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A sign advertising Flow in an upper St. Andrew community.

Susan Gordon, Business Reporter

The competition in Jamaica's landline telecommunications market is set to intensify as newcomer Flow seeks to grow its customer base by significantly slashing rates in an area dominated by the former telecommunications monopoly, Cable and Wireless Jamaica (C&WJ) .

The rate reductions by Flow follows closely on the announcement of a rate hike effective month-end by C&WJ, which said the increase has become necessary to offset growing operational expenses.

The lower call rates being offered by the cable service provider, which hinges its system on cutting-edge fibre optics, will also benefit C&WJ's customers, who will also be able to make cross-network calls to Flow's system for less than what it now costs them to make intra-network calls on C&WJ's network.

Cable service provider

Beginning the end of this month, it will cost C&WJ's customers 65 cents per minute or 10 cents more to make calls on their own network, while it will cost them 55 cents or 10 cents per minute less to terminate a call on Flow's network.

The cable service provider said it has cut rates on landline services by over 70 per cent since July 1, after the former telecommunications monopoly announced a five to 10 per cent increase on its fixed-line rates. Flow is able to offer cable television, high-speed Internet connectivity and voice telephone service on one connection, using digital technology.

But while the move by Flow, whose parent company is Columbus Communications, headed by Jamaican billionaire, Michael Lee-Chin, may appear to be on an aggressive drive to capture market share and erode C&WJ's dominance, Flow's marketing director, Jean McPherson, said that was not the aim.

Capturing market share

"We have established an additional point of interconnection to C&WJ's fixed network which allows us to lower our termination costs and pass on the savings to our customers," McPherson explained to Sunday Business on Friday.

"Calls from Flow lines to MiPhone, Megaphone and Worldphone services are free of cost, while charges to Digicel are only 50 cents per minute,"she said. "Further, calling from Flow lines to C&W lines is cheaper than calling from C&W to C&W," McPherson added.

Before now, it was costing Flow customers using its landline service $1.95 per minute to make calls during peak hours. However, that has now been reduced to 85 cents per minute during peak hours and 55 cents per minute for calls during off-peak hours.

In addition, customers can talk within the Flow network for $495 per month, rivalling Cable and Wireless' $900 per month plan which allows its customers to make calls within the network for a monthly fixed rate.

Earlier this month, C&WJ announced that post-paid fixed-line rates would increase to 65 cents per minute during off-peak hours, up from 60 cents and 99 cents per minute during peak hours, up from 90 cents per minute as of August 31. The rates for C&WJ's prepaid fixed-line customers will also move to $1.35 per minute in peak time and $1.05 per minute during off-peak hours, up from $1.25 and 99cents per minute, respectively.

McPherson said Flow's price reduction has made the company the most competitive landline service provider in Jamaica. She said, Flow has already seen an impact from the cut in prices. According to her, Flow's customer base in fixed-line service doubled in July on the announcement of the rate cut.

"Within the one and a half months (that) we have offered these rates, we are 125 per cent above our expectations from where we were at," McPherson outlined to Sunday Business. She said the calculations were made based on the number of requests for service by customers.

Financially sustainable

When asked if the rate cuts were financially sustainable for the two-year-old company given the significant reduction in rates, she replied: "We've done our financials on our cost and it's feasible." She gave the assurance 0 that the reduced rates would apply for the long term.

And now that the company has been granted an islandwide cable television licence, it will be able to offer these rates to more customers as it lays out its fibre-optic network islandwide.

susan.gordon@gleanerjm.com