable players in the market a year from now, five years and even 10 years from now," he said.
Innis meantime says it's unlikely that cable prices will fall, based on the price that operators have to pay to the providers of content.
"It cost about US$8 per month for channels like HBO or Cine-max," said the cable operator.
susan.gordon@gleanerjm.com
SOURCE: Financial Gleaner, Friday, February 29, 2008.
