The demands of the consumers come first
Tuesday 13th April 2010, 3:00PM BST.
From Charles Webb, director.
I WRITE in response to several recent comments that have appeared in the Jersey Evening Post concerning the Jersey Competition Regulatory Authority.
Many of these comments have concerned the JCRA’s current proposals to issue new postal licences.
These proposed licences are currently subject to public consultation, as required by Jersey’s Postal Law.
Therefore, it is inappropriate at the moment to respond to the views that have been expressed on potential further competition within post in Jersey.
I do respond, however, to negative views that have been expressed concerning the JCRA’s record to date in telecommunications regulation in Jersey.
In 2002, the States of Jersey introduced a new framework for telecommunications regulation in Jersey, one based largely on the satisfaction of demands for telecommunications services through increasing competition. Since then, this regulatory framework has been administered by the JCRA.
This framework has brought substantial benefits to the consumers of Jersey. These benefits include:
• Substantially reduced prices for telecommunication services – Increased competition has resulted in decreased prices for telecommunication services in Jersey. This, in turn, has led to large consumer savings – in effect putting more money into consumers’ hands, as opposed to increasing profits of telecommunications providers.
In September 2008 the JCRA estimated that increased competition in both mobile and fixed-line telecommunication services resulted in total consumer savings in Jersey of approximately £7 million. This estimate was calculated before the introduction of mobile number portability in Jersey in December 2008, which has resulted in even further price reductions for mobile telephone services and additional consumer savings.
• Substantially increased choice for telecommunication services – As a result of the introduction of competition, consumers in Jersey have unprecedented choice in the telecommunication services available. This choice is in the form of the various competing offers of the telecommunication service providers.
This is another important benefit of competition – it not only encourages competitors to decrease prices, but also encourages them to increase choice and innovation. Simply put, competition makes them work harder, in all ways, to maintain and grow their business.
• Local investment and new employment opportunities.
• Finally, the new telecommunication providers have invested millions in this jurisdiction and collectively have created well over 100 new jobs in Jersey. Thus, the view recently expressed in this newspaper, that telecommunications market liberalisation has ‘led to local people losing jobs’, simply is not accurate, when looked at properly in the round.
The framework introduced by the States in 2002 puts the demands of consumers first, above the interests of individual competitors, whether they be States owned or in the private sector.
This is the framework for telecommunications regulation the JCRA has administered, and will continue to administer, for the benefit of consumers in Jersey.
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There have been more jobs lost at JT than created with the new operators. I am interested in the collective Tax revenue compared to before competition was introduced; if i was a betting man i would bet that its less!!
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OK then Charles here are a few for you to answer if you dare.
How much money is the JCRA getting out from JT and the other teleco’s? You are getting money from them aren’t you to issue licences?
As per the new telecos how many J cat licences are being issued to them so that they can bring over their staff to work over here? Don’t say all the staff are local because I wouldn’t believe you.
As per JT it puts I think £11-12M per year back into the states coffers every year. What happens when this is hit by competition such that only £4-5M gets put back in? Who makes up the shortfall? It won’t be the other telco’s will it? Would this mean GST has to go up to make up the shortfall caused by competition? Do you know the answer to this?
No doubt you are getting well rewarded for your efforts in bringing prices down for Joe Public. How many other staff do you have and are they all local or are they J cat? How much is your wage bill and associated costs in comparision to the £7M you say you are saving us?
Now I don’t know about you but I’m not really bothered by a a hundred pounds possibily saved on my phone bill but I would be extremely interested in you sorting out import/export and travel costs to and from Jersey which would save much more, probably into the thousands per person IMHO. What do you have to say on this or is this area out of bounds?
I myself view the JCRA as a waste of time and money. I had hoped for much more. Maybe others view things differently?
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Adrian (#3) — thanks for your post. I always read your comments with interest on this site. I will attempt to answer the questions you raise. I quote from your email below and my responses are in brackets [ ]
“How much money is the JCRA getting out from JT and the other teleco’s? You are getting money from them aren’t you to issue licences?”
[Per our published 2008 Annual Report, available on our website, our total licence fees was £658,135 -- from telecom and postal licensees]
As per the new telecos how many J cat licences are being issued to them so that they can bring over their staff to work over here? Don’t say all the staff are local because I wouldn’t believe you.
[The JCRA is not responsible for issuing J cat licences -- perhaps you can contact Home Affairs to inquire. By the way, I'm a J Cat (if you have already guessed by my accent!), have lived here since 2005, pay my taxes, and love it here!]
