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Bermuda's Internet Access and Costs

How they compare in speed, price and competitiveness to those in USA, Canada and UK

By Keith Archibald Forbes (see About Us) exclusively for Bermuda Online

To refer by e-mail to this file use "bermuda-online.org/internet" as your Subject

Best rates available locally

Industry leader Logic Communications Ltd and others now offer the following, in upload speeds:

• Compare the above to prices in USA, Canada, United Kingdom, Europe, Japan, for substantially higher Broadband or DSL upload speeds. In contrast, Bermuda is now too slow and uncompetitive to be an effective international business jurisdiction. In July 2007, the UK-based Organization for Economic Co-operation and Development (OECD) and MoneySupermarket, an online price and quality comparison website, showed that British customers were being left behind by nearly all their European neighbours when it came to broadband. OECD figures state that on average Britons are paying an average $30 a month for (non-wireless) broadband, compared with just $10.80 in Sweden, less than $16 in the United States and $17.40 in France. More importantly, neither they nor anyone in Bermuda (so much slower than in the UK) are enjoying some of the super-fast speeds that many of their international peers can get. In Japan, for instance, it is possible to enjoy broadband speeds of 100 megabits per second, while in Britain it is difficult to get much more than 8 Mbps, because most UK houses are still connected to broadband exchanges via old copper wires. The OECD report uses October 2006 data.

Internet Service Providers (ISPs), residential and business

In its 21 square miles, Bermuda has the following at home Internet Service Providers providing both DSL and dial-up 56 Kbps services. Those who do not want a DSL line at home should know that Dial Up is not 56K but often a very slow 36 Kbps service. All Dial Up prices exclude the cost of a local phone call to access the Internet from local servers, about $0.20 per hour or a higher charge per call when exceeding an hour, payable separately to Bermuda Telephone Company Limited (BTC). In contrast, in the United Kingdom and most other countries, local telephone costs are included in unlimited Dial Up and other prices. 

• Cable & Wireless. A Class A carrier, one with its own international long-distance circuits. Registered businesses only, which can provide a valid tax account number. Registered businesses only, which can provide a valid tax account number. 
• FKBNet. Fort Knox Bermuda - began in mid 2002 as a family Internet service. Call 293-5980. Operating from St. David's, it has teamed up with Gateway Systems. 
• Logic Communications Ltd. The original ISP. For individuals and businesses. Residential and business packages, separate and bundled, for both Internet and International Long Distance phone calls. Owned by Keytech of Bermuda which also owns the Bermuda Telephone Company Limited (BTC). 
• North Rock Communications. Washington Lane (previously Franklin Travel). Telephone (441) 296-2700. Fax (441) 296-2701. E-mail info@northrock.bm. Presently, the only one also with high speed wireless services for businesses and homes.  
• TeleBermuda International.  A Class A carrier, one with its own international long-distance circuits. Registered businesses only, which can provide a valid tax account number. 
• Transact Ltd.  20 Dundonald Street, Hamilton. Phone 298-1279 or fax 292-4310 or e-mail info@transact.bm. Residential and registered businesses.

Other factors presently limiting Bermuda's effectiveness as an electronic commerce center

