WITHOUT CANCOM, THERE MIGHT never have been Columbus Communications.
While Whitehorse TV founder Rolf Hougen might find it surprisingly strange that he’s the first person mentioned in a story about an aggressive cable and telecom company in the Caribbean, we just have to start way north before heading south.
In need of a distant signal provider to beam TV to his fledgling cable operation in the late 1970s, Hougen applied to the Department of Communications for permission to launch a satellite company which would deliver TV not just to the subscribers in Whitehorse (who had to endure a community channel that scheduled a block of time where a camera was trained on a goldfish bowl) but across Canada.
This was prior to the age of fibre optics – and once Hougen was granted permission by the CRTC, Canadian Satellite Communications, Cancom, was born in 1981.
The trouble was that there weren’t enough small Canadian cable operators in existence needing signals, and Cancom began to hemorrhage. Its chief financial officer at the time, Gary Kain, hatched a plan to secure rural cable licenses out east and launch little cable operations. In the mid-80s, Cancom "had $500,000 a month in revenue and $2 million a month in expenses," Kain told me back in 2000 when he was chairman of Regional Cablesystems.
So Kain created a feeder system for Cancom, where small town Canadians, seeing distant TV signals from far off places like Boston and Detroit, would feed Cancom through their monthly cable bill. Kain’s company had numerous incarnations, such as C1 Cable and divisions such as N1 (the N stood for Newfoundland), and would eventually morph into Regional Cablesystems, a publicly traded company which at one time owned more than 1,200 Canadian and U.S. rural headends.
Part of the ownership group of N1 was Phil Keeping, owner of Eastern Cable TV in New Brunswick. He helped lead the installation and launch of some 150 Newfoundland cable systems while building Eastern in New Brunswick, which was a 30% owner of N1. In 1991, Keeping sold off his interest in N1 to what was on its way to becoming Regional Cablesystems to concentrate on New Brunswick.
At the same time, he began to look elsewhere for other opportunities and in 1994, sold Eastern Cable TV to Fundy Cable’s Bill Stanley.
That elsewhere was The Bahamas.
And it wasn’t just any old system Keeping built in the Bahamas. He built a state of the art, 750 MHz, hybrid-fibre coax system with 150-home nodes… in 1995. "We didn’t build a traditional cable plant," says current Cable Bahamas president and COO Tony Butler. "It was a telecommunications plant from day one… We had addressable taps from the get-go."
The Bahamas is hundreds of islands spread out over 700 miles or so, so rolling trucks – or floating boats – to shut off customers for non-payment would have been impossibly expensive. 
"Instead, we could do it with a keystroke," said Butler, a Scotsman who was once The Bahamas’ director of public works and led the rebuilding of the Bahamian island Eleuthra when it was leveled by Hurricane Andrew in 1992.
The Bahamas is still a cash society. Only 4% of the cable company’s customers are pre-authorized payers. So, the office is jam-packed at the end of every month with people settling their bills, cash in hand. And missing a bill or two doesn’t quite carry the same stigma there as we believe it does here in Canada. Cable Bahamas sometimes disconnects about 2,000 people a month for non-payment, but almost all pay up right away and are reconnected.
Keeping picked a great time to come to The Bahamas, a nation of about 300,000 people whose major industry is tourism and that is probably best known to most as home of Atlantis Paradise Island – an enormous resort and casino complex which was built in the 1990s – the same time Keeping was constructing his cable plant.
"It was built for US$1.2 billion and they are spending another billion on phase 3, which is coming up," adds Butler, whose company and its divisions get north of US$50,000 a month from the mega-resort where the penthouse can reportedly be rented for $25,000 a night.
Keeping’s company, Columbus Communications, owned a minority share of Cable Bahamas, with the rest of the shares owned by Bahamians – and a chunk by the Bahamian government. Columbus has three of the five seats on the board, however.
It’s a structure that still stands today, except that Columbus has grown much, much bigger outside of The Bahamas, with its new owners having purchased the Cable Company of Trinidad & Tobago, Merit Communications of Jamaica and New World Network in 2005 – all as part of a strategy to rationalize the telecom marketplace in the Caribbean.
Columbus is now almost 50%-owned by Canadian billionaire Michael Lee-Chin of investment fund AIC Limited (and owner of National Commercial Bank in his home country of Jamaica); Clearwater Seafoods chairman John Risley; First Marblehead Corp. owner Daniel Meyers; and president and CEO Brendan Paddick.
Paddick as many will remember, was CEO of Regional, which later became Persona Communications. Regional/Persona were consolidators of small cable systems in Canada and eventually ran out of good systems to buy. It then turned its attention to the Caribbean and old friend Keeping’s operations, purchasing it in 2003.
However, Persona was a public company and the markets didn’t like the foray south of two borders and punished the stock price. Eventually, Persona’s Canadian operations were sold to its current owners and the Caribbean operations were untangled and placed back in Keeping’s hands, only to then be sold again to Paddick’s group.
Cable Bahamas is a mature cable market, for the most part – and one which Columbus is using as a template for Jamaica and Trinidad. Cable Bahamas has the advantage of being the licensed monopoly in the country but over the years it has spent $400 million there bringing TV and Internet (and later this year, voice) to Bahamians, says Butler.
So far, it’s only competition are illegal grey and black market American satellite dishes.
The Bahamas has, by far, the highest Internet penetration of any country in the Caribbean. Cable Bahamas has 30,000 high speed Internet households by itself and its research says the government-owned telco has about 10,000. That’s 40,000 Internet homes out of a total of about 90,000 Bahamian households. And like in North America, says Butler, "people have an insatiable appetite for bandwidth."
The Bahamian government recognized the need for computer literacy and Internet penetration and dropped the punishing 42% duties once charged on personal computers (hey, an economy with no income or sales tax has to take in revenue somehow – so a car with a sticker price of over US$20,000 is subject to a 67% duty, for example).
Look for Cable Bahamas to launch voice this year while it also studies wireless.
Photos by Greg O’Brien
