Jamaica: The Benefits of Mobile Competition

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 (renamed LIME in November 2008) 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. By 2009, mobile subscribers had doubled again to nearly 3 million.

In 2004 Jamaica’s teledensity exceeded what would be expected based on its GDP per capita, comparing favorably to countries with much higher GDP per capita, such as New Zealand, Singapore and the United States. 

A 2004 Snapshot:  Cross-Country Comparison of Teledensity by Income

Jamaica

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 LIME’s share in the mobile market. LIME has gone from being the sole provider of mobile service to a market share of 31% in 2005 and about 22% in 2009. Its main competitor, Digicel, captured 62% of the market by 2005 growing further to over 65% by 2009. In fact Digicel’s growth has been so tremendous that LIME has approached the regulator requesting that Digicel be declared to have significant market power.

Interestingly, in 2004 Trinidad and Tobago had a teledensity substantially lower than Jamaica’s. Although Trinidad and Tobago’s per capital GDP was more than twice that of Jamaica, it had not yet liberalized its telecommunications market by 2004. By 2009, the number of mobile subscribers in Jamaica has doubled again to nearly three million (109 subscriptions per inhabitant), an annual growth rate of over 10%. But in newly liberalized Trinidad and Tobago mobile subscribers grew between 2004 and 2009 at nearly 25% per year, resulting in nearly two million subscribers (147 subscriptions per inhabitant).  

Endnotes:

[1] From Box 1.1 of the infoDev/ITU Telecommunications Regulation Handbook, 2011

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