• Unlike in the USA, Canada, UK, etc. where it is possible, via the Internet, for people from or in other parts of the world to access published private Bermuda Telephone Company Limited (BTC) landline and other telephone numbers, in Bermuda it is not. There is no Bermuda equivalent of the Internet's 411 service.
• In Bermuda, all international companies must by law by 100 percent dependent on local companies - such as the Bermuda Telephone Company Limited (BTC) - for their local telephone and other local telecommunications needs.  Local Internet Service Providers (ISPs) must be Bermudian companies (in other words, at least 60% beneficially Bermudian owned,  directed and managed). Presently - and this is not likely to change - local laws do not allow  any foreign corporations - such as AOL, which routinely offers services in the UK, Europe, USA and Canada - to offer Internet service from Bermuda, or to own more than 40 percent of a local business (one trading in the local market place). Overseas based organizations with huge bulk purchasing power elsewhere and no controls (like Bermuda has) are not permitted to own local outlets. 
• This unique protectionist legislation makes Bermuda's local e-commerce scenario unattractive to some non-Bermudian investors who wish to have complete and effective management and directorship control over their businesses.  
• Global companies with world headquarters or offices in Bermuda - like insurance and investment companies and telecommunications companies - may operate in worldwide markets but are not allowed to operate freely in the local Bermuda market place.
• Unlike in other countries abroad where governments routinely have their web sites in their home jurisdictions, the Bermuda Government has its official Tourism web site in the USA. Most other "local" websites are USA or Canada or UK based. Only a few are truly local.  Cost and 24-hour support overseas are some of the reasons why.
• Bermuda does not yet offer adequate intellectual property protection. Bermuda still has 1950's law, not good enough to offer the kind of legislation and protection corporate clients of today need. Laws in the USA, Canada, United Kingdom, Europe, etc. are much more modern and businesslike for the electronic age.
• Bundling of Internet services is not allowed, unlike in the UK, Canada, USA, etc. where bundling is common, with one company providing local and international land line telephone, cell (mobile) phone service, cable TV and ADSL (Broadband) - with the latter at no extra cost when other services are billed.
• The Bermuda Government has import duties (averaging 27.5 percent and up) levied by the Government on computers, modems, peripherals, routers and all other relevant electronics. They are the highest in the Western Hemisphere. In addition to Customs Duties are Air freight, wharfage and Air Terminal fees. Thus the retail cost in Bermuda of a new 3.4 GHz computer with 1 G DDR RAM and a 17" LCD Flat Panel Display is hugely more than in the USA and double that of the UK. Plus, USA and UK prices price often come with lots of extras including a printer, scanner, choice of software options  and 1 year free high-speed Broadband Internet access that the Bermuda price does not.
• The license fees paid to the Bermuda Government by ISPs and others directly or indirectly are the highest fees and taxes per square mile of territory imposed by any country anywhere for telecommunications. 
• The very high Cost of Living, see www.bermuda-online.org/costoflivingguide.htm. 

Other Services include

• a number of privately owned Internet Cafes

• A Bermuda Government operated community portal program aimed at senior citizens, in community centres.

• A Bermuda Government operated recycled PC program, for seniors in government owned  Parish Rest (care) homes.

• An Internet Access in Public Places initiative, such as in Post Offices, libraries and other public buildings, following the UK methodology.

Reforms suggested to current system

Current system

The four categories of telecommunications companies are:

• Class A providers. International service providers (TBI and Cable & Wireless. Also Brasil Telecom, which cannot sell to retail customers).
  

• Class B providers. Fixed and wireless domestic service providers, including BTC, Quantum, the cellular providers and the Cable TV providers; and
  

• Class C providers . Internet service providers, including Logic, North Rock, Fort Knox and Transact.
  

• Cable TV providers - Bermuda-based Cable TV companies authorized to provide limited telecommunication services. They include Bermuda CableVision and World on Wireless.
  

• Companies would get one licence to cover all sectors under the Government's new proposal. (See at end of Other Factors, etc. below)

Proposed reforms

The Royal Gazette group report. A sweeping reform of the telecommunications industry aimed at generating more competition and lower prices for consumers is in the pipeline. Amid a raft of proposals contained in a consultation document, Government suggested in January 2007 that restrictions on foreign ownership – known as the 60-40 rule – should be entirely dropped for telecommunications companies. And the industry’s licensing system is also in line for a complete overhaul, which would allow companies to deliver an unrestricted range of services with one all-embracing licence. For example, this would mean that an internet service provider (ISP) like Logic could compete with a cellular phone company like CellularOne, or an international service provider like TeleBermuda International. The moves are mooted in a consultation document on regulatory reforms drawn up by the Ministry of Environment, Telecommunications and E-Commerce (METEC). It is hoped that the abandonment of foreign ownership restrictions will encourage investment in the latest technology and lead to “a level playing field.” Currently, international service providers can be 100 percent foreign-owned, while all ISPs, for example, are subject to the 60-40 rule. METEC announced in mid-January 2007 that the public would be encouraged to have its say on the proposals and consultation would include a public meeting to be advertised in the print media. A statement from METEC said that the restrictions imposed by the licensing system were causing problems for companies now seeking to expand into new markets. There are four groups of providers under the current system and companies are prohibited from providing services outside its licensed area.