As per JT it puts I think £11-12M per year back into the states coffers every year. What happens when this is hit by competition such that only £4-5M gets put back in? Who makes up the shortfall? It won’t be the other telco’s will it? Would this mean GST has to go up to make up the shortfall caused by competition? Do you know the answer to this?
[I also don't understand the distinction between direct taxation (through means like GST) and indirect taxation (through a gov't owned undertaking charging higher prices to give more money to the gov't). Isn't direct taxation more transparent and democratic?]
No doubt you are getting well rewarded for your efforts in bringing prices down for Joe Public. How many other staff do you have and are they all local or are they J cat? How much is your wage bill and associated costs in comparision to the £7M you say you are saving us?
[Again, per our published annual report, our salary and staff costs in 2008 was £777,525. This accounts for all employment costs associated with 9 full-time employees, 4 part-time non-executive directors, and a part-time bookkeeper]
Now I don’t know about you but I’m not really bothered by a a hundred pounds possibily saved on my phone bill but I would be extremely interested in you sorting out import/export and travel costs to and from Jersey which would save much more, probably into the thousands per person IMHO. What do you have to say on this or is this area out of bounds?
[The reason we focus on telecoms and post so much is because we have specific regulatory powers over them per the Telecoms (Jersey) Law and the Postal (Jersey) Law. We currently do not have regulatory powers over ferry services -- although this is something Economic Development plans to consult on later this year. You should check out the consultation when its published.]
[Thanks for your interest, and feel free to contact me if you have follow-up questions]
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Hi Chuck thanks for answering some of the points posted.
It is interesting to see that you state you have 14 staff in total to manage a few telecos. I take it £777,525 is for 14 staffs wages? If this is so then I make it that the average wage is £67,610, or there abouts, for a full time post there. What do you make it?
So your costs to run something that the states could have done themselves is £777,525 to save the customer £7M. Is this correct? By this I mean the states own JT and they could have just told the board that the costs of all services would be coming down to whatever they wanted. How much competition would have been needed for this to have happened?
As you know recently over 100 staff where let go by JT most of these would you not agree would have been well paid jobs where those involved probably would have paid Income Tax? How many are now likely to pay Income Tax do you honestly think? I doubt it will be many. So to me this is a nett lose to the taxman of maybe 80 plus people.
As per finding other jobs where will they get them from? Jersey is in a recession at present just as I predicted that it would be over 2 years ago. You could say they can get a job at another teleco. This is possible but I doubt there will be over 100 teleco jobs up for grabs at decent salaries and it would surprise me if many at these new telecos will be for residents. Hence my question about J-cats previously to you.
As per the customer can you name me one extra service that has been forced in due to competition or a better grade of service achieved as a consequence? It appears you are basing your remit on saving £7M to the customer. However you have already admitted that this is erroded by £777,525.00 needed for wages to do this.
Also what effect will this competition have on the island infrastructure long term? I can’t believe it will be good. I believe Jersey will end up with a substandard infrastructure with all this competition. What do you think? If JT can’t afford to pay to maintain it due to hits on their profits, who will foot the bill do you honestly think?
Now let us get back to the £12M or thereabouts that JT puts back into general taxation. What happens when this gets hit and they only return £4-5M? This will mean that Joe Public will be left to make up the shortfall via increased taxation won’t it?
So we could end up at a point where competition doesn’t save the customer money when everything is taken into account and the standard of service my be somewhat reduced because of this. However they will have some competition. My very valid point in all this is WHAT IS THE POINT if things pan out as I predict?
It is also good of you to admit that you are unable to look at other areas being forced only to look at the teleco and postal market. It is vital for Jersey to start to become competitive in the market place and until import/export costs and travel are sorted out we are in serious trouble IMHO.
“Isn’t direct taxation more transparent and democratic?”
A good question but it isn’t as straight forward as that is it? Would you expect a senior citizen to pay for a landland if they lived say on Portelet Common and it would cost £30k to connect them? Or would you expect big business to pay a little more so that these sort of occurances could be factored in to the scheme of things without crippling the likes of the senior citizen mentioned above? So in this case indirect taxation of big business would be helping out the community wouldn’t it?
As per democracy what is that? I haven’t seen a democratic state yet in the purest sense of the word.
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Adrian — thanks again for your interest in telecoms regulation. If you want to get in a detailed discussion, please contact me directly via the JCRA website. I’d be pleased to meet.
Chuck
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