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By John Ravelo

SAIPAN, CNMI (Saipan Tribune, May 6) - Pacific Telecom Inc. yesterday criticized the new conditions being proposed by Gov. Juan N. Babauta in the sale of Verizon's local operations, accusing the administration of bias against it.

PTI's Jose Ricardo Delgado said the administration's prejudicial stance against his company's venture in the CNMI paints a negative picture of the islands to potential foreign investors.

Verizon's local carrier, Micronesian Telecommunications Corp., echoed Delgado's position. The Saipan Chamber of Commerce also urged the governor to support the Verizon deal.

Babauta had submitted to the Commonwealth Telecommunications Commission Tuesday a proposal for enforcement procedures and the posting of a $10 million performance bond by PTI before the consummation of its purchase of MTC. He said the conditions are necessary to make sure that PTI would not violate an approved settlement that would consummate the Verizon sale.

"Our position on the bond and enforcement provisions is clear: the CTC has the power to regulate our LEC [local exchange carrier] business. What he [Babauta] wants is overkill, unnecessary, and bordering on overbearing," Delgado said.

The proposed enforcement procedures outline provisions for a $10,000 minimum penalty against PTI if the firm violates an approved settlement. Babauta said PTI should be required to post a performance bond of at least $10 million as surety of its financial capability to pay a fine if any would be imposed.

Delgado views the bond proposal as a manifestation of Babauta's bias against him, adding that the governor has not given his company any incentive at all.

"He [Babauta] helps many other people, but with PTI, because of the past which was not in my control, I have been given a very hard time. Foreign investors obviously see this, and are hesitant to put money in a place where the administration plays out its biases," Delgado said.

"I think that what is happening here yet again is a sign that PTI has not been given fair treatment.and Verizon, [which] is selling the asset and has been generous to the community for years, is also being treated shabbily," he added.

MTC spokesperson Tonie M. Apatang also expressed the company's opposition to the proposed bond requirement and enforcement provisions.

She said a bond requirement is unnecessary and would just add to the cost of business operations, instead of investing the money for other uses that could benefit employees. She stressed that the CTC has regulatory and enforcement powers-which are already in place-over telecom companies.

"Why on earth would you ask a company that has been established in the CNMI for 23 years to post a $10-million bond? If this bond costs MTC 2-4 percent to get, why would the governor want to impose something punitive on the phone company that has served this community," Apatang said.

Apatang said that MTC has operated well since 1981 and has one of the largest workforce locally.

"We can think of many other failed investments in the CNMI that should have required bonds but not a company that has been in the CNMI since 1981. It's time to move the Commonwealth forward in a collaborative way and welcome serious investors that have proven they want to do business in the CNMI, not stifle investment by adding punitive measures to companies," she said.

Chamber president Alex Sablan also urged Babauta to support the Verizon deal as a show of good faith.

"We believe that Verizon is not a telephone monopoly in the CNMI because the government does not prohibit competitors, or potential competitors, from operating and competing against the company," Sablan said.

The proposed enforcement provisions state that the CTC should retain jurisdiction over enforcing an order that would approve the telecommunications sale. They seek to allow any individual or organization to file a complaint with the CTC and serve it on PTI to enforce the order.

Under the proposal, anyone who believes that PTI is violating the settlement can provide the company a written notice of violation, which will give the company 30 days to remedy the situation. After 30 days, the complaining entity may then file with the CTC a complaint that attaches the written notice.

The CTC shall then retain jurisdiction to award damages and costs incidental to the complaint. The proposal also provides for a minimum penalty of $10,000 up to $500,000 per day of violation from the first day after the cure period or from the day the violation started until it is remedied. The penalty will accrue from the first day of the violation if it was intentionally committed.

Once it takes over MTC's Verizon operations, PTI has committed to end inter-island toll charges, protect local workers, increase local competition, guarantee certain technological offerings and no-rate increases for years.

May 6, 2004

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