THE watchdog Public Utilities Commission (PUC), yesterday suspended the application by the Guyana Telephone and Telegraph Company (GT&T) for increased rates for six months and scheduled a hearing next week to fix temporary rates.
PUC Chairman, Justice Prem Persaud announced that due to the nature of the application, it was unlikely that the matter could be determined in a short time. He said the application would therefore be suspended for six months with effect from January 31.
The first hearing for temporary rates is scheduled for January 15 at Hotel Tower in Georgetown at 16:00 hrs.
However, consumer groups are against temporary rates and Ms. Eileen Cox, on behalf of the Consumer Advisory Bureau and the Guyana Consumers Association argued that the rates could remain temporary for years and customers need to be considered.
GT&T's application for the tariff establishing new rates in order to prevent substantial revenue shortfalls would have taken effect 30 days after the notice was given, so a decision had to be taken, PUC officials said.
The phone company had applied for a public hearing in its quest to recoup revenue it says it expects to lose through the reduction of international settlement rates.
The company had made a rate-filing with the PUC with the expectation that some proper rate structure or variations would come into effect with the United States Federal Communications Commission (FCC) order that kicked in January 1, bringing the rates that U.S. carriers pay to Guyana down from US85 cents to US23 cents.
The reduction has brought with it a significant drop in revenues, GT&T officials claim.
The company had projected earnings at a 1.05% rate of return on its invested capital for wire-line services. GT&T said that to achieve the minimum 15% rate of return, it requires additional revenues of $5,556M by way of increased rates and charges.
Workers of the company were reportedly told they may be retrenched if the company did not get an increase in its local rates to compensate for the billions of dollars in losses expected.
A large crowd turned up at the Supreme Court Library in Georgetown late yesterday afternoon for the PUC hearing with GT&T. Most of these were GT&T employees who officials said showed up because of their interest in the jobs they stand to lose.
Commissioner John Willems said the large GT&T turnout might have been intended to intimidate the commission by causing an atmosphere of fear.
An employee of GT&T urged the commission to urgently consider temporary rates saying hundreds of employees at GT&T depend on their jobs.
Among the gathering were Chief Executive Officer, Ms. Sonita Jagan and other GT&T top officials. The room was packed with mostly GT&T employees with persons spilling on to the corridor. Even media personnel had to stand.
Persaud said the crowd was not expected as he referred to the poor turnout at PUC hearings, most of which are held at the Ocean View International Hotel at Liliendaal, East Coast Demerara.
The consumer groups had earlier this week noted their disapproval of the steep increases in local phone bills proposed by GT&T.
Cox had told the Chronicle that the $5.5B increase stipulated by GT&T in its proposal to the PUC is in excess of what the phone company stands to lose in the settlement rate change.
GT&T is proposing to increase the domestic telephone rental from $250 to $1,500 and the business/commercial from $1,000 to $3,000 a month.
It proposes to increase calls within exchanges from 20 cents to a whopping $4 per minute during the day, and from 10 cents per minute to $2 per minute at nights and is looking to an approximate 75 per cent increase for out-of-exchange-calls.
In terms of international calls, it proposes that for all countries, except the U.S. and the United Kingdom, the rates remain the same but that there be one off peak rate. The rates to these two countries would be reduced with one rate being applied to both locations, $136 during peak hours and $123 during off-peak.
The company also wants Internet users to pay for its line service, which is currently not paid to GT&T.
Cox claimed GT&T is taking advantage of the opportunity to squeeze consumers in Guyana more.
GT&T was yesterday represented by attorneys-at-law Senior Counsel Rex McKay and Miles Fitzpatrick and Godfrey Statia.
The argument yesterday was centered on the short notices given for the hearing.
The consumer groups expressed concern about this claiming that it was "most unreasonable and unfair" for the commission to give only four days notice of hearing of a rate case, "especially in a case of such great complexity and momentous significance to telephone subscribers..."
A joint statement by the Consumer Advisory Bureau and the Guyana Consumers Association was read by Mr. Patrick Dial who noted that the two notices received provide very little information on the nature of the issues with which the hearing was concerned.
"The result is that we have been denied a reasonable opportunity to study the issues and to avail ourselves of expert advice for the protection of the interest of telephone subscribers", Dial stated as he quoted a passage from the 'Conduct of the Utility Rate Case'.
The consumer groups pointed out that adequate notice along with the timely availability of, or access to, documents to be considered at the hearing, is an indispensable condition of natural justice.
"Because of the gross inadequacy of the notice in terms of time and information, and the availability of GT&T's application just days before the hearing, the consumers are not in a position to make any substantive intervention in the current proceedings. We respectfully submit that to hold a hearing in these circumstances would deny us, the representatives of the consumers, the opportunity of a fair hearing", they stated.
The consumer groups also charged that the latest position on the settlement issues is that GT&T's parent company, ATN, had petitioned the FCC directly for a reconsideration of its decision and that was opposed by the U.S. giants AT&T, Sprint and MCI. They said it is now on hold, pending the decision of the FCC.
But McKay accused Dial of misleading the gathering as he pointed out that there was no stay of the order and that GT&T is obliged to pay the rate as of January 1.
Fitzpatrick added that GT&T had sought a review with the FCC board but it recommended that that there was no merit in the application.
He reiterated that GT&T has already signed the agreement with the U.S. carriers with respect to the FCC order.
He said other countries would eventually fall into line, using the order as a benchmark.
But the consumer groups stated that the FCC rules do not provide a deadline for the disposal of the matter. They said the fact that the settlement rate has not been reduced does not in any way affect the timeliness of the commission's December notice.
They argued that since the settlement rate has not been changed and there is no indication as to when the FCC will decide on the petition for reconsideration and no certainty as to the outcome of the matter, "GT&T's application is premature and must be rejected by the Commission."
When GT&T made the filing in 1997, it did not in fact encompass the entire decrease from US85 cents to US23 cents but from US85 cents to about US50-65 cents, GT&T officials said.
The rate increase at the local level that GT&T has applied for will probably not be sufficient to compensate for the direct hit, Jagan had said during a news conference last year.
She had noted that the company was hoping that when in fact the US23 cents kicked in, AT&T, MCI and Sprint would have adjusted their collection rate because even though the US23 cents is what they would pay GT&T, it is not what they would collect from their consumers.
"If AT&T and MCI reduce their collection rate to the consumers in the U.S., it can take the effect of stimulating a volume increase in traffic and if that stimulates a sufficiently high enough increase in volume to offset, then the local rates will not have to go up significantly to compensate for that loss", she had explained.
"What we are asking for is an intermediary increase so that the company would not be in a position where it cannot even sustain its general operations", she had stated.