Babauta stands pat on NECA requirement

Gov. Juan N. Babauta insisted that Verizon should be required to join the National Exchange Carrier Association, which Micronesian Telecommunications Corp. and prospective buyer Pacific Telecom, Inc. agreed to in a 2004 settlement agreement.

Babauta and CNMI consumer counsel Brian Caldwell jointly opposed MTC and PTI’s request to reconsider some points in the Commonwealth Telecommunications Commission’s final order that allowed the companies to proceed with the sale of Verizon.

Since last year, the companies have agreed to join the NECA as part of the 27-point agreement, which the companies reached with the interveners, Babauta and Caldwell, before settlement hearing officer Sean Emory Frink. The parties expected PTI’s membership to NECA to provide assistance to rate and tariff development, industry database management, compliance auditing, economic forecasting, trend analysis and regulatory policy analysis.

The companies, however, have asked the CTC to relax its requirement for them to join NECA, subject to their demonstration of good cause within 119 days of closing the multi-million-dollar telecom deal. PTI proposed a modification of the final order, saying that NECA membership might prove to be a financial liability rather than a benefit to MTC.

Babauta’s lawyer, assistant attorney general James Livingstone, and Caldwell disagreed, saying that they have relied on the expertise and oversight that NECA would provide Verizon when they agreed to the settlement. They noted that NECA is affiliated with the Federal Communications Commission.

“Unlike PTI, NECA is a known, reliable organization with a long history in the telecommunications field and a proven track record,” they said. “PTI and MTC should not be allowed to replace NECA with just any company merely to save a dollar.”

Livingstone and Caldwell said PTI needs significant regulatory assistance in running Verizon, alleging that the company lacks the technical expertise.

“The public may benefit from NECA even if PTI and MTC have to join and continue with NECA membership when it is not ‘cost-effective’ to receive its services because of the other benefits received by this community that NECA membership brings, such as knowing that reliable and sound advice is being provided to the inexperienced local phone company,” the government attorneys said.

The lawyers also said the commission should not be made to rely on CoBank, a PTI financier, to ensure that Verizon is run in a safe and sound manner.

MTC and PTI asked the CTC to consider comments by CoBank, which they claimed to be experienced in providing telecommunications acquisition financing and was involved in the acquisition of the Guam telephone system.

“It is the commission’s role, not the role of private banks, to ensure that MTC is run in a safe and sound manner for the benefit of the community,” they said. The lawyers did not object to the companies’ request to extend the transaction’s closing date to Aug. 30, 2005.

The CTC released its final order last June 16, over one year and nine months after MTC and PTI jointly applied for the approval of transfer of all common stock. The companies and interveners separately filed requests for reconsideration.

The commission has ordered the conduct of a contested case proceeding on competitive issues related to Verizon’s sole ownership of the CNMI’s only inter-island cable, asserting its jurisdiction over the matter.