Trouble in paradise as internet rival sues Cable & Wireless

Cable & Wireless, the telecoms giant, is facing a major lawsuit in the Caribbean that could destroy the company's dominant position in one of its key markets.

Cariaccess, a start-up company that has been trying to offer broadband internet services in the region for five years, issued a writ in St Vincent on Friday afternoon against C&W. It is claiming damages of EC$113m (£22m) against C&W and the National Telecommunications Regulatory Commission (NTRC), the island's telecoms regulator.

Cariaccess claims that it was prevented from launching a broadband service by the wholesale charges that C&W was charging for access to its network. It alleges that the price on offer from C&W was several times the price the group offered to its own retail customers, making it impossible for Cariaccess to sell a competitive retail product.

Cariaccess is suing the NTRC for not enforcing regulations that prohibited C&W from imposing wholesale prices on its potential rivals that were in excess of its own retail prices for broadband access.

The writ reads: "Almost five years after receiving its first Organisation of Eastern Caribbean States (OECS) telecom license, Cariaccess remains unable to interconnect to the (PSTN) public-switched telephone, internet and other networks, anywhere in the OECS." In documents submitted to the St Vincent court, Cariacess claims that C&W offered to sell it one particular broadband product for EC$17,229 per month, compared with its own retail price of just EC$299.99.

Anthony Gunn, the founder of Cariaccess, said: "I am happy that after being blocked for so long, we can take this matter to court. I am sure justice will prevail."

In the six months to the end of September, C&W's international division, which includes operations in the Caribbean, saw broadband customer numbers grow from 312,000 to 370,000.

In C&W's interim results last month, the company said growth in broadband customers had been particularly strong in Jamaica and Barbados - two of the Caribbean islands which could potentially be affected by the Cariaccess court case.

Revenue from broadband at C&W's international business for the interim period was £36m, up from £25m in the year before. The company said growth was "principally driven by Panama and Caribbean businesses".

C&W's share price has risen steeply recently on the back of improved performance in the UK. But it still relies on its international business as a cash cow to fund investment in Britain.