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The world's worst telephone company by Grahame Lynch Telecom Asia, April 2001 Dhiraagu telecom tower, Hithadhoo Seenu atoll It is praised by financial analysts for its remarkable re-invention. It praises itself for what it claims as the world's most technologically advanced IP network. But it still makes too much of its money via neo-colonialist monopoly arrangements in third-world countries. The company is Cable & Wireless. And despite the rave reviews, it remains a company that makes money in odious ways. 'What is most offensive about this odious company is the way it uses the monopoly rents of small, poor island nations to subsidise its loss-making fibre networks in rich European and American countries.' Cable & Wireless has a proud beginning, building the first submarine cables in the 19th century. Not long after, it spread out, taking advantage of the economic reach of the British Empire to secure itself telephony franchises in the Caribbean, Central America, the Pacific Ocean and the British Far East Asia. Of course, these days Cable & Wireless gets most attention for its expansive IP network roll-out, reaching some 84 cities across the world with OC-192 connectivity. But this IP-centric business focus isn't yet profitable. Indeed, as a business unit, it lost some $317 million in the last financial year. Where does Cable & Wireless make its real money? Jamaica, Ascension Island, Panama, the Falkland Islands, Diego Garcia, and lots of other places that are (1) small, (2) poor, and (3) suffer the misfortune to be ex-British colonies. Pound of Flesh Together, Cable & Wireless' island monopolies are home to only a few million people with limited incomes. But Cable & Wireless certainly extracts its pound of flesh. Indeed, Cable & Wireless made some $298 million in pure profit from its 'regional businesses' last year, along with another $104 million in Australia and $425 million from 'discontinued operations' mainly Hong Kong Telecom. For many years, Cable & Wireless made most of its profits from Hong Kong. And although the British finally handed Hong Kong back to China in 1997, Hong Kong taxpayers were then forced to cough up billions to 'compensate' Cable & Wireless for the early termination of the monopoly licence granted by the British administration in the mid-1980s. And what a monopoly it was. Cable & Wireless took advantage of Hong Kong's small borders to charge full IDD rates for calls travelling as few as 15 miles to neighbouring cities in China and the adjoining enclave of Macau, where the local telephone company was also owned by Cable & Wireless. At one point, Hong Kong Telecom was returning almost half its sales in profits! But while the Hong Kong cashcow has been consigned to history, the cashcow of a whole bunch of former British Empire island nations continues on. A quick perusal of the ITU's list of international settlement charges shows that the most expensive in the world are always levied by a Cable & Wireless property on some island nation. What's more, these countries are being left behind by Cable & Wireless monopoly rents and refusal to invest profits back into their infrastructure. Enough is enough Just this past March, five of them in the East Caribbean got together and said enough is enough. High phone charges and under-investment were leaving them marginalised from the world economy. So they forced Cable & Wireless to step aside and face liberalisation. Cable & Wireless was petulant in negotiations, threatening to disrupt phone service without an orderly transition. After it agreed to the liberalisations, it spitefully laid off hundreds of local workers. What is most offensive about this odious company is the way it uses the monopoly rents of small, poor island nations to subsidise its loss-making fibre networks in rich European and American countries. Its grand new IP network doesn't extend out to these places - when it is clear those economies would benefit from being connected to the world's broadband network. When it does invest in these regions it's the usual eye-rolling affair - an e-business centre in Bermuda for British companies' offshore tax haven registrations is one of the few examples it can provide of 'regional' investment. Of course, not all of the profit makes its way back into first world IP investment. Some $197 million of it was given back to Cable & Wireless' British and American shareholders in dividends last year. The East Caribbean actions of last month should empower other countries to end C&W's monoploy deals. It may have been all right for the British to plunder the world's island natives back when 19th century values of business morality prevailed, but it's clearly not acceptable in the 21st century. Good riddance to the world's worst telephone company. Telecom Asia, April 2001 top

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