‘Verizon sale to result in cheaper rates’

The Babauta administration welcomed the conditional approval of the Verizon sale to Pacific Telecom Inc., believing that it would ultimately result in cheaper service rates.

Press secretary Peter A. Callaghan said yesterday that Gov. Juan N. Babauta “sees [the approval] as not only a victory for himself but also for the people of the Commonwealth.”

He added, though, that the governor will not be completely satisfied “until the rates come in line” with Guam, Hawaii, or U.S. rates.

“He [Babauta] is pleased with the ruling. He is pleased that the Commonwealth Telecommunication Commission is going to take under consideration the rates that Verizon charges for cable services. He is pleased that CTC acknowledges that Verizon has a monopoly on the cable and is charging a monopoly-type of prices,” said Callaghan.

The commission on Tuesday night voted to conditionally approve the sale of Verizon from Micronesian Telecommunications Corp. to PTI. The commission said it would look further into the “competitive issue” in a separate proceeding.

The PTI license includes a condition which says that “the usage, pricing and nature of the service provided by the fiber optic cable would be studied further in a contested case proceeding.”

House Speaker Benigno R. Fitial would prefer a “complete approval” of the Verizon sale to Pacific Telecom, according to his spokesman, Charles Reyes Jr.

“It’s been delayed for quite sometime. The speaker wants to see complete approval as soon as possible,” said Reyes.

He said the sale is a free-market oriented policy, which Fitial favors.

“He [Fitial] is supporting businesses buying and selling and engaging in free-market transaction,” said Reyes.

Callaghan said that, although the commission’s decision did not mean an actual breakdown of “monopoly” or ownership of the cable—or divestiture as requested by the administration—the commission nevertheless has committed to investigate the pricing and this, he said, addresses the governor’s concern on market competitiveness.

“This means that they’re going to contest the prices charged by PTI. The CTC has the authority to do it under the law,” said Callaghan.

In short, he said, the regulatory body—not Pacific Telecom—would eventually set the rates of services in the CNMI. Once prices go down, he said this would open up the market to other investors.

“It opens up the market for other people to come in and buy usage of the cable at a fair market value and offer competitive services,” he said.

Right now, he said, Verizon leases out usage of cable to other companies like SaipanCell and iConnect “at a high price.”

“Once those prices come down, companies would be able to offer digital TV coming in, etc.—those things that other people have at $19.95 a month,” said Callaghan.

He predicts that DSL service would go down from $50 to $25 a month. On Guam, he said, such service is available at around $20.

Aside from pricing, the commission has yet to resolve auditing issues involving Pacific Telecom.

The commission said Tuesday that it still has “several unanswered questions regarding the track record and commitment of [Pacific Telecom].”

CTC chair Norman Tenorio said the decision would send a strong signal to the investment community that the commission has been fair and has abided by its rules.

CTC’s decision now allows PTI to take over Verizon’s operations. The transfer of ownership shall take place in 90 days.