TWENTY-FOUR INTERCONNECT points in 16 countries. That’s the story of Columbus Communications and New World Network.
The other story is the sheer number of Canadians – especially Newfoundlanders – on board running the thing. Of about 600 total employees under the Columbus Communications umbrella, about 40 are Canucks – and many of those in charge are Newfies.
CEO Brendan Paddick, part owner John Risley, CFO Max Parsons, Trinidad president John Reid, all seven in charge in Jamaica, including Merit Communications president Richard Pardy – are from The Rock.
"There’s a whole bunch of ex-Cancom/C1 Cable guys, a bunch of Persona people, and more than a healthy share of Newfoundlanders," says Paddick. "We’re the Newfoundland mafia, is what they call us."
Cable Bahamas president Tony Butler says of the Newf leadership: "They’re strange people."
Perhaps.
Many investors in the old incarnation of Persona Communications sure thought it strange that a Canadian company running hundreds of small cable systems here (boring, but revenue-producing) had suddenly turned its attention to The Bahamas of all places.
Back in 2002, Persona paid US$45 million for Columbus Communications, which owned control of Cable Bahamas. Bay Street hated the move and a share price that at one time had been near $20 dropped below $7. The business world is littered with Canadian retail companies that have suffered (or worse) when expanding outside the country and there was palpable fear that this Caribbean foray was a boondoggle. At one AGM, some disgruntled investors said as much, loudly.
So, when Persona was sold to an investors group of Hicks, Muse, Tate & Furst Incorporated, of Dallas, Texas; TD Capital Canadian Private Equity Partners; CIBC Capital Partners and current CEO Dean MacDonald in 2004 for $400 million, the Caribbean venture was cut out of the deal. The new Persona owners thought the investment too risky.
So, former Columbus owner Phil Keeping took over again for a short while and after that sale was wrapped, Paddick had new investors lined up (Risley, AIC Group owner and billionaire Michael Lee-Chin, and First Marblehead Corp. founder Daniel Meyers) and re-purchased Columbus and Cable Bahamas.
It was but step one.
Steps two, three and four – all big ones – took place in 2005. The company purchased Merit Communications in Jamaica, the Cable Company of Trinidad and Tobago, and most importantly, New World Network – which owns 88% of ARCOS (Americas Region Caribbean Optical-ring System), the undersea fibre network which lands at 24 interconnect points in 16 Caribbean countries. New World was in bankruptcy protection and Columbus was able to purchase it "for cents on the dollar," says Paddick. Former Regional Cablesystems and Cancom executive Paul Scott was appointed president.
More steps are coming. When cartt.ca visited New World in Miami, senior executives from Columbia’s incumbent telco ETB were in town to sign a deal likely to be worth more than a million a month to the company. 
The ARCOS ring encircles Cuba and carries traffic from Cable Bahamas’ network, as well all sorts of traffic from all sorts of companies in places like Mexico, Belize, Guatemala, Puerto Rico and so forth (see map). A loop tying in Jamaica is nearing completion and one linking Columbus’ Trinidad operations is likely to begin sinking this year.
New World has about 11,000 kms of "wet plant" as Scott called it.
To have retail Internet and voice on Caribbean islands, where local governments are in various stages of deregulation, owning your own pipe off the islands is an absolute must, says Paddick, and the ARCOS fibre is the only ring like this all the way around the islands.
"One thing the Cable Bahamas experience has taught us is that without the marriage of the two, without being able to control your own pipe off the island, it doesn’t work," he adds.
Without its own backbone to North America, Cable Bahamas would have all of its "eggs in its competitor’s basket… and the reality is getting interconnections with existing telcos is tough, if you can get them at all," explains Scott.
"The core competency of some of these telcos is thwarting competition, not providing service," adds Ted Boyle, another former Cancom executive who will oversee Cable Bahamas’ push into the voice market. While most Caribbean nations are moving towards telecom deregulation, the incumbents – which most often have some kind of government ownership, resist with all their might.
While New World is a great asset – it’s one that needs rapid upgrading, something the company is already in the throes of completing. "We’re currently at 102% capacity," said Paddick in December. However, with advanced wavelength multiplexing gear being installed, New World is adding cards at its operations centre that will expand its bandwidth four-fold, says Scott.
"Capacity won’t be a problem," he said. All they have to worry about are breaks – such as when a Carnival cruise ship anchor destroyed one section of the fibre last year. The network isn’t in shipping lanes of course, but the boat was seeking shelter in a storm and unluckily nailed the network. It’s a US$250,000 repair that takes at least a week. But, since the loop is redundant, customers probably didn’t notice the outage.
But as Columbus grows, how does the company choose where it will have a retail presence like in The Bahamas, Jamaica and Trinidad and where it will have a backhaul presence such as in Columbia?
Paddick didn’t want to outline strategy completely but pointed to where in Mexico the ARCOS network lands: At either end of the Mexican Caribbean hotel strip in Cancun and Tulum. Mexico contributes "about $50,000 a month in recurring revenue – which is about 70% of what we generate out of the Atlantis hotel alone (in Nassau). So that’s a market where we may establish a retail presence."
