CTC to impose fees on other telecom firms

The Commonwealth Telecommunications Commission affirmed last night its imposition of an increased franchise fee on Verizon, but said it would come out with proposed regulations to impose regulatory fees on other telecommunication companies in the CNMI.

The CTC conceded that Verizon “may be correct” in asserting that other telecom firms should share the full amount of the CTC’s budget derived from regulatory fees, but said that it has no established basis yet to determine the other companies’ responsibility.

In a unanimous opinion by CTC chair Norman Tenorio and board members Mike Fitzgerald and Josephine Mesta, the commission said it would come out with the regulations to impose franchise fees on other telecom providers and establish procedures for their promulgation.

The CTC ordered executive director Adam Turner to prepare a proposed set of regulations for a generally applicable franchise fee assessment for public comment.

The CTC, however, affirmed the imposition of a “2.5 percent of the gross profit” rate on Verizon, saying that no promulgation of regulations is required to implement the rate increase.

It said that Public Law 14-53, which became effective on June 13, 2005, did not authorize but simply amended the restriction on CTC in imposing the fee from 0.5-percent back to 2.5 percent.

“This is certainly not the ‘first time’ that the 2.5-percent fee has been assessed and paid. Rather, for 20 out of the last 25 years, or 80 financial quarters, the company has paid its franchise fee,” the CTC said. “The government/commission, as franchisor, has simply returned to the charge mandated in the 1983 franchise agreement.”

“We wish to make clear that no authority exists for the CTC to simply raise rates without proper hearings and other procedures as defined by the CTA. It is noted that when the company saw the fee reduced, it made no effort to adjust rates downward,” the CTC said.

Verizon has been disputing the fee being assessed by the CTC in the amount of $107,526.03 representing 2.5-percent of the company’s declared gross revenue of over $4.3 million for the first quarter of 2005 and has expressed its desire to pass the cost on to consumers. Earlier, it sent the CTC a $21,505 check, representing 0.5 percent of the gross revenue. Upon demand, Verizon paid $86,025 to meet the total amount assessed by the CTC.

The CTC said, though, that the amount could be incorrect, saying that the 2.5-percent rate was applied to the first quarter’s gross revenue from Jan. 17, instead of Jan. 13, when the new restriction applied by operation of law. The CTC said the amount might not have netted out the first quarter’s share of the annual $25,000 deduction from gross revenues.

“The invoice and assessment should properly have sought a fee predicated on the temporary 0.5-percent rate for the period Jan. 1-12, 2005, and the rate 2.5-percent thereafter,” the CTC said.