Ethical issue raised in CTC funding

Citing ethical issues, independent Rep. David Apatang questioned yesterday the administration and the Commonwealth Telecommunications Commission for agreeing to allow telecommunication companies “to pass on” fees to consumers in order to fund the regulatory body.

“I’m just wondering why you’re supporting this increase. Is it ethical to do that?” Apatang asked CTC executive director Adam Turner during yesterday’s public hearing on House Bill 14-251.

Both Turner and Marsha Schultz, legal counsel for Verizon and Pacific Telecom Inc., confirmed yesterday that part of the parties’ agreement for the sale of Verizon was the passage of the bill, which seeks to boost the funding for CTC by increasing the franchise fee from .5 percent to 2.5 percent of the telecommunication firms’ annual gross revenue in excess of $25,000. It would also authorize telecommunication companies to pass on the fee to customers.

By doing that, Apatang said, the government is practically asking the company to fund the operations of CTC.

“Is it ethical to force the company to pay so that you can get funding? Can you twist the arm [of the company]? Can you do that?” Apatang pressed.

He said it is the government’s responsibility to fund CTC, not the telecommunications companies.

The bill remains pending at the House.

Turner, for his part, said that CTC was not involved in the agreement between the Governor’s Office/Attorney General Office and PTI/Verizon. He said, though, that CTC supports the agreement made by both parties.

“We’re not twisting arms. We’re supporting the agreement because it offers more benefits to the community,” he said, urging lawmakers to look “at the big picture.”

Turner said that among others, the agreement gets rid of inter-island toll fees, ensures employee protection, low long-distance rates, and infrastructure development.

Schultz also said that the agreement would require the company not to raise its local rates.

The bill, authored by majority floor leader Oscar M. Babauta, said that the telecommunication law, P.L. 12-39, reduced CTC’s funding to less than 20 percent of the funding level of its predecessor entity, resulting in “extreme difficulty for the CTC to carry out its obligation in an effective and efficient manner.”

The measure aims to amend the Act “to restore CTC funding to approximately 60 percent of its previous level, to provide funding for telecom consumer advocacy, to authorize telecommunication companies to pass through such costs to consumers.”

The proposal also aims to set up a CNMI Universal Service Fund; to provide CTC the authority to establish regulations related to the establishment of the Fund; and to provide CTC with discretion for spending a portion of its budget on items to be addressed in Fund regulations, “which will result in a significant benefit for consumers at minimal cost.”

The bill provides that CTC’s charges on any telecommunications company under 4 CMC Section 8327 “shall not exceed 2.5 percent of its annual gross revenues in Commonwealth in excess of $25,000 and shall be passed on to consumers by the telecommunications company in a manner approved by the commission.”

The existing law allows for .5 percent of the annual gross revenue.

It further said that 20 percent of all charges collected from a company shall be appropriated by the CNMI Legislature to the CNMI Office of the Attorney General “to be used solely for the purpose of advocating on behalf of CNMI telecom consumers regarding telecom services.”

Apatang said the CNMI people cannot afford any pass-on increase at this time.

In his remarks, Turner noted that the Legislature had failed to appropriate money for CTC. He said the CTC is only getting some $80,000.

He said the agency would need $70,000 for a director, $40,000 to hire one staff, $30,000 to operate the office, and $100,000 for professional services.