The consultation document, entitled “Telecommunications Regulatory Reform in Bermuda” proposes that all current licensees should be offered a Unified Domestic Licence (UDL) which would eradicate the restrictions and allow providers to offer “a full service portfolio.” “Tangible benefits to consumers from the proposed reform include one-stop-shopping – being able to purchase all telecommunications services from a single provider – and increased competition which frequently results in improved quality of service and reductions in prices for services,” a statement from METEC said. “Additionally, from a consumer perspective, it is currently necessary for users of telecommunications services to contract with several providers (e.g. for the services provided by the Class A, B and C providers) and this means a more complex and less user-friendly telecommunications environment than is seen in many other countries around the world.” The Ministry also proposes issuing no new domestic licenses for between one and three years “to enable current providers to adjust to the new market conditions before further competitors are allowed into the market”. The regulatory changes would bring Bermuda “in line with international best practice and to ensure the continued investment in innovative services for telecommunications users in Bermuda”, METEC added. METEC Minister Neletha Butterfield said: “Technology is changing rapidly and the structure of Bermuda’s telecommunications industry does not lend itself easily to the new converged technology and service platforms emerging across the world.” METEC this month invited applications from telecom companies to build and operate a new submarine telecom cable. The consultation document explains why the Island needs it.
It says that Cable & Wireless operates and owns two submarine cables. “Both of these cables have been in use for a number of years and their capacity limits are inadequate for the future needs of the economy,” the document states. Brasil Telecom also operates a cable to Bermuda but the company is restricted from doing business with retail customers and can only sell capacity to the other international providers, Cable & Wireless and TeleBermuda International. Anyone interested can download the documents via the Government portal (www.gov.bm) or pick them up in person from the Department of Telecommunications on the second floor of the F.B. Perry Building, 40 Church Street, Hamilton.

The risk of Bermuda having its “life-blood” ocean-bed telecommunications cables severed – leaving the Island’s international businesses cut off from the rest of the world – is one of the considerations driving moves to re-organize the sector. And that is not a far-fetched scenario. On December 26 last year an earthquake in southern Taiwan caused major disruption to banks and businesses across South-East Asia when six undersea optic cables carrying international telephone lines and internet connections were cut and another was seriously damaged. Bermuda has three undersea telecom cables linking to the outside world but two of those are outdated and have virtually reached their capacity-carrying limits. The need for an additional international cable is one of the arguments Government has for now seeking a telecoms shake-up in Bermuda, because to attract the investment needed to pay for a new undersea optic cable it needs to make the local market more attractive to potential cable connection suppliers. 

Where the idea runs into hot water with local telecom providers, telecom professionals and some members of the public, is when it proposes the 60/40 rule – which stipulates majority Bermuda ownership – be abandoned and the entire sector opened up to possible wholesale foreign ownership. A further concern is the plan to block domestic telecom companies such as North Rock Communications, Cellular One, Fort Knox and KeyTech seeking to secure their own deals with Brasil Telecom – the owner of the super-high capacity optic cable that serves the Island – to use its cable. Under proposed Government regulatory reforms, only Cable & Wireless (C&W) and TeleBermuda International (TBI), which already have international service licenses, will be able to “sell” international connectivity to other domestic operators. C&W owns the other two undersea cables and together with TBI also buys capacity on Brasil Telecom’s optic cable. C&W and TBI will be obliged to offer wholesale international capacity to the other domestic telecom companies on “non-discriminatory terms” according to the proposed reform. Government wants to create a level playing field for anyone to compete in Bermuda’s telecoms marketplace, but the proposed level playing field has a number of unfair slopes in the eyes of critics of the regulatory reform ideas. Written submissions will be taken up to February 19. Strong objections remain from those with either a vested interest or who object to the 60/40 rule being waived. Currently,  the Island’s primary undersea cable is a self-healing fiber optic cable owned by Brasil Telecom, which has more data-carrying capacity than Bermuda would likely ever need. But it is at risk of damage from a natural occurrence or being snagged by a ship’s anchor between its length from Bermuda to New Jersey. Fortunately, the cable is actually a ‘ring’ that sweeps down to the islands of the Caribbean and to Venezuela before shooting back to connect to the mainland US. So, if there is a break in the Bermuda-New Jersey link the connection is not broken as it re-routes south. But it is still a precarious link. The consequences of the Island being left high-and-dry without fast internet connectivity would have major repercussions for Bermuda’s international business community. It wants and needs wants to have an additional path off the Island. Their life-blood is communication. The proposals would do away with the current set-up of four categories of telecommunication providers. Currently there are class A (international service providers), class B (fixed and wireless domestic providers) and class C (internet service providers) as well as cable TV providers. 

