Chamber: Let Verizon sale proceed

The Saipan Chamber of Commerce said it “objects to the degree of intrusion” by the Executive Branch in the much-delayed sale of Verizon to Pacific Telecommunications Inc., citing that the transaction is “a private sale.”

“This transaction is a private sale between PTI and Verizon. We object to the degree in which the government is intruding…. Both parties in this pending sale have agreed to [27] points that need to be resolved; once resolution has been reached fairly, the sale should proceed,” said chamber president Alex A. Sablan in a Sept. 1, 2004 letter to Gov. Juan N. Babauta.

Sablan noted that the public comment period afforded the administration and the public “has long passed.”
Besides, he said the government’s regulatory body, the Commonwealth Telecommunications Commission, has effectively wielded its oversight authority on the matter.

“The chamber believes that the regulatory oversight vested in and administered by the CTC is adequate and fair. Additional government interference in this process in our opinion is inappropriate and further depicts a hostile investment climate in the CNMI,” said Sablan.

He said there is no question that competition is healthy and beneficial for consumers, but noted that “businesses need to compete on a level playing field.”

“Businesses cannot compete when the government leads a task force whose aim is to find an alternative provider, and which proposes using federal or local tax dollars to subsidize another [fiber optic] company,” he said, in reference to the administration’s reported plan to tap a Homeland Security grant “to stop the Verizon monopoly” in fiber optic.

Sablan said it would be an understatement to say that the administration’s intrusion in a well-established telecommunications entity such as Verizon/Micronesian Telecommunications Co. could unduly hurt the entire CNMI community.

Babauta earlier wrote Sablan justifying his administration’s efforts “in promoting competitions” in the local telecommunications industry.

“Both in print and at a recent meeting, Chamber officers have characterized my administration as competing with private business,” the governor said, while maintaining that it is “properly the role of the government to encourage open, competitive economic markets.”

“Where markets are 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 by regulating prices so that the monopolist does not earn excess profits to the detriment of everyone else,” Babauta said.

Prices charged for cable services right now he said, are based on the market power of a monopoly, which results in consumers paying more than they would in a competitive market.

Verizon has argued that monopoly does not exist in the CNMI, citing that the company has never been able to raise its basic rates for 10 years now.

Likewise, Verizon has cited that current rates for wireless communications and the Internet are quite competitive in the Commonwealth given the presence of other players.

Meantime, Sablan told Babauta that “the redundancy issue you mention can be resolved with numerous, less costly alternatives rather than risking millions in federal and or/meager local funds for the sole purpose of laying a fiber cable inter-island.”

The irony, he said, is that there would not even be the discussion had MTC/Verizon not spent $16 million of its own money to lay fiber optic cable in the CNMI.

“This pending sale needs to move forward in a fair and timely manner. Businesses in the CNMI need a reliable, efficient service…. We urge you to allow this private transaction to proceed without further unwarranted interruption,” he said.