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EDITORIAL - Let the market deal with Flow
published: Tuesday | March 4, 2008
The over-eager bureaucrats at the Broadcasting Commission hopefully will begin to pay attention to the facts on the ground as well as the perspectives of entrepreneurs who have actually invested in the cable television business.
If they do, they will perhaps now conclude that markets are themselves more adept at allocating resources and managing competition than zealous interventions of consumed regulators.
Indeed, this was largely the point we made when the Broadcasting Commission gained an injunction to block Columbus Communications, which operates in Jamaica as Flow, from concluding the takeover of Entertainment Systems Ltd. The commission complained that it was not told about the acquisition deal ahead of time and suggested that it should be on the ground floor of the negotiations.
For many observers, the Broadcasting Commission appears to display a residual distrust of the free market and large, technologically savvy and innovative enterprises. It is an attitude that harks to a different ideological environment and the period of economic liberalisation.
In that context, Flow is the big, bad and dangerous wolf coming to devour the Little Red Riding Hoods of the cable TV market. So, the so-called 'small man' needed protection. Except that things do not seem to fit easily into the Broadcasting Commission's preconceived package.
Last Friday, this newspaper quoted Collin Innis, the head of the Jamaica Association of Community Cable Operators (JACCO), as saying that despite the previous acquisition of seven companies, he had not "seen any significant change in the number of operators".
By Mr Innis' count there are at least 54 companies now operating in the market - six more than what the Broadcasting Commission says exists. Further, Flow's projection is that by 2011 it will have 187,000 households as subscribers, or about quarter of the houses which make up the market. On none of these counts can Flow be said to be a monopoly.
Flow has an all-island licence, while most of the other companies operate in zones. But before Flow, one company did have a national licence to provide a wireless, integrated service, but failed to deliver. The Broadcasting Commission says that it is not averse to granting another national licence.
Fifty-four (or even 48) cable companies operating in a market the size of Jamaica's can hardly achieve the economies of scale necessary to drive efficiencies. Indeed, it shows - in terms of the use of technology, quality of service and compliance with intellectual property and copyright laws; or even compliance with Broadcasting Commission rules. The commission reported that only 23 companies were fully compliant.
A market shakeout is inevitable. The only question is how quickly it will come. In fact, JACCO's Mr Innis says that the desire for consolidation is a regular issue at the association's meeting. But as is often the case, people have been afraid to make the plunge. Some have preferred to throw in their lot with Flow, a clearly well-capitalised, structured and efficiently managed company.
There may be legitimate concerns about Flow emerging as a monopoly but the solution is not to block its progress with heavy-handed regulation and unseemly interventions. Create a competitive environment and leave the market to work. The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
published: Tuesday | March 4, 2008
The over-eager bureaucrats at the Broadcasting Commission hopefully will begin to pay attention to the facts on the ground as well as the perspectives of entrepreneurs who have actually invested in the cable television business.
If they do, they will perhaps now conclude that markets are themselves more adept at allocating resources and managing competition than zealous interventions of consumed regulators.
Indeed, this was largely the point we made when the Broadcasting Commission gained an injunction to block Columbus Communications, which operates in Jamaica as Flow, from concluding the takeover of Entertainment Systems Ltd. The commission complained that it was not told about the acquisition deal ahead of time and suggested that it should be on the ground floor of the negotiations.
For many observers, the Broadcasting Commission appears to display a residual distrust of the free market and large, technologically savvy and innovative enterprises. It is an attitude that harks to a different ideological environment and the period of economic liberalisation.
In that context, Flow is the big, bad and dangerous wolf coming to devour the Little Red Riding Hoods of the cable TV market. So, the so-called 'small man' needed protection. Except that things do not seem to fit easily into the Broadcasting Commission's preconceived package.
Last Friday, this newspaper quoted Collin Innis, the head of the Jamaica Association of Community Cable Operators (JACCO), as saying that despite the previous acquisition of seven companies, he had not "seen any significant change in the number of operators".
By Mr Innis' count there are at least 54 companies now operating in the market - six more than what the Broadcasting Commission says exists. Further, Flow's projection is that by 2011 it will have 187,000 households as subscribers, or about quarter of the houses which make up the market. On none of these counts can Flow be said to be a monopoly.
Flow has an all-island licence, while most of the other companies operate in zones. But before Flow, one company did have a national licence to provide a wireless, integrated service, but failed to deliver. The Broadcasting Commission says that it is not averse to granting another national licence.
Fifty-four (or even 48) cable companies operating in a market the size of Jamaica's can hardly achieve the economies of scale necessary to drive efficiencies. Indeed, it shows - in terms of the use of technology, quality of service and compliance with intellectual property and copyright laws; or even compliance with Broadcasting Commission rules. The commission reported that only 23 companies were fully compliant.
A market shakeout is inevitable. The only question is how quickly it will come. In fact, JACCO's Mr Innis says that the desire for consolidation is a regular issue at the association's meeting. But as is often the case, people have been afraid to make the plunge. Some have preferred to throw in their lot with Flow, a clearly well-capitalised, structured and efficiently managed company.
There may be legitimate concerns about Flow emerging as a monopoly but the solution is not to block its progress with heavy-handed regulation and unseemly interventions. Create a competitive environment and leave the market to work. The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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