STATEMENT BY PREMIER AND MINISTER OF FINANCE

HONOURABLE ANDREW A. FAHIE

DURING THE 13TH SITTING OF THE SECOND SESSION OF THE FOURTH HOUSE OF ASSEMBLY 

TELECOMMUNICATIONS REGULATORY COMMISSION BALANCES

21 July, 2020

Mr Speaker, I rise to provide an update on the work being done by the Telecommunications Regulatory Commission (TRC) as it relates to the enforcement of, and adherence to the Telecommunications Act 2006.

Honourable Members would recall that in my last statement to this Honourable House on this subject on 19 June, 2020, I spoke about the Commission’s obligations under the Act to collect revenues in the forms of the industry levy and royalties as per Section 58 of the Act, and the preparation and approval of a budget and work plan in accordance with Section 63.

As I reported to this Honourable House, the budget and work plan for the year 2019/2020 was approved by the board of the Commission, and then approved by me, in my capacity, as Minister of Finance on 23 March, 2020; and I proceeded to lay the both documents on the table as directed by the Telecommunications Act 2006.

This was done well ahead of the Statutory deadline for tabling of those documents, and I am advised it was the first time since the Act came into effect in 2006 - the first time in the history of the Commission - the TRC’s budget has been approved and laid before the legislature as prescribed under the law.

Also, Members would recall, I reported that as a result of the diligence of the Commission, which took office only February this year that $2M was recently raised for the Government’s coffers, for which $1M was allocated towards the paving of public roads and the purchase of other needed associated equipment. The remaining $1M was allocated to allow for the commencement of the long-awaited and long-overdue East End—Long Look Sewerage Project.

Mr Speaker, of course, the people of East End—Long Look have a sign of hope in their new Government in seeing this project come to fruition in the very near future now that some funding is coming into place, having been deprived of such when $8M allocated under the previous administration for the said project was redirected to the Tortola Pier Park project under the immediate past administration.

Honourable Members would also recall my explanation as to how these funds were generated.

Sources of revenue for the Commission include Industry Levy and Royalties, according to the Act.

The Royalty is currently calculated at 3 percent of gross telecommunications revenue of each licenced operator.

The Industry Levy is calculated via a process and a formula, and is also supposed to be collected from the four licenced operators.

As I reported to this Honourable House on the prior occasion, records show that under the previous Boards and management, the TRC did not collect any industry levy from the licenced operators. They did, however, collect the Royalties.

It is significant to note, as I am advised, the cumulative sum of industry levy that should have been collected from 2007 to the present – for financial year 2006 coming forward annually – is $28,164,438.15.

Of this sum, $4,249,009.12 was billed by the TRC for the current 2019-2020 period and the collection of these funds in underway.

This means that from 2006-2007 to 2018-2019, some $23,915,429.03 in industry levy that should have been collected from licenced operators for the Commission to do its work  on behalf of the Government and People of the Virgin Islands  was not collected.

From 2007 to 2020, some $25,044,047.60 in royalties was collected.

Now, under the provisions of the Act, the proceeds from the industry levy is supposed to be used by the TRC to fund its operational expenses, and surplus funds including royalties should have been paid to the Government for deposit into the Consolidated Fund or as directed by the Minister.

This means at least $25M was supposed to be paid across to the Government between 2007 to 2020.

However, this was not done, except for the $2M that was collected this year and paid over to the Government to be allocated towards public road paving and associated equipment purchase and also towards the East End-Long Look Sewerage Project, along with $250,000 which was paid into the Consolidated Fund some years ago.

Since the Commission was not collecting the industry levy, it was using the royalties to fund its expenditure.

As it stands, the TRC owes the Government and citizens of the BVI approximately $23 million.

The TRC is also duty bound to recover the unpaid or uncollected industry levy. The TRC Board has advised that it is seeking legal advice on how to proceed.

It is important to note that one of the contributing factors to the TRC not collecting the sums that were due is that of the non-completion of audited financial statements.

However, I am advised that the Commission was unable to complete its accounts and have it certified because some licenced operators have not been submitting their audited financial statements to the Commission over the years so that the necessary calculations could be done.

It is also important for Honourable Members and the public to note, Mr Speaker that the licences for all four operators are due to expire at different times in 2022.

Under the Act, the operators must be given notice of this one year before, and the process of dealing with that would begin.

One of the issues we will have to look at in this process is compliance with the Act.

May I say that all persons who are doing business in the Virgin Islands are expected to comply with the laws of the Territory.

Where the laws place obligations on individuals and firms, these must be respected.

You are responsible for ensuring that you comply with your obligations with the law, whether it is in submitting your audited financial statements in a timely manner or settling invoices when they are presented.

In this time of COVID-19 where every dollar and every cent counts, and where the people of the Virgin Islands are carrying such a heavy burden of coping with loss of income, both to themselves and to the Government’s coffers, we cannot have these situations where corporations make huge profits, but they do not pay their fair share as stated in the law.

This will not be tolerated, now and in the future, and I am putting all parties on notice to get their respective acts together, immediately.

Some obligations of Telecommunications Operators under the Act and in line with their licence include:

• Pay Regulatory fees as per their licences (Royalties and Industry Levy)
• Offer Consumers good value for money (i.e. service should not cost an arm and a leg)
• Offer BVI consumers consistent service across all islands
• Become compliant with the terms of their licences and remain in compliance
• Offer all consumers quality service comparable with other leading jurisdictions.

The TRC will bring all operators into compliance with all aspects of their licence as all licences expire in 2022. This will help determine the licencing regime after 2022.

On a somewhat related note, Mr Speaker, I do wish to advise Honourable Members that the TRC has been receiving queries from members of the public regarding poor quality service for residential and business customers.

We continue to hear complaints about slow internet speeds, high costs, and a run-around by customer service representatives.  

The Commission has advised that it is working to address these issues and will definitely be implementing measures to hold operators accountable to their obligations in this area under their respective licences.

The Commission is working to develop Quality of Service standards consistent with industry best practice for both voice and Internet, and they will be ensuring adherence by operators when new licences are issued.

The TRC is aiming to ensure that customers have good grade of service across all islands and especially across Sister Islands through a Universal Service Mechanism.

This will ensure that our other services, e.g. Financial Services industry, can compete with Regional and global competitors.

Further details on these measures will be provided in due course, and I will endeavour to provide further updates on how the TRC will be moving to recover the monies owed to it by the operators, and to settle its own debt to the Government in the form of royalties that have not been remitted to the Government.

I wish to emphasise to this Honourable House, Honourable Members and to the public that this situation is not of the making of the new TRC Board.

It is a situation that was inherited and only discovered after the new Board began evaluating the operations of the Commission.

Needless to say, that the new Board, has taken measures that are not popular. But, may I say that what is popular is not always right, and what is right is not always popular.

For many years, the people of the Virgin Islands have been deprived of millions of dollars that are now needed to assist in the repairs of our schools, improving our infrastructure, as well as boosting our Consolidated Fund.

In closing, this Government is committed to supporting the new TRC Board in the collection of the funds on behalf of the people of the Virgin Islands.

 Mr Speaker, I thank you.