CTC may approve Verizon sale despite monopoly issue

Over a month after rejecting the proposed special enforcement provisions and $10-million performance bond on prospective Verizon buyer Pacific Telecoms Inc., the Commonwealth Telecommunications Commission said it could grant the company a license to operate the telecommunications facility even if the issue on Verizon’s monopoly has yet to be resolved.

CTC executive director Adam Turner said yesterday that the commission could grant PTI the license once the two remaining issues in the negotiation settlement are resolved. If this happens, he said a determination could be reached possibly in September regarding PTI’s proposed acquisition of Verizon’s operations from Micronesian Telecommunications Corp.

“We’re following the settlement and moving forward to complete the items [touched] in the settlement,” Turner said. “[By September], we could finish the settlement and get this done.”

What remains to be done is the completion of an audit by Deloitte and Touche to determine PTI’s financial capability. Turner also said it is important for the Legislature to act on a proposed legislation for CTC’s future funding.

“We’re just completing the final scope of work and final negotiation terms and we’re going to complete the work,” Turner said of the required audit. The CTC will conduct a meeting tomorrow in connection with the proposed Verizon purchase.

PTI earlier agreed with Gov. Juan N. Babauta and CNMI consumer counsel Brian Caldwell to establish minimum capitalization and working capital levels that must be maintained at all times. Babauta and Caldwell had intervened in the company’s application for the approval of the proposed telecommunications deal.

Turner said that, once the audit begins, initial findings could be ready in 30 days, or possibly by August.

The settlement, contained in the Final Agreed Settlement Report prepared by CTC lawyer Sean Frink, explicitly states that the CTC would be “the ultimate decision maker of whether financial inquiry is necessary after receiving the Deloitte and Touche report.

It allows the governor and the consumer counsel, however, to exercise their right to revoke their approval of the settlement on the issue of whether or not PTI has the financial capability to fund the purchase upon the completion of the audit report.

“It is recognized, however, that the commission has the legal authority to proceed with approving the purchase regardless of the governor and/or consumer counsel’s objection related to financial issues,” the settlement report states.

The CTC earlier vowed to look into the issue on Verizon’s monopoly of the CNMI’s only fiber optic cable, which was raised by Babauta’s lawyer, James Livingstone, and Caldwell, before the commission’s board.

Turner reiterated that Verizon’s use of the fiber optic cable is clearly a monopoly. He added, though, that there are cases when natural monopolies are allowed to operate without any special regulation, such as cable television. In contrast, Turner had also said that there are also numerous cases of monopolies being regulated.

Turner said the CTC could approve the sale without waiting for the monopoly issue to be resolved. He added, however, that the CTC would look into the issue, even if it might have already granted PTI a license.

Sometime last month, the CTC rejected Babauta’s and Caldwell’s proposal for the establishment of special enforcement provisions and the imposition of a $10-million performance bond on PTI once it acquires control over Verizon’s local operations.

The CTC’s commissioners ruled that imposing a bond on PTI would just add to the cost of doing business. They said PTI should be allowed to operate its affairs in a free enterprise setting, and that more faith should be placed on the CTC in its task to oversee PTI’s operations.

Livingstone and Caldwell said they would conform with the commissioners’ ruling.