But since those categories were introduced in the late 1990s the evolution of new technologies has increasingly made it difficult to separate the services that have sprung up and cross-over the previous classification boundaries. Ending those segregated categories and allowing telecom operators to apply for Unified Domestic Licenses covering all aspects of telecoms delivery is Government’s ultimate goal. The 60:40 rule would need to go to create a level playing field because it already applies to varying degrees to the different players depending on which ‘class’ they are currently in. And the reason why the domestic operators are not being allowed to seek their own international connectivity deal with Brasil Telecom is to make things more attractive for an investor to put in place a new undersea cable.

In late November 2007 it was announced that Bermuda has moved a step closer to a more competitive market place for internet and international telecommunications after Government announced it is prepared to offer a consortium of domestic companies a licence to install a new undersea cable connecting Bermuda and North America. Three Bermuda companies, namely North Rock Communications, Transact and KeyTech - parent company of the Bermuda Telephone Company, joined together under the name Cable Company to apply for the new licence in September,. 2007. The companies wish to own and operate their own undersea telecoms cable as a way of by-passing the need to buy capacity from carriers Cable and Wireless and TeleBermuda International on existing cable networks. The Minister of the Environment, Telecommunications and E-Commerce, Neletha Butterfield, has said that an evaluation of the Cable Company application for an International Public Telecommunications Licence and Foreshore Licence had been completed. The Minister accepted the recommendations of the Telecommunications Commission and is prepared to offer Cable Company Limited the new licence. The Minister is also satisfied that the intended marine approach of the cable minimizes the distance it will traverse shallow water and avoids sensitive marine environments as much as practically possible; she will therefore also recommend to the Minister of Works and Engineering that he award Cable Company Limited a Foreshore Licence." The licence is subject to the acceptance of the terms and conditions as prescribed in the tender document in addition to the commitments made by Cable Company in its proposal. Once awarded, the licence will enable the consortium to construct and operate a new submarine cable, connecting Bermuda to North America. A subsequent statement confirmed the licence.  A new undersea internet and telecommunications cable to end the current duopoly of Cable & Wireless and TeleBermuda International is scheduled to go into operation by 2010.

The three rival Bermuda communication companies have now had the way opened for them to construct the Island's fourth undersea telecoms cable connection. Will it mean cheaper internet prices? It's too early to say. The new initiative is a step towards breaking up the restrictive telecommunications operating practices that have been in place in Bermuda for the past 11 years. The three companies who have formed the entity Cable Company to pursue the cable licence have, up until now, had no other choice than to pay for international bandwidth through C&W and TBI. By owning their own undersea cable connection between Bermuda and the US they will have access to their own bandwidth carrier capacity as well as the ability to sell capacity to others on the Island. How much the new cable system will cost has not been revealed, other than that it is in the "tens of millions" of dollars. As a comparison C&W announced earlier this year it was replacing one of its ageing cables at a cost of $22 million. The Cable Company has named its new submarine cable Challenger. It will attach to a cable network off the US eastern seaboard and link to Bermuda via South Shore. The southern side of the Island was chosen as the preferred landing area for the new cable because it would be the least environmentally disruptive location.. The new cable will be 100 percent Bermudian owned. It will also have the ability to carry telecommunications traffic 10 times the capacity of that currently used by the Island. Final planning and the availability of cable-laying ships will dictate when the new cable can be put in place and begin operating, but Cable Company is looking at a 24-month time frame.