Motion to Review and Vary the Price Cap Plan 2016

• Jurisdiction: Barbados
• Judgment Date: 28 March 2018
• Docket Number: Document No.: FTC/URD/DECPCP/CW-2018-01
• Court: Fair Trading Commission (Barbados)

Motion to Review and Vary the Price Cap Plan 2016

Document No.: FTC/URD/DECPCP/CW-2018-01

FAIR TRADING COMMISSION

DECISION

Table of Contents

SECTION 1 EXECUTIVE SUMMARY	3
SECTION 2 INTRODUCTION	5
SECTION 3 LEGISLATIVE FRAMEWORK	6
SECTION 4 REASONS FOR DECISION	7
SECTION 5 DETERMINATION	8

SECTION 1 EXECUTIVE SUMMARY

1 On December 5 ^th, 2016, Cable & Wireless (Barbados) Limited (C&W) informed the Fair Trading Commission (the Commission) that its Board of Directors had approved a change in its year end date from March 31 to December 31 to coincide with the year end date of its parent company, Liberty Global. As a result of the foregoing, C&W, by a Notice of Motion dated and filed on the 29 ^th of August 2017 (the Application), applied for a review of the Commission's Decision on the Price Cap Plan (PCP) 2016 and the PCP 2016 Compliance Rules and Procedures FTC/UR/PCP/2016-02. This Application proposed a change in the Statutory Financial Year End from March 31 to December 31 of each year and corresponding changes in the regulatory reporting periods set out in the PCP Decision 2016 and PCP Compliance Rules and Procedures.

2 On January 12, 2018, the Commission commenced consultation on this matter by issuing C&W's Application to the public, inviting stakeholders and interested persons to submit written comments on or before Friday, January 26, 2018. There were no responses. Owing to C&W's change in financial year end and the need for the PCP 2016 reporting periods to remain aligned with said financial year end, the Commission has determined that the reporting dates of the PCP 2016 and PCP 2016 Compliance Rules and Procedures will be adjusted as follows:

• I Section 24 of the PCP 2016 Decision outlines the periods as:

  Period 1: April 1, 2016 through to March 31, 2017

  Period 2: April 1, 2017 through to March 31, 2018

  Period 3: April 1, 2018 through to March 31, 2019

  The adjusted periods shall now be:

  Period 1: April 1, 2016 through to December 31, 2016

  Period 2: January 1, 2017 through to December 31, 2017

  Period 3: January 1, 2018 through to December 31, 2018

• II Submission of the Annual Compliance Filing (ACF) shall be adjusted from March 1 to December 1 of each year.

• III As it relates to the submission of Annual Audited Statutory Financial Statements, Annual Regulatory Financial Statements and Annual updated versions of the Enhanced Allocation Model (EAM), the financial reporting periods shall no longer be for the period ending March 31, 2017 and March 31, 2018, but shall now be for the period ending December 31, 2016 and December 31, 2017.

• IV The period for the Audited Statutory Financial Statements will no longer be from April 1 – March 31, to be filed by July 15 of each year, but shall now be January 1 – December 31, to be filed by April 15 of the following year.

• V The period for the Reconciled Regulatory Financial Statements will no longer be from April 1 – March 31, to be filed by September 15 of each year, but instead shall now be a period of January 1 – December 31, to be filed by June 15 of the following year.

• VI The submission of the EAM, currently required under the PCP 2016 Compliance Rules and Procedures by September 15 of each year, shall now be required by June 15 of each year.

• VII Currently, as it relates to the Unaudited Financial Results, the submission date is November 15, 2018 for the period ending September 15, 2018. The new submission date shall be September 15, 2018 for the period ending June 30, 2018.

SECTION 2 INTRODUCTION

3 On March 31, 2016 the Commission issued the PCP 2016 to govern the adjustments of rates of the regulated telecommunications services of C&W. It is based on two service baskets, one for ‘competitive’ services and the second for ‘non-competitive’ services. In addition there is a sub-cap on residential fixed line services (access and installation). The PCP 2016 stipulates that the prices of regulated services are restricted such that any price increases across the Basket will be below or equal to the level of inflation, or 3% per year in case inflation exceeds 3% during that year. In case of when the inflation rate is less than zero (i.e. negative), then the allowable price increase in that year will be set to zero for that year.

4 Paragraphs 22 to 24 of the Decision on the PCP 2016 outline its temporal nature. It was approved for three (3) years and was based on the following three reporting periods which were are aligned with the Company's financial year at the time i.e.:

Period 1: April 1, 2016 through to March 31, 2017

Period 2: April 1, 2017 through to March 31, 2018

Period 3: April 1, 2018 through to March 31, 2019

5 However, in 2016 C&W's Board made the decision to align its financial year with that of Liberty Global, its parent company and thus began to follow a financial year with mirrored the calendar year i.e. January 1 to December 31. In view of this change in circumstances, C&W, on August 29, 2017 filed its Application for a review of the Decision and the Commission subsequently commenced consultation on the matter. This Decision will outline the legislative basis upon which the Commission has the power to make these adjustments, the reasons for the adjustments and the final determination of the nature of the adjustments.

SECTION 3 LEGISLATIVE FRAMEWORK

6 Section 4 (3) (a) (b) (d) and (f) of the Fair Trading Commission Act, CAP.326B (FTCA) states that the Commission shall:

• a) “establish principles for arriving at the rates to be charged by service providers”.

• b) “set the maximum rates to be charged by service providers”.

• d) “determine the standards of service applicable to service providers”

• (f) “carry out periodic reviews of the rates and principles for setting rates and standards of service of service providers”.

7 The Commission is also charged with this...