Docomo Pacific statement on public funding for Project Atisa

The May 17 Marianas Variety article titled “IT&E Questions Legality of Docomo-NMI MOU” raised several important issues, but readers may have been left with questions about the public funds currently being discussed by the Legislature. Docomo Pacific would like to take this opportunity to clarify and correct the record.

In 2016, Docomo Pacific commenced work on Atisa, a second submarine fiber-optic cable system linking Guam and the CNMI. Although the CNMI government has committed to a one-time contribution of $3 million to defray the cost of landing Atisa on Tinian and Rota, to date the entire cost of this project—over $25 million thus far—has been paid solely by Docomo Pacific.

Atisa is truly a game-changer. CNMI residents now have access to the same products and services as their friends and family in Guam and the U.S. mainland. Even more significantly, prices have gone down, not up. In a time when the economic winds are shifting favorably for the CNMI, this is an unambiguously positive development for local consumers, businesses, and potential investors.

All of us will recall July 2015, when Saipan was suddenly plunged into digital darkness after the then-sole undersea cable was cut. For nearly three days, the airport could not process tourists’ passports, local businesses had to refuse credit cards, and ATMs would not dispense cash. Then, less than a month later, Typhoon Soudelor destroyed much of Saipan’s telephone and aerial fiber lines.

In the aftermath of these disasters, almost everyone realized that the second submarine fiber-optic cable was no longer optional, but rather an urgent issue of both domestic security and economic necessity. At the same time, however, the cost of a new cable was far beyond the local government’s ability to fund on its own.

Moreover, even if a second cable were built between Guam and Saipan, the financial business case for connecting Rota and Tinian was almost impossible to justify, as it would add at least $6 million to the overall project cost, while reaching fewer than 6,000 residents.

After a series of discussion with then-governor Inos and representatives from Rota and Tinian, Docomo Pacific came to understand the importance of a “One Marianas” strategy that included all three islands.

Several potential funding sources for the Tinian-Rota costs were explored, including the Federal Communications Commission and the Department of Agriculture. When these proved unavailing, the CNMI government proposed a one-time contribution of $3 million—roughly half the cost of the Tinian-Rota segment—through combination of local ($1.3 million) and federal ($1.7 million) funds.

In March 2016, at a press conference at the Fiesta Resort & Spa Saipan attended by local media, members of the business community, Gov. Torres, and members of the Legislature, Docomo Pacific, and the CNMI government signed a memorandum of understanding. The purpose of this MOU was to formalize our mutual cooperation to identify and allocate available funds, whether from Capital Improvement Plan funds, Technical Assistance grants, Casino Gross Revenue taxes or, BGRT tax relief. The MOU was also reviewed and approved by the attorney general.

This entire process, from start to finish, was completely transparent and public. Yet IT&E’s comment in the Variety article convey the impression that the process has somehow been secretive, unfair, or simply a bad deal for the CNMI. The facts, however, tell a very different story.

First, on the issue of “public benefit for the taxpayer,” in addition to the redundancy and economic security from a second cable, Atisa provides a significant source of revenue to the CNMI’s tax base. In addition to the roughly $10,000 per year to the Department of Public Lands for Atisa-related landing sites, Docomo Pacific also pays 3 percent of business gross revenue tax on all of its Atisa-generated revenues, which totals nearly $500,0000 a year or more to the CNMI government. Docomo Pacific also pays tens of thousands of dollars annually to DPL in per-foot underground and aerial fiber fees, from which IT&E is largely or completely exempt.

Second, Mr. Oehlerking’s remark about “corporate handouts” is surprising, particularly considering the long history of public subsidies and exemptions IT&E has received over the years in the CNMI. For example, in 2010, IT&E received $8 million in federal ARRA grants, (funds which Docomo Pacific was not eligible). Yet, at the same time, until the construction of Atisa, they charged CNMI customers (including Docomo Pacific) literally some of the highest rates on the planet for inter-island transport capacity on their own undersea cable. If the issue is a “level playing field,” facts like these need to be part of the discussion.

Third, it is simply incorrect that the CNMI is going to receive “nothing in return” for helping to defray the costs of including Rota and Tinian in Atisa. In addition to the sizeable tax revenues noted above, Docomo Pacific also provides discounted or free services to hospitals and clinics, schools, libraries and other government agencies such as the Office of Aging.

But the real answer to what the CNMI has gotten in return from Atisa is much larger: a second cable has energized the local telecommunications market, which has both increased availability and lowered the cost of product and services. This fact alone is a huge win for local consumers and businesses, who now have more choices at lower prices.

As a responsible corporate citizen in the local community, Docomo Pacific recognizes that the expenditure of public monies is never something to take for granted. We appreciate the partnership we have forged with our customers in the CNMI, and we support the ongoing efforts of the Legislature to allocate and disburse these funds for Tinian and Rota promptly. Meanwhile, our commitment to a One Marianas is unwavering. We are—and always will be—Better Together.