The Bahamas Telecommunications Company Ltd v Public Utilities Commission and Another
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hope of Craighead |
| Judgment Date | 12 February 2008 |
| Neutral Citation | [2008] UKPC 10 |
| Docket Number | Appeal No 19 of 2007 |
| Court | Privy Council |
| Date | 12 February 2008 |
[2008] UKPC 10
Present at the hearing:-
Lord Hope of Craighead
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
Lord Mance
Sir Christopher Rose
Privy Council
[Delivered by Lord Hope of Craighead]
This is an appeal from a decision of the Court of Appeal of the Commonwealth of The Bahamas (Ganpatsingh JA, Burton Hall CJ and Osadebay JA). On 31 July 2006 it set aside an order made by Longley J on 5 September 2005 and struck out the appellant's originating summons in which various declaratory and other reliefs were sought against the first respondent as an abuse of the court's process. The appellant is The Bahamas Telecommunication Company Limited ("BTC"). The first respondent is the Public Utilities Commission ("PUC"). Longley J gave leave to amend the originating summons by adding System Resource Group Ltd ("SRG") as the second defendant in view of the effect that the reliefs sought, if granted, would have on that company. SRG is the second respondent to this appeal.
Background
The first respondent was established by statute to regulate the services rendered by public utilities in The Bahamas. Section 4(1) of the Public Utilities Commission Act 1993 provides that its duties include the promotion of effective competition consistently and in accordance with any policy established by the Government for that sector. The Telecommunications Act 1999 ("the 1999 Act"), to which assent was given on 28 January 2000, created a new legal framework for telecommunications in The Bahamas. Its purpose was to remove the monopoly rights of The Bahamas Telecommunications Corporation and to establish a licensing regime in place of that monopoly. Section 22 of the 1999 Act provided for the formation of BTC to acquire and take over the principal assets and activities of the Corporation. Section 4(e) of that Act included among the objectives of Part II which deals with regulatory authorities the introduction, maintenance and promotion of effective and sustainable competition in telecommunications services in The Bahamas, subject to any special rights granted to BTC in accordance with sector policy.
Section 5(1)(a) of the 1999 Act included among the functions of the Minister charged with responsibility for telecommunications services the determination, after consultation with the PUC, of the sector policy which was to be published in the Official Gazette. Section 6 dealt with the regulatory functions of the PUC. It provided, inter alia, as follows:
"(1) The functions of the Commission shall be –
(a) to advise the Minister generally in relation to the telecommunications sector;
(b) to implement the sector policy;
(c) to issue, modify, enforce and revoke licences in a manner consistent with sector policy;
…
(i) to facilitate, maintain and promote effective and sustainable competition in telecommunications services in The Bahamas in accordance with the objective set out in section 4(e)."
Section 9 made provision for the granting of licences by the PUC having regard to any current sector policy promulgated by the Minister, subject to such conditions as appear to the PUC to be appropriate having regard to the objectives of the Act as specified in section 4.
On 31 July 2001 the Government published its Telecommunications Sector Policy ("TSP 2001"). Prior that date the Corporation had enjoyed a universal monopoly over the provision of telecommunications networks and services in The Bahamas. In its introduction to TSP 2001 the Government stated that it recognised that the provision of a world-class telecommunications infrastructure was the key to the rapid economic and social development of the country, and that it accepted that privatisation and liberalisation of telecommunications was a critical pre-condition for achieving the necessary objectives for this development. In accordance with its policy of privatisation it was proposed that the Corporation should be privatised. This was to be achieved by vesting the Corporation's assets in a new company, BTC, to enable it to continue to operate the telecommunications network and offer services under a new licence. Details of the private sector participation were set out in sections 5.2 to 5.5.
