July 23, 2012—In April 2011, Digicel, an international telecommunications provider, requested review of a June 2009 ruling by Vanuatu’s regulator that had declared the firm dominant in two local markets, the market for retail mobile services and the wholesale market for call termination. Nathan Associates’ expert Dr. Bruno Viani led the ruling review, concluding that Digicel was indeed still dominant in those two markets under the terms of Digicel’s license. The review did not cover the definitions of the markets in question.
Working with the Telecommunication & Regulation Regulator’s legal adviser, Dr. Viani found that Digicel had “economic strength” in the retail market as evidenced by the extent of its wireless network coverage (90 percent of Vanuatu’s population), its revenue from retail revenue services, and its 57 percent market share in 2011, among other things. He also found that Digicel “has the ability to behave to an appreciable degree independent of competitors or customers.” Here, evidence includes a score of 5,200 in 2011 (last quarter) on the Herfindahl-Hirschman Index of market concentration, high barriers to market entry, and the duopoly market structure.
Dr. Viani also found that Digicel has “economic strength” in the wholesale market for call termination, in part because it has the power to exclude competitors from its network.
Digicel was established in Jamaica in 2001 and has since entered numerous markets, targeting those undergoing market liberalization. In Vanuatu, Digicel’s only significant rival is Telecom Vanuatu Limited (TVL). Nathan Associates is advising the country’s telecom regulator, TRR, under a two-year contract.