CDR: C&W blocks Internet phone calls in the Caymans

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http://www.totaltele.com/view.asp?ArticleID=30234&pub=tt&categoryid=626

Internet & E-commerce

C&W blocks Internet phone calls in the Caymans
By Rick Catlin, Reuters 24 August 2000 

Officials of communications giant Cable & Wireless , which has a monopoly
on the Cayman Islands, have begun blocking Internet subscribers on the
islands from using the U.S.-based Net2Phone long distance phone service
that charges a fraction of what C&W charges Cayman customers.

The move came after C&W sent an e-mail to its Internet subscribers
on the islands, a major financial centre, earlier this month advising
them they were breaking their contract with C&W by using the Internet
for phone services.

The Net2Phone system uses the Internet to make long distance calls,
by-passing the traditional telephone service and charging far less.

C&W spokesperson Tina Trumbach confirmed the blockage on Wednesday, adding
that any other similar system that can be detected will be blocked.

She noted that company officials last year indicated publicly they
would not be blocking Net2Phone at that time as long as usage
did not seriously affect C&W revenues.

Since then, the technology to block systems such as Net2Phone has become
available as C&W's long distance revenues have been declining and Net2Phone
usage has increased.

UK-based Cable & Wireless is one of the world's largest telecommunications
companies and in the Cayman Islands alone, the company generates more than
$50 million in net profits annually, according to government figures,
from a country of just 45,000 people.

C&W has an exclusive 25-year contract with the Cayman government signed in
1991 to be the sole provider of telecommunications service to the Cayman
Islands.
In return, C&W pays 6 percent of its gross revenues to the government
annually,
which two years ago amounted to about US$10 million.

Recently, the company has indicated a willingness to accept competition in a
"structured" and "regulated" environment.

Trumbach said the company will soon offer further price reductions on
Internet service to various business customers. But the company said
it could not sustain a trend of lowering prices if there were a
proliferation of "prohibited usage."

The Cayman Islands, a British colony of three islands in the
western Caribbean, have a population of about 45,000 and more than
40,000 registered companies, including nearly 600 banks and trusts
and nearly 500 captive insurance companies.

It has been estimated that about 2,000 C&W customers in the Cayman Islands
used Net2Phone or similar service. C&W could not confirm that number.

Businessman William Peguero, whose company was selling "YapJacks"
- the device that enables Internet telephone communication -
vowed to fight C&W in the courts. He said he has already obtained
more than 1,000 signatures on a petition
calling for an end to the C&W monopoly in the Cayman Islands and open
competition to lower rates.

"Jurisdictions including Jamaica, Bermuda, Hong Kong and others around
the world have ended the Cable & Wireless monopoly on telecommunications
through the introduction of competition," he said. "In each case,
the services offered are better and the pricing for those services
lowered for the citizens and businesses in those countries."

He also claimed C&W has no legal right to block access to any Internet
service.

The current C&W long-distance rate for a business hours call to
North America is $1.50 per minute. Peguero said he was able to
make calls on Net2Phone for about 13 cents per minute.

Net2Phone attorney Steve Dorry in New York said his company had no comment on
the matter "at this time."

He added, however, that the company would be addressing the legal issue
"in the proper forum" in the very near future.

Dorry said he expected similar action by C&W in other jurisdictions where it
operates as a monopoly, particularly in the English-speaking Caribbean.

Several years ago, when some Cayman Islands businesses bought in to a
call back system in the United States to provide long distance service
cheaper than normal C&W rates, the company was able to effectively
identify and block call back usage from specific telephones.