Verizon sale decision may be out Tuesday

By Tuesday next week, the longstanding dispute on the proposed sale of Verizon may be over.

The Commonwealth Telecommunications Commission might come up with a decision on the fate of the Verizon deal, particularly on whether the commission would grant or deny the request to partly divest the company of sole ownership of the only fiber optic cable facility in the CNMI.

Gov. Juan N. Babauta, who was with Sen. Paul Manglona, personally appeared at the CTC hearing last night, as the commission heard the final arguments in the dispute.

Babauta spoke before the podium as he read his speech, urging the CTC to divest Verizon of part-ownership of the cable and promote competition in the local telecommunications industry.

“My concern throughout this regulatory review of the Verizon sale has been simple: to bring competition to the marketplace, because I believe in the power of a free, open and competitive market,” he said.

“I ask you to require that PTI release its monopoly control over broadband services by selling—selling, not giving away—a few strands of the fiber optic cable,” he said. “This is not unfair to PTI. You have the Economist.com report, so you know, even if PTI sells part of the cable, it will still make millions in profits every year.”

Babauta said that granting the divestiture request would enhance competition and lead to competitive prices of telecom services. He said enhancing competition would also encourage new investments in the CNMI.

Babauta’s testimony followed that of Robert Maloney, chief executive officer of Pacific System’s Corp., a CNMI subsidiary of Guam firm Pacific Data Systems.

Maloney also said that the CTC should encourage competition. If the prices of telecommunication services are high, demand for investments would go down. Conversely, he said that if the prices are low, the demand would increase. “You get investments in the community,” Maloney said.

Before Caldwell and Babauta’s lawyer, assistant attorney general James Livingstone, could present the testimony of Maloney, Steve Carrara, lawyer for the MTC and PTI, objected to the matter. The CTC, however, allowed Maloney to speak out, assuring Carrara that he could respond to the testimony.

Carrara said that, if demand is elastic, then there is more reason for competitors to invest in another cable facility. Maloney conceded that any competitor of Verizon could build another cable under the present situation.

Caldwell said that the sale of Verizon from MTC to PTI allows CTC to break the cable monopoly. Livingstone explained that divestiture would not be unfair to MTC, since it could still sell the cable 100 percent; he asserted that PTI should not have absolute control over the cable.

Carrara said that the MTC’s investment in the telecom industry is a “Micronesia success story.” He urged the CTC to approve the sale without divesting Verizon of cable ownership, saying that such a move would deter future investments in the CNMI.

“You can’t tell businesses how to invest after they’ve made the investment,” Carrera said of MTC’s cable investment. He said ruling on that line would violate the ex post facto law. “There’s no guarantee that divestiture will provide any benefit.”

He also enumerated the assurances made by PTI, including the infusion of fresh capital of $20 million in the next five years and an end to interisland toll fees. He said PTI has demonstrated that it is financially and technically capable to take over Verizon’s operations.

During the hearing, which lasted nearly two hours, commissioners Norman Tenorio, Josephine Mesta and Mike Fitzgerald also asked the parties several questions. The parties also responded to questions from CTC counsel Alan Barak and executive director Adam Turner.

PTI and MTC jointly filed with the CTC an application for the transfer of all common stock on Sept. 5, 2003.