Another attractive aspect to the Caribbean is that the markets there are where Canadian telecom and cable was 10 or 15 years ago, so Paddick and the other executives have a sense of where the markets might head. However, the people there also know or have a sense that a better communications system could be theirs for the asking – and they are demanding.
"There’s a significant portion of the population in these countries who will do anything to get quality service," says Scott. In some areas, consumers are paying $70 a month for 256 Kbps service.
"If you look at all the macros in these countries, which are developing, you’ve got a burgeoning middle class. You’ve got e-commerce being not some foreign concept. You’ve got geographic distances that really lend well to e-commerce and Internet uses and a lot of governments are recognizing that ICT is something they really have to focus on," adds Paddick.
Just looking at the mobile phone uptake in Jamaica, where Irish provider Digicell came in three years ago and now has 1.5 million customers (in a market of 3 million), "they are unbelievable early adopters of technology," says Paddick.
So why didn’t the old Persona stick with this? Why hasn’t a larger telecom company seen the Islands as an opportunity, the way Columbus has? " Because the public markets can’t wait," says Paddick. "And this whole region is hurry up and wait. But if you stick with it, you’ll get there.
"You’ll have a meeting and say okay, we have to get this done tomorrow and you’ll leave and have a follow-up six months later," he explains.
While the company declined to make Lee-Chin available for this story, Paddick says his involvement is more than just an investment. As with his purchase of National Commercial Bank in Jamaica a few years ago – a bank which was failing – Lee-Chin is involved in Columbus "because it’s the right thing for this region," explains Paddick.
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COLUMBUS COMMUNICATIONS ASSETS
Cable Bahamas
Commenced operation in 1994 by constructing a state-of-the-art hybrid fibre co-axial cable television system. It has been providing cable television services in The Bahamas since 1995 and Internet services since July 2000. The company presently services 68,000 cable TV customers, representing 70% of the 97,000 households its cable plant passes on 16 islands throughout The Bahamas. The company also provides services to approximately 28,000 Internet customers, and has experienced a Compounded Growth Rate of 109% since the service was launched.
Cable Bahamas has constructed a 2,600-kilometre, high-bandwidth fibre network with a capacity of 750 megahertz in more than 96% of its operating territory. The bi-directional Cable Bahamas broadband network is based on switched architecture that facilitates the delivery of specific data and information to any point of presence in the system. As a result of its significant bandwidth capacity, Cable Bahamas is technically and strategically positioned to capitalize on a variety of opportunities in the regional broadband industry. See www.cablebahamas.com.
CoralWave
The Internet division of Cable Bahamas, was launched in July 2000 to provide high-speed Internet services using DOCSIS-based cable modem technology. Presently serving over 30% of all households in the Bahamas, its success has been demonstrated by the fact that The Bahamas has the highest proportion of households with high-speed Internet services in the Western Hemisphere.
Maxil Communications Ltd.
A wholly owned subsidiary of Cable Bahamas, provides an international data centre, web-hosting facilities, and business continuity services in the Bahamas. Built to world-class standards for functionality and redundancy, Maxil provides web hosting and e-commerce infrastructure for more than 600 companies. Maxil developed one of the few e-commerce facilities in the Caribbean, and with the support of Caribbean Crossings’ low-latency fibre connectivity to the U.S. Internet backbone, it has become a showcase facility for the Caribbean region.
Caribbean Crossings
A wholly-owned subsidiary of Cable Bahamas and is an international telecommunications company that has constructed and operates an undersea fibre-optic cable system linking four largest islands of The Bahamas – Grand Bahama, New Providence, Eleuthera, and Abaco – to the continental United States. The company provides innovative, seamless point-to-point international telecommunications network solutions to wholesale capacity purchasers, including carriers, Internet service providers (ISPs) and value-added resellers by using the most technologically advanced undersea fibre-optic facilities currently available. Caribbean Crossings holds telecommunications licenses issued by the Public Utilities Commission of The Bahamas and the Federal Communications Commission of the United States.
Caribbean Crossings has had a material impact on the price of bandwidth to The Bahamas. Prior to the announcement of its plans, a T1 (1.54 megabits per second) dedicated circuit from The Bahamas to the United States was priced at US$48,000 per month. As of January 2005, dedicated T1 pricing from The Bahamas to the United States is approximately US$10,000 per month with both the incumbent and Caribbean Crossings enjoying increased sales. Caribbean Crossings has effectively reduced the price of bandwidth, resulting in The Bahamas having the most competitive bandwidth pricing in the English-speaking Caribbean. This clearly demonstrates the effectiveness of a competitive market environment, one in which businesses can prosper and broader macro economies are strengthened.
Merit Communications Ltd.
Acquired by Columbus effective February 1, 2005. Merit was formed in 2002, according to the guidelines of the Registrar of Companies of Jamaica, to build a next-generation network capable of delivering voice, data and video over fibre optic cable.
Through Merit, Columbus plans to embark on an aggressive US$110 million fibre deep HFC network construction capital program. Fibre deep HFC is the latest generation of broadband system design, and as the name implies, the fibre extends deeper into the network, significantly increasing the total amount of installed fibre.
