The Bahamas Telecommunications Company

The Situation

In 2003, the Bahamas Telecommunications Company (BTC) lost its monopoly on fixed-line telecommunications services and it needed to respond to a host of economic and regulatory issues such as: reaching an interconnection agreement with its competitor, rebalancing tariffs, implementing a universal service program and developing a price cap regime. Each issue required a detailed understanding of the forward-looking economic costs that BTC incurs to provide telecommunications service.

NERA's Role

NERA worked with BTC personnel and with outside engineering experts to build a forward-looking economic cost model for BTC. The economic-engineering model built by NERA measured the "real-world" forward-looking costs that BTC likely incurs to provide telecommunications services. In building the model NERA and the company had to take into account the rapidly evolving telecommunications technology such as the growth of packet-based (soft) switches and its impact on circuit-switched networks.

The Result

NERA’s cost model has been used to set interconnection rates between BTC and its competitor and to determine the parameters of a tariff rebalancing plan being considered by the government. The cost study results will also be used in measuring the costs of universal service, determining key parameters of a price cap plan and in BTC’s marketing and pricing policies.