Grant eyed for new fiber optic cable

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Posted on Jul 07 2004

The Babauta administration disclosed that it is looking at several options to end what it calls as “Verizon’s monopoly” of the only fiber optic cable in the CNMI, including a Homeland Security grant for another cable system.

If the plan materializes, a new fiber optic cable will bring competition to Verizon’s facility. Verizon reportedly invested some $16 million for its fiber optic cable in 1996.

“Many businesses have already come into the CNMI, but did not make it because of exorbitant cable rate assessed by MTC [Micronesian Telecommunications Corp.],” Brown told local businessmen during a membership meeting of the Saipan Chamber of Commerce at the Aqua Resort Club yesterday.

The “monopoly issue” is one of the two remaining issues that need to be resolved before the Commonwealth Telecommunications Commission renders its decision on whether or not to approve the sale of MTC’s operations of Verizon to Pacific Telecom Inc.

Brown said breaking the “monopoly” would make the CNMI more attractive to investors and lure other industries to the islands, such as information technology and call centers.

Chamber president Alex Sablan said, however, that the Verizon “monopoly” is a misnomer, citing that the company has been operating on a free market framework. “I find it dangerous that the government [will] compete with MTC,” Sablan said.

CNMI consumer counsel Brian Caldwell said Verizon currently charges high rates for interisland cable service. He said the cost of renting a private T1 line between Saipan and Guam ranges from $7,000 to $8,000 per month. Comparatively, monthly lease of T1 line between Guam and Los Angeles only costs $1,000 to $2,000.

“Every modem for swiping point-of-sale transaction, private corporate network, cellular call, Internet access, including DSL service, must pass over this cable,” Caldwell said.

Assistant Attorney General James Livingstone, Gov. Juan N. Babauta’s lawyer in the Verizon deal intervention pending before the CTC, said it is not in the public interest to allow one company to monopolize an essential telecommunication link to the world. He said competition in the telecom industry would drive down rates in the CNMI.

PTI’s Jose Ricardo Delgado, however, had earlier pointed out that the only reason why there is only one fiber optic cable in the CNMI is because no other company has come in and built one.

He said there is no law stopping other telecommunications company from building their own fiber optic cable, hence the use of the term “monopoly” is incorrect. He pointed out that it was only Verizon that had the commitment to pour in millions of dollars to build the facility.

Delgado had accused the Babauta administration of bias against his company. He had said that the administration’s prejudicial stance against his company’s proposed venture in the CNMI paints a negative picture of the islands to potential foreign investors. MTC supported the PTI’s position. The Chamber had also urged the governor to support the MTC-PTI deal.

The CTC had rejected Babauta’s and Caldwell’s proposal on the establishment of special enforcement provisions and the imposition of a $10-million performance bond on PTI once it acquires control over Verizon’s local operations from MTC.

The decision narrowed the dispute arising from the governor’s intervention in the application for the approval of the sale to two issues—the financial audit to be completed by Deloitte and Touche to determine financial capability of both MTC and PTI, besides Verizon’s “monopoly” of the CNMI’s fiber optic cable.

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