Fibre deep HFC uses a combination of a small homes-per-node ratio and a higher powered RF output at the optical node to eliminate the need for additional RF line or trunk amplifiers. The passive RF design reduces the number of active elements in the RF plant, and has the impact of lowering noise, eliminating power problems, and reducing operating costs.
Merit’s design goals are to provide a robust secure network for today and into the future that:
1. delivers an all-digital high resolution television signal;
2. has high capacity (860 digital channels or 260 high definition channels);
3. has a high reverse channel bandwidth for telephony and data services;
4. has a long design life, which may be extended as new services are introduced;
5. minimizes active (powered) components in the field and is low maintenance;
6. maximizes fault tolerance through a low drops per node ratio (~100);
7. is cost effective and may be marketed at competitive rates.
Merit Communications’ network will be a fully protected broadband network utilizing two advanced architectures: (1) fibre deep HFC; and (2) FTTP. The FTTP network will be deployed principally in business districts. Residential neighbourhoods will be served with a fibre deep HFC network. Although the fibre deep HFC architecture does not use a direct fibre to each home, its design allows for high fibre counts to be distributed far into the network and is capable of providing significant bi-directional bandwidth to each home connected. Merit Communications was re-branded Columbus Communications Jamaica Limited in September 2005 and markets its triple play service under the brand, Flow. See www.FlowJamaica.com.
FibraLink Jamaica Ltd
A Jamaican corporation incorporated in June 2004, is a wholly owned subsidiary of Columbus that was established with the express purpose of building, owning, and operating a submarine fibre-optic network to link Jamaica into the continental United States. In December 2004, FibraLink was issued the exclusive license by the Jamaican Office of Utilities Regulations in Jamaica to build and operate an international subsea optical network, the result of an open and competitive formal request for proposal process. FibraLink has executed a contract with Alcatel Submarine Networks for the design and construction of a submarine link from Bull Bay, Jamaica to Puerto Plata, Dominican Republic. The estimated Ready for Service date of the Network is January 15, 2006. Columbus anticipates meeting this schedule and it is nearing completion of its terrestrial cable landing stations.
Trinidad & Tobago Trans-cable Company Limited (CCTT)
Effective June 1, 2005, Columbus completed the acquisition of Trinidad and Tobago Trans-cable Company Ltd. (“CCTT”).CCTT is currently the dominant cable television provider in Trinidad and since the purchase by Columbus it has seen its basic cable subscriber base grow to in excess of 109,000. CCTT has invested in excess of TT$400 million in capital, an average of TT$50 million per annum, with its service footprint presently passing over 200,000 homes. It directly employs 230 full-time employees and an additional 200 contractual employees.
Columbus has plans to essentially “reinvent” the Company through a significant investment in its infrastructure, increase its workforce by 50%, re-brand the Company, digitize its entire cable TV line-up and introduce competitive high-speed Internet and Telephony products.
Columbus plans to embark on an aggressive US$160 million plant rebuild and system extension capital program. This plan will see the entire current RF plant reconstructed to 860 MHz, thereby positioning the company to offer the full triple play of video, voice and data services. In addition, Columbus plans to extend the current network footprint to reach the estimated 60,000 to 80,000 residences in Trinidad that do not currently have access to cable television and internet services.
Columbus, through Cable Trinidad, will use the same network architecture parameters and specifications as that being deployed by Merit in Jamaica.
New World Network
On September 6, 2005, Columbus closed the acquisition of New World Network, Ltd. (“New World). New World is a wholesale provider of advanced, high-speed bandwidth capacity to telecommunications companies and Internet Service Providers.
New World owns an 88.2% undivided interest in the Americas Region Caribbean Optical-ring System ("ARCOS"), an undersea broadband fiber-optic cable network. ARCOS is 8,600 km in length and connects the United States with Central America, South America and the Caribbean. Specifically, ARCOS connects the United States with the Bahamas, Turks & Caicos, Dominican Republic, Puerto Rico, Curacao, Venezuela, Colombia, Panama, Costa Rica, Nicaragua, Honduras, Guatemala, Belize, and Mexico. New World Network has extended its services to Ecuador and El Salvador.
New World’s co-owners in ARCOS include approximately 28 carriers throughout the region, including MCI Worldcom, AT&T, Cable & Wireless, Avantel, CANTV and Verizon. This unique ownership structure combines the advantages of an independently owned company and the benefits of strategic partnerships with local carriers that provide landing rights, backhaul and interconnection to local networks.
New World offers bandwidth and IP services from country-to-country, city-to-city, or office-to-office through ARCOS. Co-location space, interconnections, and other value-adding services are offered alongside these bandwidth products.
Through the purchase of New World Network, Columbus substantially enhanced its presence in both the Caribbean and Latin America region, and obtained access to advanced telecommunications capabilities and bandwidth to augment the services provided by other companies in which Columbus is the controlling shareholder. In addition, New World Network will continue to provide and expand its industry-leading bandwidth services to carriers and other customers throughout the region. See www.nwncable.com.
