Battlegrounds and Graveyards

There is a well known saying at Cable & Wireless that goes, “Jamaica is the battleground and also the graveyard for Chief Executives!” The last casualty, CEO and President Rodney Davis, exited the business last year and was preceded by Errald Miller, Gary Barrow, and Jacqueline Holding, all within a space of 7 years following liberalization.

A few weeks ago, David Leshem wrote a very interesting blog titled “Where revenue assurance stops, a bedtime story”. The article reminded me when Davis was at the helm in Jamaica, and in a desperate attempt to claw back market share in both the mobile and fixed-line businesses, he introduced a mobile tariff called “10/8” and also a pre-pay pots service marketed as “homefone”.

Davis was eventually axed after a disastrous first quarter in 2007, posting significant losses owing to both of these products. In the case of the “10/8” mobile tariff, the profit margin was so low and the volume of off-net traffic to local competitor, Digicel, was always going to be a problem to commercially sustain. In the case of “homefone”, the pre-pay pots service was positioned in the market with free installation, which had disastrous consequences.

The “homefone” service was in fact hugely popular amongst the low income earners in Jamaica, and over 120,000 new subscribers applied.  After putting in new line plant to accommodate growing demand, the return on investment would not break even until year 5. Most “homefone” customers could not even afford to make regular calls anyway, but at least they all had shiny new phones, and some even had multiple phones in each household for good measure. After all, everything was free, free, free, even free installation! Subsequently, opex and capex lines soared without any material increases in revenues and brought Davis’ tenure to an end.

This brings me back to David Leshem’s original question in his blog, “Whose role is it to make sure that the marketers come up with the right tariffs?” Well, I often ask myself this question over and over because I was Head of RA at Cable & Wireless International at the time. Perhaps I should have done more? Could I have done more? Who else in the business was noticing this? Why do we continue to provide these services when there is no payback? Why are these tariffs so low? The questions would continue long after the event.

As RA practitioners, we are here to inform the business that these things might happen but when you have a desperate CEO trying to make his numbers before his final showdown at the O.K. Corral battleground, then all rationale (including RA advice) goes out the window. As it happens, Davis was not the only casualty in all this, and the axe later fell on the entire London HQ.

Lee Scargall
Lee Scargall
Lee is a senior risk management professional. He has extensive experience of managing both ERM and RAFM teams in telcos around the world, having worked for Ooredoo Group, Cable & Wireless and T‑Mobile UK.

Lee earned a PhD in Electrical and Electronic Engineering from the University of Newcastle upon Tyne, UK, for advanced research in to 3G video-telephony.

3 Comments on "Battlegrounds and Graveyards"

  1. David Leshem David Leshem | 28 Oct 2008 at 6:14 pm |

    Thanks for the post. I had the pleasure to visit C&W just prior to the launch of Digicell Jamaica during Feb. 2001.
    And for the record I saved this press release. In my view it is as good as gold.

    from From C&W J web site:
    February 23, 20001

    C&WJ’s Acting President Gary Barrow said that ….

    Mr. Barrow also took the opportunity to reassure C&WJ’s Mobile customers that the company was far advanced in its further upgrading of its cellular network, which will significantly improve the quality of the existing service.

    In apologizing for any inconvenience which customers had experienced, the C&WJ Acting President thanked them for their understanding and patience, and said that, in this case, the company had become a victim of its own success. He pointed out that over the past few months the company had been activating more mobile phones in one week than it did in one year during the first several years of the existence of the service.

    Mr. Barrow said he wanted his company’s customers to know that his first three priorities as far as they are concerned are: firstly, service; secondly, service; and thirdly, service.

  2. David Leshem David Leshem | 28 Oct 2008 at 6:34 pm |


    The interesting part is what Garry Barrow didn’t say in his press release – Which is why the press release was issued. Simply because C&W JM lost 50% market share in 2 weeks to Digicell. They never seem to recover since.

    For the curious ones, the reasons for Digicell success were rather interesting:

    1/ C&W network collapsed entirely for about a week during the launch of Digicell (at that time their name was Mossel).

    2/ Unique customer acquisition criteria: In order to be qualified as C&W customer you had to have a reference from your high school principle, or a local clergy or the local police officer.

    3/ Unique pricing – Airtime charge is a combination of calling party (A number) tariff and called party (B number) tariff. So basically if friend B1 has different tariff from friend B2, different call cost for same A number.

    4/ I have more, but this is enough.

    My point, is that their problems go way back.

  3. Avatar Mike Willett | 31 Oct 2008 at 11:44 am |


    Your question about should RA have done more is an interesting one. You can say possibly they should have but then I would also be asking what diligence existed on the business case and how was funding made available for this offer.

    I won’t seek to answer this question (mainly because I can’t) but an issue this raises is when does RA move from just ensuring that the business intent has been correctly implemented (e.g. the pricing that they wanted to charge “is” being charged) and move to providing assurance that what the pricing people (in this example) are trying to achieve (be it customer growth, ARPU growth etc) will be achieved with the changes they are proposing to make. This is a much messier and tougher question to address in a complex and changing environment like telco.


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