Babauta justifies position on telecom

Gov. Juan N. Babauta dismissed criticisms that his administration has been trying to compete with private businesses in efforts to promote investments in the local telecommunications industry.

In an Aug. 16, 2004, letter to Saipan Chamber of Commerce president Alex Sablan, Babauta, who is pushing for new investments in fiber optic cable, said his actions are “in fact, very much pro-business and will lead to the growth of our economy.”

“Both in print and at a recent meeting, Chamber officers have characterized my administration as competing with private business,” he said.

He said that while he respects the role of the Chamber as a voice for free enterprise, he hopes that it sees that his actions to stimulate new investment “are completely in accord with that principle and will benefit your members.”

The governor said that it is properly the role of the government to encourage open, competitive economic markets.

“Where markets are not competitive, as is the case with the fiber optic cable services to and from the NMI, government has a responsibility to protect the public interest by regulating prices so that the monopolist does not earn excess profits to the detriment of everyone else,” he said.

Prices charged for cable services right now, he said, are based on the market power of a monopoly, which results in consumers paying more than they would in a competitive market.

Further, he said that encouraging new investments in telecommunications is in no way different from government efforts to encourage new investment in any other economic activity.

“To the best of my knowledge, the Chamber has never objected to government promotion of new hotel development or new airline services…so it is puzzling that it would take the position that government should not encourage investment [in telecommunications], especially since your position protects the interests of a single business whose pricing policies are detrimental to all other Chamber members,” he said.

The governor also noted that the government has an interest in assuring that critical infrastructure “is robust and reliable.”

He said that the current connectivity, which includes satellite, does not offer the best cost-to-capacity ratio.

A new fiber optic cable would be an alternate communications route at a far more affordable price, he said.

He said that in the heightened security environment and given the intrinsic isolation of CNMI, it is the government’s duty to ensure the CNMI is not cut off the rest of the world.

“Having a back-up cable connection would greatly enhance our security in this regard,” he said.

Authorities earlier cited a 90 percent resolution of issues involving the sale of

Verizon from Micronesian Telecommunications Co. to Pacific Telecom Inc.

Authorities said that only two of 31 issues have not been resolved between parties—including Verizon, PTC, the Communications Commission, and the Attorney General’s Office.