Internet, Telecommunications Reform And Economic Development In Haiti

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The Regulator: CONATEL (Conseil National Des Telecommunications)

Conatel is part of the Ministry. In fact, the Minister of Works, Transport and Communication is the Chair of CONATEL. Ninety-five percent of Conatel's fees are paid by Teleco. Internet service providers pay 10% of their revenues to Conatel as license fees.
In May of 1998, Conatel released a vision statement for telecommunications in Haiti. The office of the Minister of Works, Transport and Communication indicated that he did not wholly agree with Conatel's vision, and specifically requested a national plan for telecommunications in the near future.

The Director General of Conatel, Jean Arry Ceant, has a sense of what a regulator should be doing and the authority it should have. He seems to recognize that Conatel does not have sufficient authority to regulate Teleco. Nor does there seem to be a
true separation of Teleco and Conatel.

Conatel finds itself in the unfortunate position of being directed by a Minister who is himself subordinate to the principle representative of Teleco. In fact, Conatel is subordinate to the two most powerful representatives of Teleco's owners: the Chairman and Vice Chairman of the Central Bank. Regulators subordinate to Ministries of Communication are fairly common in both developing and developed countries, but a regulator that is subordinate to the telephone company is uniquely problematic. This would be like the Chairman of the FCC and its Commissioners being subordinate to the CEO of AT&T.

This structural problem undermines both the Ministry and the regulator's ability to deal objectively with Teleco, and it is most likely the principle reason for what is perceived to be haphazard administration of telecom policy on the part of the regulator and Teleco. Both Conatel and Teleco have entered into agreements with cellular and Internet providers without consulting each other, which has led to a number of conflicts and contradictions. If the arrangement between the Ministry, Conatel, and Teleco cannot be restructured, clear lines of demarcation should be drawn. The role of the Minister and his authority to make decisions that affect Teleco and other participants in the sector -- ISPs, mobile and other wireless service providers -- should be clearly laid out. Powers delegated to the regulator and their scope must be clearly established and communicated to the public and all relevant parties. The regulator must have adequate means of enforcement backed by the Minister. Without clear lines of jurisdiction and authority, fair and impartial regulations, even if established, cannot be enforced.

Basic Telecommunications Services: TELECO (Telecommunications D'Haiti)
Teleco is the largest asset in Haiti. Ninety-seven percent of this company is owned by the Central Bank of Haiti; three percent of its ownership is foreign (believed to be Canadian). The Governor of the Central Bank is also the Chairperson of Teleco. Both the Chair and the Director of Teleco are appointed by Haiti's President. The Minister of Works, Transport and Communications is Teleco's Vice Chair. A total of five Ministers sit on Teleco's Board of Directors, including the Ministers of Finance and Planning.

Notwithstanding this leadership, there is a striking lack of accountability for Teleco's operations. According to representatives of the Central Bank, although its Governor sits on the board, Teleco "manages itself." The presence of Ministers from other important sectors on Teleco's board further complicates the accountability issue, and may in fact contribute to its evident divided loyalties, operational inertia, and unaccounted-for revenue shortfalls. Haiti has seen no increase in its 60,000 lines in the last few years, and reportedly only between 30-and-40,000 of those lines work at a given time. This is difficult to explain given its large work force (3200 employees), some $78 million in annual revenues, and just under $53 million in settlement payments from the United States.

Even if no one will claim responsibility for the operation of Teleco notwithstanding occupying seats on the board, the Central Bank is fully aware of Teleco's problems, and has taken very effective steps to ensure that its own network will be functional. The Bank bypasses Teleco's network via a fiber optic link installed by Alcatel for its transactions in and between its Port au Prince offices, and via radio and dedicated lines for areas beyond. The Bank has also arranged -- in advance of deployment -- to have a special team at Teleco responsible only for keeping dedicated lines it leases from Teleco fully operational. The Central Bank uses Intelsat to access the United States. This satellite link can, and presumably does, carry voice traffic.

The Central Bank, the principal owner of Teleco, is therefore insulated from its operational problems. The Bank's daily operations are not affected by Teleco's inefficiency, poor management, and lack of accountability, arbitrary or questionable business practices. The Chairman of Teleco, as the Governor of the Central Bank, thus has little operational incentive to see to it that the problems with Teleco, service and otherwise, are solved.

In addition to wireline service, Teleco provides mobile cellular service through a joint venture with a company called Rectel. Sixty percent of this venture is owned by Teleco; forty percent by Rectel. Teleco also allocates frequency with the approval of the Regulator. This arrangement will no longer be sustainable as competition among cellular/PCS providers, Teleco, and ISPs develops.
The complaints against Teleco are widespread. Its network is underdeveloped and poorly maintained. It appears to be poorly managed. Teleco resorts to arbitrary cuts in service to deter the use of voice-over-the Internet to avoid its high international tariffs. There is said to be corruption within the company. Service can go dead at any time, but customers must pay their bills anyway or lose service. Pirating of international lines occurs -- the line goes "dead," is used by the "pirates" to make international calls while the line is inoperative for the subscriber, who later receives a bill for an exorbitant amount for calls made during the service outage. Teleco maintains that it does not require customers to pay in this situation if they can establish that the calls occurred when they did not have service, but people in unrelated sectors -- academia and private business --dispute this.

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