$100m cellular lawsuit – LIME takes Digicel to court … again
Cable and Wireless Jamaica Limited, trading as LIME, on Monday filed a $100-million lawsuit against big rival Digicel Jamaica Limited, on allegations of a $2.48 disparity in call termination charges and claims of unfair competition in the billing of fixed to mobile rates.
Digicel, in an immediate reaction last night, called the suit “a cynical act of desperation by a crumbling monopolist”, and counter-charged that it was designed to force an increase in the price of its fixed wireless product for Digicel’s business customers.
LIME alleges that Digicel has been charging up to $6.48 per minute for terminating LIME calls on its mobile network, while charging users of its own fixed network, which was launched in early 2007, only $4 per minute for comparable calls.
Digicel’s fixed network operations are currently confined to businesses but will expand to consumers with the 2010 launch of its WiMAX service. The two-year-old fixed service has, to date, saved its business customers “50 per cent on their overall landline bills”, Digicel said, but did not explain how it arrived at that figure.
“As things stand now, before LIME seeks to cover its own cost to set up a call from a landline to a Digicel mobile customer, it has to cover Digicel’s termination charge which, depending on the time of day, may range from $6.48 per minute for a local peak time call, to $4.76 for a local off peak call,” said LIME Jamaica country manager Geoff Houston Tuesday at a press conference announcing the lawsuit.
“It is therefore impossible for us to cover our cost and meet or beat Digicel’s $4 retail rate.”
Houston said his company filed a complaint with the FTC, but nothing has happened to date. The suit alleges that Digicel’s tactics amount to an abuse of its dominance of the mobile market, as prescribed by sections 19 and 20 of the Fair Competition Act and 30 of the Telecommunications Act.
According to the court documents filed with the Supreme Court Monday, LIME is seeking to have Digicel restrained from charging a wholesale fixed to mobile termination rate.
This, it claims, “has the effect of treating the claimant and/or its subscribers less favourably to terminate calls” on Digicel’s mobile network than the Irish company “charges its own fixed network subscribers to terminate calls on its mobile network.”
Digicel was launched in Jamaica in April 2001 and quickly dethroned Cable and Wireless as the top telecoms.
The competition between the two has become increasingly more hostile, with charges and counter-charges of overcharging between the two since 2003, when in August of that year Digicel informed Lime that retail fixed-to-mobile (FTM) calls were to be charged to customers on a per-minute rather than a per-second basis.
Prior to that, the parties had been paying FTM termination rates on a per-second basis.
LIME has been paying for interconnection on a per-minute basis since November 2003. Its previous lawsuit filed September, claiming damages of US$42 million, dates back to that period.
The Office of Utilities Regulation stepped into the fray earlier this year as the inter-connection quarrel deepened, issuing a June 4 clarification notice regarding FTM charges, in which it stated that LIME was only required to pay to other mobile carriers the contractually agreed termination rate for calls.
Subsequent to the OUR missive, LIME wrote to Digicel indicating that the contracted rates as contained in the interconnection agreement was on a per-second basis.
Digicel has sought a stay of the OUR decision in an appeal before the Telecommunications Appeals Tribunal.
Last night, the company said it would also fight the $100 million suit.
“Competition means that customers have choice – as such, we are determined to fight this nonsense to protect the interests of our business customers and to ensure that they benefit from real choice,” said Richard Fraser, Digicel’s head of legal and regulatory affairs in a company-issued statement.
CEO Mark Linehan suggested that the company focus instead on “its next rebrand”.