Show Hide image

The connected player

Gibtelecom has been both building block and beneficiary of the explosion of e-gaming on the Rock. Its Chief Executive Officer, Tim Bristow, makes the links.

 Gibraltar Telecom has sponsored this supplement on e-gaming but you’re a telecoms company. What’s the link?

Gibtelecom built a fibre-optic network throughout Gibraltar in the 1990s which, together with the merger with a local international carrier and mobile business, provides the communications backbone for the e-gaming sector in Gibraltar. Meeting the requirements of some of the biggest and best e-gaming companies in the world has influenced our development and made us raise our game. Without the communications infrastructure, online companies could not have come to Gibraltar in the first place. Since then, we have substantially enhanced our national and international networks, and consequently Gibtelecom remains the communications company of choice in the jurisdiction even after competitors entered the scene.

What makes Gibraltar a competitive jurisdiction for e-gaming?

Though e-gaming companies are attracted to Gibraltar as an EU jurisdiction, with a friendly business environment and competitive fiscal package, they also benefit from a qualified workforce and plenty of ancillary professionals. The online gaming industry is dependent on good telecommunications, and would not be able to thrive here if the industry was not up to speed; it is this all round package that makes Gibraltar competitive. Although Gibraltar has more than one local telecommunications provider, it is Gibtelecom that is still leading the way locally with resilient fibre optic connectivity, multiple diverse international links (partnering with Telefonica, Interoute and Vodafone amongst others). Gibtelecom has huge amounts of bandwidth readily available for expansion or event bursting. Gibtelecom has been committed to investing in providing robust and diverse national and international fibre-optic routes. Gibtelecom’s investment in the state-ofthe- art Europe India Gateway (EIG) submarine cable and quality data centres will help keep Gibraltar a top tier business jurisdiction. The EIG high bandwidth fibre-optic system not only complements existing routes but also provides Gibraltar with an alternative submarine path, without the capacity limitations or the incidence of interruptions that often face land routes.

What does Gibtelecom have to offer and what has it been doing to meet the quality and services required in such a demanding area such as e-gaming?

Gibtelecom prides itself on being in-sync with technology as well as in touch with its customers. Gibraltar is a hub for some of the leading e-gaming companies in the world. The Rock is not just a business friendly environment with a competitive tax regime, it is also well connected and has a stable regulatory framework focused on good corporate governance and customer protection. Indeed, if the communications infrastructure and solutions were not continuously developing then the e-gaming sector couldn’t have thrived in the jurisdiction as well as it has. In a world that is increasingly reliant on round-the-clock high speed communications Gibtelecom is at the forefront of de- veloping the technology to ensure the growing needs of e-commerce and the wider community in Gibraltar are met. At home Gibtelecom is building a next generation network, which can facilitate internet speeds of up to 100 Mbps throughout Gibraltar. Gibtelecom is also an accredited ‘recognised for excellence’ company by the European Foundation for Quality Management, which is a testament to the high standards the Company has delivered to Gibraltar’s e-gaming community.

How has the Company developed its data centre business?

The data centre business as we know it today has changed much since Gibtelecom set up its first hosting environment nearly a decade ago, and as the market needs changed developing this part of the business was a natural move. Gibtelecom’s data centre development plans are very much aligned to customers’ business and IT strategies, as well as their specific regulatory and industry requirements. For example, the facilities being Payment Card Industry (PCI) compliant is an essential factor for many of our customers due to the large volumes of financial transactions they process. Our aim is to be the customer’s partner of choice by ensuring that our data centres have the right technical set-up, connectivity, security and environment to meet market requirements.

What challenges does a focus on egaming and finance markets create?

Catering for some of the most demanding e-commerce businesses in the world has resulted in Gibtelecom creating a more robust international network from Gibraltar. In a global business environment, hosting facilities need to be paired with seamless and resilient connectivity. This was the impetus for the Company being one of the founding shareholders of the Europe India Gateway (EIG) consortium, a new 15,000km high bandwidth fibreoptic submarine cable spanning from London to Mumbai. The cable system runs across three continents and has thirteen landing points along the way, of which Gibraltar is one. As well as providing linkages to other international cable systems, the route complements Gibtelecom’s other links, connecting to hubs in London, Madrid and Marseilles.

What is Gibtelecom doing to meet the demands of gaming companies with regards to the contracting of hosting services?

Trends in the sector, which Gibtelecom is actively leading, are towards a one-stopcommunications- shop, embracing telecommunications, computer hosting and value-added services. Gibtelecom is by far the biggest provider of data hosting services in Gibraltar. We operate several stateof- the-art data centres in a secure location; well above sea level and away from the main centres of business on the Rock. Our data centres employ the latest industry standard technologies, including efficient cooling and standby power, and are Payment Card Industry (PCI) compliant. All Gibtelecom’s data centres are supported by an onsite Network Operations Centre, with engineers available 24/7.

Could you explain what the EIG project represents and what does this investment represent to the Company?

The EIG submarine cable not only complements Gibtelecom’s extant terrestrial and other sea routes, but has placed the company in a position to seek business opportunities outside Gibraltar. This is an exciting project for us. It means Gibtelecom is now a global carrier and able to provide wholesale bandwidth and carrier services with more routing options and diversity. Gibtelecom set up an international marketing arm in 2011 to develop and seek new offshore growth opportunities, since landing partnerships with telco’s headquartered in London, Sydney, New York, Monaco, Johannesburg and Seychelles amongst others. Following the substantial multi-million pound investment in this submarine route, Gibtelecom is looking at expanding its networks further, with plans already underway to increase network diversity via new routes transiting through Monaco and Marseilles into various key communications hubs in Europe. This said, the considerable additional investment has not been endured by the customer. In fact, 2012 saw substantial reductions in IP bandwidth prices of up to 25 percent, and averaging some 14 percent across all e-commerce customers.

