Verizon: Governor’s concerns unfounded

Monopoly in the telecommunications business in the CNMI is practically non-existent—despite Verizon operating the only fiber optic cable—because prices have remained competitive on the consumers’ part, according to Verizon general manager Tony Mosley.

“The governor’s statements are unfounded. When he uses words [like] monopoly, those are designed to inflame a situation that really doesn’t exist. When I say doesn’t exist, I say that to the taxpayers because when you look across the board with all the pricing in the CNMI for the telecom, it’s all pretty much competitive,” said Mosley in an interview Friday in response to a recent statement by Gov. Juan N. Babauta.

In justifying his position on open, competitive market, Babauta, in an Aug. 16 letter to Saipan Chamber of Commerce president Alex Sablan, said it is the government’s role “to protect the public interest by regulating prices, so that the monopolist does not earn excess profits to the detriment of everyone else.”

“Where market is 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,” the governor said.

He also denied that his administration is trying to compete with private businesses in efforts to promote investments in the local telecommunications industry.

Mosley maintained that Verizon’s rates are “pretty competitive” compared with U.S. rates, citing that local basic phone rate is $19.

In the U.S., the basic rate is $25, he said.

“So I don’t understand the concerns about monopoly,” he said, further noting that Verizon has not had any increase in basic rates in 10 years.

“In a monopoly situation, we could raise the rates freely but it’s impossible here because there’s a commission that regulates it,” he said.

In terms of wireless or cellular rates, he said these are “extremely competitive” as there are multiple providers offering services to customers in the CNMI.

The same is true with Internet services, he said.

“A number of Internet providers are here and people can use any of them,” he said.

The lack of players in the fiber optic industry, he indicated, is not Verizon’s fault.

“Investors chose not to. Anybody can do it. They could put up their own satellite, microwave facility. If they choose fiber optic cable, they can do it. It’s been open for 10 to 15 years. In case of Verizon, we invested $14 million [for fiber optic] in 1997,” he said.

In his letter, Babauta cited that prices charged for cable services right now are based on the market power of a monopoly, which results in consumers paying more than they would in a competitive market.

Babauta cited that the cost of a T1 line between Saipan and Guam, for instance, is $60 per mile, while the cost for the same line from Guam to Los Angeles is only $1 per mile.

“This non-market-based cost for one service reduces the ability of consumers to spend for other products and services that are competitively priced,” said the governor.

Further, he said that not allowing competition in the industry would allow Verizon “to use its monopoly to limit the capacity and the types of services its competitors can offer, restricting choices available.”

For his part, Mosley said the Guam-Los Angeles fiber optic line has certainly a much larger market than the CNMI.

Besides, he said that Verizon also considers the rate of return on its investment. “It’s like any other industry, you pay more for things depending on where you live,” he said.

Babauta said that encouraging new investments in telecommunications is in no way different from government efforts to encourage new investment in any other industries such as tourism and airlines.

He said that the current connectivity, which includes satellite, does not offer the best cost-to-capacity ratio, adding that a new fiber optic cable would be an alternate communications route at a far more affordable price.

Babauta said he is merely pushing for “competitive ownership of the one inter-island cable, and explores other solutions to increase competitiveness, including a new investment in telecommunications connectivity.”