Gibraltar’s telecommunications sector is undergoing a radical transformation that is already yielding significant benefits for business and home users alike.

The entrance of a new player into a market traditionally dominated by a single service provider has increased choice for the consumer and is helping to drive down prices.

Yet beyond a simple reduction in costs, the new market climate is expanding the Rock’s communications framework to meet the growing demands of vital sectors of the local economy, including international business sectors including gaming and finance.

For the average telecoms user, perhaps the most evident of the recent changes stems from the political accord reached in Cordoba last year between the governments of Gibraltar, Spain and the UK.

Spain’s recognition of Gibraltar’s 350 international dialling prefix has opened the way for mobile roaming across the border, a development whose impact cannot be understated.

Gone are the days when Gibraltar mobile phone users needed two numbers - one local, one Spanish – in order to keep in touch. For business users with interests in Spain, this has been a welcome step toward normality.

The recognition of the 350 code has not been without its problems, as we report elsewhere in this issue of B2B. Callers trying to phone Gibraltar say they frequently experience difficulties in getting through, an issue that has raised serious concerns in the business community. But officials are working to address these technical teething problems, and in general the shift to 350 has been broadly welcomed.

In Gibraltar meanwhile, there have been major changes in the telecoms landscape.

Local provider Sapphire Networks recently unveiled an agreement with leading Spanish company ONO that establishes an alternative fixed-line connection to Gibraltar. Prior to this, all fixed-line communications from the Rock were routed through the Telefonica network, leaving Gibraltar susceptible to outages.

Now, Sapphire’s own fibre optic infrastructure connects its base in Europort with a hub in La Linea, where it links up with the ONO network. Sapphire is maintaining its link through Telefonica but is bolstering that with the second link, resulting in two independent fibre network connections between Gibraltar and Madrid.

In practice it means Sapphire can offer its customers an extremely robust service, and an alternative to the services offered by Gibtelecom. In the terminology of the communications industry, the key word is resilience.

Sapphire director Tony Welsh, speaking at the company’s formal launch recently, said many business clients - notably those in the online gaming sector - simply could not afford to lose connectivity.

“For many businesses, loss of connectivity equals loss of revenue,” he told guests at the launch. “Our network resilience is the reason we are here today.”

Mr. Welsh said resilience was the way to minimise the risk of communications breakdowns.

Every piece of Sapphire’s technical equipment and network, he said, had built-in resilience giving the company and its customers a fall-back solution.

Sapphire has already put in place its own physical network of fire optic cables to many areas of Gibraltar, and has other types of connection available depending on customer requirements. It also uses Gibtelecom’s infrastructure where necessary.

Sapphire’s entry into the market has broken Gibtelecom’s monopoly on communications and opened the sector up to competition. Already, prices for services such as broadband internet connections are coming down.

“Gibraltar now has a choice,” Mr. Welsh said. “A choice of suppliers, service, cost and technical know-how.”

Chief Minister Peter Caruana, speaking at the Sapphire launch, welcomed the concept of competition in the communications sector.

“It is hugely important for Gibraltar that there should be more than one service provider,” he said.

But Mr. Caruana also struck a cautious note about increased competition and said Gibraltar must take into account society’s needs in this context.

“In Gibraltar’s socio-economic model, profitability cannot be the only factor,” he said. “Profitability cannot come at the expense of the destruction of local jobs.”

While consumers may sometimes have to pay a little extra for some services, the flip side was social stability and full employment, he suggested.

The prospect of increased competition was recognised by Gibtelecom’s new shareholder, the state-owned Telekom Slovenije, which recently announced the purchase of a 50% stake in the local company from US-based Verizon for £25m.

With the acquisition, the Slovenian company became an equal partner with the Gibraltar Government, which holds the balance of shares in Gibtelecom.

The Slovenian company will bring “leading-edge technological innovation, and experience of operating in a regulated and liberalised EU market,” said Telekom Slovenije chief executive Bojan Dremelj at a press conference to announce the deal.

He promised a market-focused approach to business development that would deliver a “better customer experience” to Gibtelecom users.

“This is a small but very prosperous and highly developed European market with strong growth potential,” he said, describing the local market. “Due to its tightly arranged operations Gibtelecom is a sound financial investment with a good rate of return on capital.”

The need for employment continuity was highlighted by Gibraltar’s telecommunications minister Fabian Vinet, who said this had been a key factor in the government’s deliberations before the sale.

“When Verizon announced their desire to exit from Gibraltar, Government and Gibtelecom highlighted the matters that had to be safeguarded by a new partner, including that a new partner would have to satisfy us of a commitment towards continuity of employment,” he said at the press conference.

The minister also flagged up the potential for new technologies and services following the Slovenian company’s acquisition of Gibtelecom shares.

“Also, we – the Government – were looking for a partner that would contribute technological expertise and therefore assist Gibtelecom in moving forward with 3G and other technologies,” Mr. Vinet said.

Telecom Slovenia, through its Mobitel subsidiary, have been among the pioneers of 3G in the whole of Europe and have demonstrated an ability for innovation which I think will be very welcome.”

“The Gibraltar Government welcomes Telecom Slovenia as its commercial partner in Gibtelecom and looks forward to the two companies working together in continuing to advance technologies and deliver world-class communications in Gibraltar.”