Photo: Getty
Show Hide image


Gibraltar - impact of Brexit

Last week our editor took a general overview of some of the scenarios for Gibraltar if Britain were to leave the Euro. This week, as the atmosphere in the British Conservative Party becomes ever more toxic, Michael Castiel, partner at Hassans lawyers on the Rock, goes into more detail (this piece written before the Iain Duncan Smith resignation and subsequent arguments happened).

However unlikely it may prove, the prospect of Britain's withdrawal from the EU sends shivers through Gibraltar's financial services, gaming and tourism industries, which are at the core of Gibraltar’s economy. For, if Britain leaves the EU, Gibraltar goes too, and, should Brexit occur, it is Gibraltar’s relationship with the UK that as in the past, largely will shape Gibraltar's future.

Gibraltar joined the European Union in 1973 as part of the UK. While rights to freedom of services across borders of EU member states apply between Gibraltar and the rest of the EU, because Gibraltar is not a separate member state (and is in fact part of the UK Member State) those rights do not apply between Gibraltar and the UK. Instead a bilateral agreement, formalised almost two decades ago, gives Gibraltar's financial service companies the equivalent EU passporting rights into the UK. Accordingly and pursuant to such agreement, where EU rights in banking, insurance and other financial services are concerned, the UK treats Gibraltar as if it is a separate member state.

This reliance on the special relationship with the UK is recognised by both the Government and the Opposition in Gibraltar, and when the territory (which in this instance as part of the UK electorate) goes to the polls on 23 June, the vote to remain in the EU is likely to be overwhelming. This may have symbolic significance but realistically seems unlikely to influence the outcome. In actual terms, although some non-EU jurisdictions use Gibraltar and its EU passporting rights as a stepping stone into Europe, almost 80% of Gibraltar’s business dealings are with the UK.

But whether or not Britain maintains the 'special relationship' with Gibraltar, if Brexit becomes a reality, other factors will come into play, with the ever-present Spanish Government’s historic sovereignty claim over Gibraltar topping the list.

Recently Spain's caretaker Foreign Minister Jose Maria Margallo went on record that if the UK voted to leave the EU he would immediately 'raise with the UK the question of Gibraltar.' If this was to come about it could take one or more of several different forms, ranging from a complete closure of the border between Spain and Gibraltar, demanding that Gibraltar passport-holders obtain costly visas to visit or transit Spain, imposing more stringent border controls, or a frontier toll on motorists driving into or out of Gibraltar. The latter idea was in fact floated by the Spanish Government three years ago, but dropped when the EU Commission indicated that any such toll would contravene EU law.

Here, again, imponderables come into play, for much will depend on which political parties will form the next Spanish government. A Spanish government headed by the right wing PP party is likely to take a less accommodating attitude towards Gibraltar (the Foreign Minister having recently indicated that in case of Brexit the Spanish Government may opportunistically push once again for a joint sovereignty deal with the UK over Gibraltar) whereas a left of centre coalition will likely adopt a more pragmatic and cooperative relationship with Gibraltar in the event of EU exit.

The most significant changes to Gibraltar's post-Brexit operation as an international finance centre are likely to be in the sphere of tax, and while Gibraltar has always met its obligations in relation to the relevant EU rules and Directives, it has also been slightly uncomfortable with aspects of the EU's moves towards harmonisation of corporate taxes across member states.

Although it was formed as a free market alliance, since its inception fiscal matters have been at the root of the EU, but Gibraltar's 'special relationship' with Britain has allowed considerable latitude in relation to what taxes it imposes or those it doesn't. However, as is the case with other member states, Gibraltar has increasingly found in recent years its fiscal sovereignty eroded and its latitude on tax matters severely curtailed.

As in Britain, Gibraltar has benefitted from several EU Directives introduced to harmonise and support the freedom of establishment, particularly the Parent-Subsidiary Directive which prohibits withholding taxes on cross-border intra-group interest dividend and royalty payments made within the EU.

As a stepping stone for foreign direct investment, should Brexit come about EU subsidiaries could no longer rely on these Directives to allow tax-free dividend or interest payments to their holding companies based in Gibraltar. In the case of the UK, bilateral double tax treaties will no doubt mitigate the impact of the non-application of any tax related Directives. Gibraltar, however, is not currently a party to any bilateral double tax treaties. Accordingly, Gibraltar would either have to seek from the UK the extension of all or some of the UK’s bilateral tax treaties to Gibraltar (subject of course to the agreement by the relevant counterparties) or it would need to negotiate its own network of bilateral double tax treaties with a whole series of EU and non EU Member States. To say the least, neither of these options would be straightforward to implement at short notice and would need the wholehearted support of the British Government

Whilst Gibraltar’s economy is likely to be adversely affected should Brexit occur, there may be some potential benefits. An EU exit would result in fewer regulations and possibly may provide Gibraltar with greater exposure to emerging economies.

From a tax perspective, an EU exit would probably enable Gibraltar to introduce tax rules and incentives that are contrary to EU tax laws and would provide the Gibraltar Government more freedom to adopt competitive tax regimes that may be considered contrary to EU state aid rules. How possible or effective any such strategy would be is doubtful given the OECD driven anti-tax avoidance climate affecting all reputable jurisdictions whether within or outside the EU.

In this as well as other possible change much will hinge on any post-Brexit relationship with the UK - an issue which the Gibraltar Government addressed recently in a paper sent to Westminster's Foreign Affairs Committee. It stressed not only that 'EU membership has been an important factor in the development of Gibraltar’s economy' but also the importance of 'clarity as to the rights the British Government will protect and defend for Gibraltar in the context of its own negotiations.'