CTC poses series of questions to Verizon, PTI

The Commonwealth Telecommunications Commission wants to know the extent of how divestiture of cable ownership may pressure Verizon to seek a rate increase.

The CTC also wants to find out how much customers are paying, if any, for cable rates that compensate the non-used capacity in the facility.

“Is this excess capacity, for which the jurisdictional customers should not pay? If so, what is the amount at issue?” the CTC asked. “If the customers are properly paying for this unused capacity, what are they getting for that payment? And to what rights and services, if any, are they thereby entitled?”

These are just some of the issues in the questions forwarded by the commission to Verizon owner Micronesian Telecommunications Corp. and prospective purchaser Pacific Telecom Inc., as well as to Gov. Juan N. Babauta and CNMI consumer counsel Brian Caldwell, who are intervenors in the companies’ application for sale approval pending at the CTC.

During its Nov. 16 meeting, the CTC decided to issue the written questions to the parties to obtain answers that would further shed light on the issue of divestiture.

The intervenors have proposed that all the assets of the submarine network, including the submerged and terrestial fiber optic cable, be placed in a trust during the closing of the transaction between MTC and PTI. They asked that the CTC appoint a trustee, who should hold a public auction for ownership interests in the trust within 90 days.

Under the proposal, the trustee will have the power to sell the assets or ownership interest of the trust, up to 33 percent of the total capacity currently available on the interisland cable. No party or combination of parties may acquire more than 33 percent of the total ownership interests or assets of the trust. Unsold portions of the trust will devolve back to Verizon’s ownership.

During that meeting, Babauta’s lawyer, James Livingstone, said the parties should be given time to prepare and argue their respective points in connection with the CTC’s questions, even as MTC and PTI’s lawyers pressed that the matter be discussed during that time.

The CTC further inquired as to what extent would opening up some part of the cable to traffic to a “non-MTC gatekeeper” produce a net increase in net revenues to MTC.

The CTC also asked PTI to identify the specific telecom network improvements it would implement within the next three years as part of the company’s commitment to infuse fresh capital of $20 million in the next five years. It also asked how divestiture might affect PTI and the level of service and impact the decisions to make the capital improvements.

Meanwhile, CTC executive director Adam Turner said that the audit report prepared by Econimcs.com would remain confidential until the issue on which portion could be publicized is resolved. MTC and PTI have asked the commission for an edited public copy.

The final report by Delloitte and Touche has yet to be distributed to the parties, with Livingstone saying that he has yet to receive a copy of the report yesterday.

The Economics.com report completed the financial analysis that runs projections of best case, worst case, and baseline scenarios for Verizon. Delloitte and Touche would complete the full audit report that would detail PTI’s financial capability to respond to these scenarios once the company takes over Verizon’s operations.