Verizon puts off paying franchise fee

Despite the May 6 deadline imposed by the Commonwealth Telecommunications Commission, Verizon failed to pay the full amount of franchise fee being demanded of it by the regulatory board.

But Verizon general manager Tony Mosley said yesterday that the company would come up with a decision on Monday whether or not it would pay the full amount of $107,526.03. This represents 2.5 percent of the company’s declared gross revenue of over $4.3 million for the first quarter of 2005.

“We will decide on Monday whether or not we’re going to pay the full required amount,” Mosley said.

So far, Verizon has given the commission a check amounting to $21,505, which reflects 0.5 percent of the declared gross revenue for the first quarter of the year.

Public Law 14-53, which was enacted on Jan. 6, 2005, removed the 0.5-percent cap on the fee, which had been effective since 2001. For about two decades, the historic rate had always been 2.5 percent before the 0.5-percent cap took effect.

The CTC wants to implement the 2.5-percent provision allowed by the law effective Jan. 6. Its board affirmed Wednesday the invoice amount sent to Verizon by CTC executive director Adam Turner.

Verizon wants a lower rate for the franchise fee. In an April 13 letter to CTC, Mosley claimed the commission earlier advised Verizon of increasing the fee to 2.5 percent “with retroactive effect to Jan. 17, 2005.”

Mosley said the CTC has taken no formal action to implement the increase, asking the commission to notify Verizon both of the increase and authorization for it to pass on the cost of the increase to consumers.

Mosley insisted yesterday that Verizon could pass on the cost of the increased franchise fee rate to its customers, citing the settlement agreement it reached with Caldwell and Gov. Juan N. Babauta in connection with Pacific Telecom Inc.’s proposed purchase of Verizon from Micronesian Telecommunications Corp.

But Mosley conceded that the Legislature was “silent” on the matter when it enacted Public Law 14-53, saying that this is “an election year.”

“There was never any refusal on the company’s part to pay,” Mosley stressed.

He added that Verizon is the only telecommunications company that the CTC charges this fee.

“The CTC should also bill other companies,” he said. “There is only one company that CTC bills and that’s us.”

CNMI consumer counsel Brian Caldwell strongly opposed the passing on of the increased fee to consumers, saying that any telecommunications company seeking a modification to existing rates must go through a hearing process before the commission.

Caldwell explained that the Legislature never intended to allow Verizon to pass on the cost of the fee increase to customers when it explicitly deleted a proposed “pass on” provision.

The CTC’s board unanimously affirmed Wednesday the commission’s invoice on Verizon and ordered the company to pay the full amount by the close of business hours yesterday. It said that failure to pay would constitute a violation of the Commonwealth Telecommunications Act and the CTC regulations.