AGO division seeks sanction, $100K fine vs PTI

The Office of the Consumer Counsel has asked the Commonwealth Telecommunications Commission to sanction Pacific Telecommunications Inc. for its alleged failure to immediately join the National Exchange Carrier Association, or NECA.

The Office of the Consumer Counsel asked CTC to find PTI in violation of section 2.1 of the Commission’s final order approving the sale and transfer of assets of the Micronesian Telecommunications Corp. to PTI. It also asked for a $100,000 fine against the company.

Section 2.1 of the final order refers to the Commission’s directive requiring MTC to join NECA as expeditiously as possible.

Consumer counsel Brian R. Caldwell demanded that PTI be fined $25,000 for violating section 2.1 and another $25,000 that was previously suspended for not filing its financing documents 10 days before closing. Caldwell also sought an additional fine of $25,000 per day, not to exceed a total of $500,000 for each day PTI was in violation of section 2.1 of the final order starting March 6, 2006.

The consumer counsel said all fines should be paid out of PTI’s profits—except for profits that have gone into the Employee Trust Fund—and not out of the company’s operating revenue.

Caldwell said CTC should direct PTI to immediately undertake all measures to join NECA.

But attorney Colin M. Thompson, on behalf of PTI and MTC, said the companies have complied with the requirements effective upon the closing date.

“For example, joint applicants were required to comply, and have complied, with the freeze and cap of local rates. Additionally, no tolls have been charged for any interisland calling for all voice and data phone calls, and ISP services,” said Thompson in a March 5, 2006 letter to the Commission.

PTI, Thompson said, has retained all employees at their existing salary and benefit levels.

With respect to NECA, Thompson said MTC continues to research the issue. He said it is clear that MTC will need additional time to resolve this complex problem.

Caldwell stated in documents that on May 2, 2004, the Office of the Consumer Counsel, then Gov. Juan Babauta, Verizon, and PTI, through the Commission’s settlement hearing officer, Sean Frink, submitted a final agreed negotiation report.

The report contains 31 negotiated items to resolve the objections of the Consumer Counsel and Babauta to the sale of MTC, based upon PTI’s alleged lack of sufficient technical, financial and managerial resources.

On Sept. 21, 2005, the sale of MTC to PTI was closed. The Commission, however, found that PTI had failed to comply with its obligation under section 4.4.4 of the final order by failing to file all “financing documents” at least 10 days prior to closing.

The Commission sanctioned PTI $25,000, but suspended payment of the sanctions for a 12-month period pending no further violations of the order.

The Commission set March 5, 2006 as the date with which PTI shall comply with the term of their final order relating to NECA.

The Commission had ordered that MTC shall join NECA as expeditiously as reasonably as possible upon closing, and no later than 119 days of the closing of the purchase transaction, giving due consideration to NECA’s rules and application schedule.

Caldwell said this is the first big test of the Commission’s resolve to ensure that the important protections secured in its final order are actually carried out.

Caldwell said PTI has failed to perform the critical requirement with respect to joining NECA. PTI, the lawyer said, did not provide adequate justification for its failure.

NECA membership, he said, was perceived by PTI itself to be a substantial benefit to the company because, as its agreement states, “NECA provides technical assistance with rate and tariff development, industry database management, compliance auditing, economic forecasting, trend analysis and regulatory policy analysis.”

“The Commission must stand firm on the NECA requirement as ordered and fine PTI for its non-compliance,” Caldwell said.