Searching for “a more cost-effective” telco provision

Gibraltar government is working to make telecommunications for the jurisdiction’s expanding bandwidth hungry eGaming and financial services customers more price competitive, it has emerged.

For some time, the expanding remote gambling sector, in particular, has complained that charges for telco services are too high when compared with other territories in which they operate.

Minister for Gaming and Financial Services, Albert Isola, took delegates at the 4th KPMG eGaming Summit in April by surprise when he announced “a round table meeting” with telco suppliers – Gibtelecom (in which the State has a 50% stake) and Sapphire Technologies – and users to “find a better way forward”.

He said: “It needs to be said that telcos have reduced their prices by some 50% over the last 10 years and at the same time the quality of their service has improved dramatically, but I accept that there is a need for a more cost-effective environment in our community.”

More than 40% of Gibraltar’s economy is generated by the remote gambling and financial services sectors. It has long been recognised that Gibraltar telco prices are a problem for gaming companies and also the wider financial services sector that also needs substantial, fast internet connections.

Telco costs became a major talking point at the eGaming Summit held at the new Sunborn Yacht Hotel when Nick Nally, chief development officer for Continent 8 Technologies, presented an outline jurisdictional comparison and benchmarking report on Gibraltar’s offering that showed telco costs were between six and 50 times more expensive than in five other jurisdictions.

Over 90% of Continent 8’s customer base for bulk data storage in ten countries is in on-line gaming. Recognising that his report was controversial, Nally said: “We think Gibraltar is the best location in Europe for gaming companies, but from our
experience it may be bad news unless something is done to reduce bandwidth charges that also affect the financial services sector more widely.”

He made clear that in other respects Gibraltar faired better by comparison with Isle of Man, Alderney, Dublin and London and Malta. Nally emphasised that across the range of staple elements to be considered when choosing where to locate an internet-based business, Gibraltar “is getting there, but there’s more work to be done”.

Telco insiders say that bandwidth charges are only one aspect of costs, internet-based operators face and in other respects operational costs in Gibraltar are below those in other jurisdictions that have the benefit of economy of scale in telco supply.