Jamaica liberalized its telecommunications market in 2000 by licensing two new mobile operators, Digicel and Oceanic Digital Jamaica. Prior to the liberalization Cable & Wireless, Jamaica (C&WJ) was the sole provider of both fixed-line and mobile services.
The impact of the two new players had a tremendous impact on the sector. In particular it led to explosive growth in mobile usage with the total mobile subscriber base jumping from 144,000 in 1999 to over 1.5 million in 2005. This growth underpinned a significant increase in the Jamaica’s total teledensity, which leapt from 43.53 telephones per 100 people in 2001 to 100.90 in 2004.
When compared with other countries, in 2004 Jamaica’s teledensity exceeded what would be expected based on its GDP per capita (see Figure 1). In fact Jamaica’s performance compares favorably to countries with much higher GDP per capita, such as New Zealand, Singapore and the United States. Interestingly, in 2004 Trinidad and Tobago had a teledensity substantially lower than Jamaica’s. Although Trinidad and Tobago’s per capital GDP is more than twice that of Jamaica, it had not yet liberalized its telecommunications market by 2004.
Figure 1: Cross-Country Comparison of Teledensity by Income
The new competing mobile carriers introduced innovations into the Jamaican market, such a pre-paid service, which made it easier for customers to access telephone services. Previously to obtain a telephone service a customer had to fill out various forms, have a formal address and make a substantial deposit. The pre-paid option did not require a deposit, which by its very nature allowed customers the flexibility to have control over their budget. This was particularly attractive to low income customers, and appears to have been a major driver behind the increase in teledensity.
Competition has severely reduced C&WJ’s share in the mobile market. C&WJ has gone from being the sole provider of mobile service a market share of 31% in 2005. Its main competitor, Digicel, has captured 62% of the market. In fact Digicel’s growth has been so tremendous that C&WJ has approached the regulator requesting that Dicigel be declared to have significant market power.