Section 5.6 of TSP 2001 was in these terms:
"Experience elsewhere has shown that the greatest gains in efficiency, cost reduction and quality and variety of services are achieved from competition, not merely privatising a monopoly. It is, therefore, the Government's policy to move towards liberalisation of all telecommunications services in The Bahamas. However, it recognises the need to be pragmatic. A short delay in introducing full competition in limited areas indicated below, will allow BTC time to prepare for a multi-carrier environment, to modernise and restructure, and to rebalance its tariffs while ensuring that BTC can continue to operate a sustainable business and therefore remain an attractive proposition for future investors. The Government has therefore decided that:
• competition in the provision of international, inter-island and local public voice services over fixed networks and the leasing of circuits for voice services will be deferred until 31 December 2003 ("the Exclusivity Period");
…
• after the expiry of the Exclusivity Period, the telecommunications sector will be opened fully to competition;
…"
Section 8.21 of TSP 2001 stated:
"Since BTC's Exclusive Rights will include voice telephony, irrespective of the network used, it will not be permissible for any company other than BTC to provide voice services over the Internet or voice over Internet Protocol Networks for the duration of the Exclusivity Period.
In September 2001, in the performance of its statutory functions as regulator, the PUC published a Call for Applications for licences to operate public fixed radiocommunications systems and to provide telecommunications services in New Providence, Grand Bahama and Abaco. Account was taken of the fact that the Exclusivity Period provided for by TSP 2001 was to expire on 31 December 2003, after which the telecommunications sector was to be opened fully to competition. It was stated in the introduction to the Call for Applications that voice telephony services were excluded until 1 January 2004. Applicants were expected to utilise state of the art technology and to provide details of their proposed systems including the technology to be employed. The Call for Applications included a copy of the draft licence which the PUC proposed to issue to the successful applicant in which it was stated that the licensee was to be prohibited from providing fixed voice telephony until 1 January 2004.
On 14 December 2001, in response to the Call for Applications, SRG submitted an application for licences to operate public fixed radiocommunications systems and provide telecommunications systems in a combined service area comprising New Providence, Grand Bahama and Abaco. Its application included a detailed description of the wireless network that SRG was proposing to build, utilising state of the art Voice over Internet Protocol ("VoIP") technology. It was stated that SRG would build an Internet Protocol ("IP") based broadband wireless network which would support data, voice and video applications. Attention was drawn to the potential that a new entrant into the voice market would enjoy to capture early market share from BTC, including the introduction of reduced tariffs for long distance, through the use of next generation packet switched networks instead of costly and aging circuit switched networks, the introduction of cost effective in-network and out-of-network domestic and inter-island services and the packaging of Internet and other IP services with voice services.
On 28 February 2002 the executive director of the PUC wrote to SRG congratulating it on its application having been evaluated as the most meritorious proposal. He said that the PUC would be contacting it within 10 working days to review all the relevant details to complete the processing of the licence to SRG. Articles reporting on SRG's successful application were published in The Tribune on 1 March 2002 and in The Nassau Guardian on 4 March 2002. The headline to the article in the Nassau Guardian was "SRG to compete with Batelco and Cable Bahamas." On 1 May 2002 the Minister responsible for telecommunications published a notice in the Official Gazette stating that he had determined, after consultation with the PUC, that the expiry date of the Exclusivity Period of 31 December 2003, delaying competition in the provision of international, inter-island and local public voice services over fixed networks and the leasing of circuits for voice services, was to be vacated until further notice.
In October 2002 the Government published a revised Telecommunications Sector Policy ("TSP 2002"). In the Preface to this version of the TSP it was explained that, as the sale of the Government's shares to a strategic investor had been delayed and because more work was needed to prepare BTC for full competition, the Government had decided that competition in the provision of international, inter-island and local public voice services over a fixed network and the leasing of circuits for voice services was to be deferred until the expiration of 24 months from the date of the completion of the sale. This period of deferment was referred to as "the Fixed Exclusivity Period". The intention was that the status of the telecommunications sector would be reviewed by the PUC with a view to opening up the sector to further competition after the expiry of the Fixed Exclusivity Period in accordance with section 6(1)(i) of the 1999 Act.
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