The Verizon-PTI saga: A drama of epic proportions

The saga regarding the proposed sale of Verizon drags on for yet another year, but not without hope that disagreements could be ironed out to pave the way for the consummation of the multi-million dollar telecom deal.

Before the year ended, Gov. Juan N. Babauta’s lawyer, assistant attorney general James Livingstone, said his client would ease its opposition to the sale if prospective purchaser Pacific Telecom Inc. comes up with a written commitment to significantly lower cable rates and promote investments that benefit the community.

The remaining issues in the pending application for the approval of the sale by the Commonwealth Telecommunications Commission include Verizon’s monopoly of the cable ownership and PTI’s financial capability to respond to worst-, baseline- and best-case scenarios in the coming years.

According to Livingstone, the divestiture dispute would come to an end if PTI agrees to significantly lower cable rates.

PTI said it is willing to bind itself to new commitments in addition to the 27-point agreement it reached with the CNMI government. PTI said it plans to expand Verizon’s broadband capacities, enhance e-health, which allows live medical consultation from off-island doctors online, and e-learning, once it takes over Verizon’s operations from Micronesian Telecommunications Corp.

PTI and MTC jointly filed with the CTC an application for the transfer of all common stock on Sept. 5, 2003. In 2004, major developments narrowed down the issues in the dispute raised by the governor and CNMI consumer counsel Brian Caldwell, both of whom intervened in the companies’ pending application.

A turning point in the longstanding dispute came about when the applicants and the intervenors reached a 27-point settlement in early May before settlement hearing officer Sean Emory Frink.

PTI agreed to invest a minimum of $20 million in capital expenditures during the five-year period immediately following the closing of the telecom deal. As part of the settlement, PTI also assured that there would be no local rate hike for two years from the transaction’s closing and that a trust fund would be established for the benefit of all Verizon employees. It also agreed to retain all existing Verizon employees in their respective positions.

The parties also agreed on several issues, including an end to inter-island long distance charges to Tinian and Rota and the retention of all Verizon employees, among others.

The settlement, however, did not end the opposition to the sale. There remained at least three issues to be resolved: the government’s proposal for the imposition of a performance bond on PTI, an audit of PTI’s financial capability, and Verizon’s monopoly of the fiber optic cable.

On May 4, James Livingstone and Caldwell asked the CTC for the establishment of special enforcement procedures that would require PTI to post a $10-million bond to ensure that the company will not violate the agreed settlement. PTI and MTC vehemently opposed this and on June 17, the CTC’s three-man board unanimously rejected the proposals, with CTC chair Norman Tenorio saying the imposition of the bond would just add to the cost of doing business.

The CTC ruling narrowed the dispute to two remaining issues: the financial audit and the monopoly. On Sept. 21, the government asked the CTC to divest Verizon of 100-percent ownership of the CNMI’s only submarine interisland cable network.