business

If ever there was a rapacious corporation, it’s Cable & Wireless. Born of colonialism in the days of the old British Empire, it was known across a string of the UK's Third World possessions upon which the sun never set as an exploiting monopoly. If you read the Caribbean online press, you will notice that the reputation persists in the West Indies decades after independence. In the 21st century the corporate parent of C&W Panama is principally known for an accounting scandal that cost its shareholders most of the value of their stock.

Although Panamanian law says that C&W was to have lost its monopoly over fixed line telephony in 2003, it prevailed upon the Moscoso kleptocracy in office at the time to set impossible fees for any competitor wishing to connect to the telephone exchanges, and thus illegally maintained its privileged position. The company’s record here is a long list of abuses for which it has often been fined, but with the fines rarely amounting to the extra income it received as the result of its misconduct.

Two of the several C&W abuses that have affected The Panama News have been the periodic blockage of international connections to the cell phones of its competitor, formerly BellSouth and now Telefonica/Movistar; and an attempt several years ago to force the websites of this country to use its webservers by blocking connections from C&W Internet service users to such websites. When they did that latter thing to The Panama News and some of its customers complained, C&W told them that The Panama News had gone out of business.

Now one of the would-be competitors of C&W Panama, ClaroCOM, has filed a $135 million antitrust suit in the Panamanian courts. In a press release about the lawsuit, ClaroCOM declared that: “C&W Panama, with its complete control over the Public Switched Telecommunications Network (PSTN) has been sanctioned and fined by the Regulator many times for committing a variety of market abuses and refusing to comply with the established regulations. These well documented abuses have led to a systematic and effective extension of C&W Panama’s monopoly that was supposed to end January 2, 2003.” Seth A. Redlich, the founder and CEO of ClaroCOM, added that “C&W Panama has gone to great lengths to dominate its competition by refusing to comply with our interconnection agreement which was signed in 2002, and the clearly established telecommunications regulations of the Republic of Panama which were written to protect the people of Panama and promote investment in this sector.”

Panamanian law provides triple damages for monopolistic practices. However, due to our dysfunctional legal system, the former Moscoso administration’s corrupt practices, the domination of the Ente Regulador by the companies it was supposed to regulate and a long established anti-competitive Panamanian business culture, that Pérez Balladares administration statute has remained almost entirely theoretical.

But now the abuses of the companies that took the places of state-owned utilities have aroused sufficient public indignation that the Torrijos administration is in the process of changing the regulatory framework in which these corporations operate. Whether the changes that the president will make by decree will be of a substantive or merely a cosmetic nature remains to be seen.

Another indicator of whether we are witnessing the end of an era of monopolistic abuses by utility companies in privileged positions will be the fate of ClaroCOM’s lawsuit. Cable & Wireless Panama has indicated that it will fight ClaroCOM in court and proffered the 2002 agreement with its accuser as “evidence” that its practices are not monopolistic.