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Broadband competition – phenomenally good for business Continued from p12
competition and the significant weakening of Sterling, but we have invested £8-9m in developing the fibre network to support that side of the business. u-mee is accounting for a greater share of the Sapphire group business, while gaming is leveling off.”
Facing realities
However, on increasing competition, Isola rounded: “It is crazy that the substantial cost cutting that is taking place for internet services, involving all three providers, is not good for Gibraltar given its impact on profitability for each of us, and this could well affect future investment and the returns that can be expected”, Isola maintained.
He held: “Gibraltar is too small a place for three telecoms companies” and questioned “the long-term stability, reliability and resilience of service in industries that are key to our economy - realities have to be faced”.
Sapphire has one 48-rack data centre at Europort that is almost full. Gibtel launched its Rockolo subsidiary in March to handle its 400 racks at Mount Pleasant and from Spring 2017 at the Gibraltar World Trade Center.
By mid-June, Rockolo had added Gibraltar’s first locally-hosted cloud computing solution in partnership with GiBVault, a specialist provider, bringing customers “reduced hardware, software and running costs, speed of deployment, greater flexibility and enhanced productivity”, Bristow pointed out.
However, in February this year, the GRA ended a year-long investigation into whether Gibtel had breached its (Significant Market Power) SMP operator obligation having blocked access to the Mount Pleasant data centre and “access to all ducts, manholes and other infrastructure” for GibFibreSpeed to provide potential customers with IP transit and leased lines services.
The GRA concluded its powers “did not extend to mandating operators to cooperate on a commercial level with other operators, even if this is deemed to be positive in the electronic communications market”. Legal advice said Gibtel did not have to offer commercial hosting agreements, or give access to its data centres, to other operators; Gibtel’s SMP obligation did not extend to its customer’s equipment in the data centre.
GibFibreSpeed disagreed and is appealing the GRA decision in Gibraltar’s Supreme Court. It’s the first case of its type and the outcome of a hearing scheduled to begin on 5th March could have far-reaching impact, having also exposed Gibraltar‘s lack
of a competition authority covering all aspects of business.
The Gibraltar Communications Act requires the GRA to “promote competition”, but as GRA legal advisor, Maurice Hook noted: “If any operator did something that we considered anti-competitive, there is in reality very little we can do about it.” That has prompted consideration of making GRA competition enforcement possible, or introducing wider-based competition law – something Gibtel’s Bristow said: “We would “welcome a competitions authority.”
The up-coming court case has delayed a GRA public consultation on wholesale broadband access markets; it has twice before proposed reviewing whether Gibtel is sufficiently competitive. “I suspect [the GRA] was out of sync with the EU requirement”, Bristow observed, “where no-one is policing the broadband retail market as proposed.”
Gibtel is mainly regulated on voice fixed lines. It’s mobile business, with download speeds of up to 400mps through 4G+ (faster than broadband at present), accounts roundly for 30% of turnover having only little competition from 2017 newcomer, Limba Telecoms.
Extending reach
When Telekom Slovenije sold in 2014 its seven years 50% Gibtel holding, the government paid £47.7m, ending 26 years of private sector involvement. Chief Minister Fabian Picardo described it as “a temporary move", stressing the importance of finding “the right partner and not the quickest partner” in Gibtel. After three years, nothing has changed, and observers believe the State will need to reduce its stake to 49% at most.
Prospective buyers may be interested in the 30% share of revenue Gibtel gains from its international business, some through sales of capacity on its share of the upgraded Europe-India Gateway 15,000 kms-long submarine cable. Gibtel has extended the reach by a third to Singapore after securing a deal with an Asian telco and also now has customers in South Africa and Australia.
“We’ve built a European network with Points of Presence in London, Marseilles and Madrid and can reach there by going north overland or by sea through various points, or through France – it means we have so much route diversity and resilience that Gibraltar can be assured its telecommunications are safe – I don’t think our competitors are even in the same game”, Bristow observed.
Ray Spencer
u-mee Business was launched in 2017 aimed at the small office and home office (SoHo) sector – shops, lawyers and accountants - providing 100Mbps fibre internet (utilizing GPON technology, like u-mee residential fibre products) with 20Mbps upload speeds and four telephone lines with extension features, for £75pm.	“We see a gap in the market here and an opportunity for us”, declared Sapphire Group chief executive, Lawrence Isola.
This differs from Sapphire’s Business Fibre product, which offers up to 300Mbps download speed with 30Mbps upload, but using direct fibre links similar to those provided to large customers in the eGaming sector, but for £250-350pm. “There has not been more than a single 3 second drop-out of service in ten years”, Isola declared proudly.
Sapphire Gibfibrespeed	Networks
11% 2%
Gibtelecom has surrendered more broadband market share in 2017 than this 2016 chart of subscribers depicts
The gaming companies, on which much of Sapphire business is based, “are not growing at the same pace as previously, there are fewer of them given mergers; they generally do not want more capacity – sometimes they want less – but they certainly now do want to spend less for a strong inter- net service when contract renewals occur”, Isola observed.
Gibtel claims two-thirds of the eGaming market.	On gaming sector concerns regarding higher than UK internet costs, Isola is pragmatic. “Prices gaming companies pay are higher when compared with elsewhere in Europe, because here we don’t have a 5m population or a cluster of 500 gaming companies to bring economies of scale... yet service expectations are the highest imaginable, and require significant continuous investment.”
Isola added: “We established u-mee two years ago as diversification to ensure we have market share and to protect profitability. Our prices have not changed despite greater
14	Gibraltar International

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