`when anyone, anyone, seeks to ridicule and malign this Commission it will respond to set the record straight because the public interest demands no less' - PUC
THE watchdog Public Utilities Commission (PUC) yesterday rejected charges by the phone company, GT&T, that it was to be blamed for a four-year delay in dealing with the firm's application to increase rates.
In a statement yesterday, the commission also said GT&T (Guyana Telephone and Telegraph Company Limited) Chief Executive Officer, Ms. Sonita Jagan did not tell the truth at a news conference last week about seeking to rebalance rates.
The PUC said it was not in the habit of "holding press conferences and it is not with pleasure that it seeks to respond to Ms Jagan's charges."
"But when anyone, anyone, seeks to ridicule and malign this Commission it will respond to set the record straight because the public interest demands no less", it declared.
At the news conference, Jagan blamed the Government, the Commission and consumer groups for proposed steep increases in telephone rates because of the delay in processing earlier requests.
She said the tariff rebalancing for which the company has applied to the PUC should have been phased in and if the process had started when first requested four years ago, GT&T would not have had to apply for such big increases at this time.
GT&T's proposal to increase rates is in light of the United States Federal Communications Commission (FCC) order that kicked in January 1, bringing the rates that the U.S. carriers pay to Guyana down from US85 cents to US23 cents.
The FCC issued its Benchmark Order in August 1997 and GT&T said all stakeholders were apprised of the proposed "glide path" that would allow the settlement rate with the U.S. carriers to reach US23 cents per minute by January 1 this year.
The PUC noted Jagan sought to blame it "for a delay of four years in dealing with their application for rate increases, and for failing to adjust the rates over that period of time although the rates in the Caribbean have been gradually decreasing to meet the requirements of the...FCC benchmark rates of US23 cents per minute for international calls from January 1, 2002."
It said she did advert to court actions by GT&T which stalled the process of the hearing for sometime and when the current PUC Chairman assumed duties in July 2000 the hearing continued.
She said the hearing went on until December 2000 and then did not continue until June 2001.
"For reasons known to herself only she deliberately refused to disclose that in December 2000 the Commission overruled the objections by counsel for the consumers and ruled in favour of GT&T that they were entitled to a minimum rate of return of 15 per cent. The consumers promptly applied to the High Court challenging that ruling.
"It was only when the matter in that forum was discontinued did the hearing recommence", the commission pointed out.
HAS NOT TOLD THE TRUTH
It said Jagan "has not told the truth when she claimed that since 1997 GT&T were seeking to have their rates rebalanced."
The commission said GT&T applied for increases in the local rates and based their application on three grounds:
(a) devaluation;
(b) dependency of audio text revenue;
(c) expansion of their network.
"Memories tend to be short, but Guyanese consumers ought to remember the sleepless days and night when they could not make contact with overseas relatives, friends and businesses in 2001 because AT&T, the international carrier with whom GT&T had an arrangement, refused to continue the service when GT&T refused to agree to a reduction in the settlement rate of 65 US cents from 85 cents.
"Despite pleas to GT&T to negotiate with AT&T they refused. Subsequent events exposed the reasoning behind GT&T's refusal. GT&T through their principal, ATN, petitioned the FCC to waive its benchmark order dealing with the reduction of the international settlement rate to 23 cents for five years", the PUC said.
It added: "In other words, whilst rates in the Caribbean were gradually being reduced to reach 23 cents in 2002, GT&T wanted the rates with respect to Guyana to continue at 85 cents for the next five years. It was only when in November 2001 the FCC rejected ATN's application that personnel at GT&T began to stir themselves and they talked of rate rebalancing.
"Since 2000 both the commission and counsel for the consumers were trying to persuade GT&T to withdraw 1/97 their application and file a fresh application to deal with the FCC's order. They declined.
RATES REDUCED THROUGHOUT CARIBBEAN
"After the FCC refused GT&T's petition in November 2001 GT&T re-applied to the body to reconsider its ruling, with a view to their reinstating the order to 85 cents with respect to Guyana for the next five years. GT&T does not want to let go of the 85 cents.
"Throughout the Caribbean the rates have been reduced and in many countries the rates went down to 19 cents per minute, below the minimum fixed by the FCC. The reason? Great increases in the volume of traffic as a result of cheaper calls. GT&T is not unaware of that strategy.
"When the reduction of the rates became a reality after the ruling of the FCC in November 2001, Mr. Robert Bazil, Public Relations Officer of GT&T, told Television Channel 65 newscast that he anticipated an increase in the volume of calls which will compensate for the decline as a result of the reduction of the rates.
"The Commission wishes for public information to allude to the standard practice in the industry that the agreement for settlement rates is reciprocal, that is to say, when USA carriers will pay 23 cents to GT&T for calls from the USA, GT&T in return will pay 23 cents to the USA for calls from Guyana.
"After the Commission's ruling in December 2001 disposing of GT&T's application filed in 1997, it immediately published a notice fixing 9th January for a hearing to consider the consequences of the reduction of the settlement rate. GT&T thereafter acknowledged that the Commission acted on its own initiative but they decided that it may be more appropriate for them to file their own application.
"It is a question of conjecture whether GT&T would have remained comatose if the Commission did not on its own motion fix a hearing to consider the impact of the reduction of the settlement rate.
"It may not be inappropriate to quote what the FCC wrote in its ruling when it rejected ATN/GT&T's petition for waiver:
`ATN has not demonstrated in its petition that it cannot recover incremental costs at the benchmark of 23 cents...The Commission adopted the benchmark policy because accounting rates on most routes exceeded foreign carrier's cost to terminate international message telephone service from the U.S. This continues to be the case today on many routes including U.S.-Guyana route...GT&T has had more than four years to make the transition from its consistently high settlement-rate with U.S. carriers to the benchmark rate of 23 cents.'
"The Commission has said it on many occasions and will repeat that it is not anti-utilities. It is conscious of its duties and responsibilities, to encourage utilities to carry out their duties, and to earn profits in the process.
COMMISSION WILL HOLD BALANCE
"The Commission has a duty to address the consumers concerns and ensure that they receive value for money. It has to hold the balance and will not shirk or abandon that responsibility."
GT&T is proposing to increase domestic telephone rental from $250 to $1,500 and business/commercial rental from $1,000 to $3,000 monthly.
It proposes to increase calls within exchanges from 20 cents to $4 per minute during the day, and from 10 cents to $2 per minute at nights and is looking at an approximate 75 per cent increase for out-of-exchange-calls.
In terms of international calls, it proposes that rates for all countries, except the United States and the United Kingdom, 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 the off-peak hours.
The company also wants Internet users to pay for its line service, which is currently not paid to GT&T, and all international rates be rounded to the nearest dollar.
Jagan last week claimed the Government ignored the unfolding reality and the PUC was resolute in its refusal to acknowledge the logic.
GT&T said that without the assistance or moral support from the Government, consumer groups or the regulatory body, the company fought the inevitable and bought time for an orderly transition to lower settlement rates.
"We challenged the FCC action in the U.S. courts, fought AT&T and the other American carriers to maintain the US85 cents per minute settlement rate for as long as possible, and sought a waiver of the Benchmark Order with respect to Guyana", the company said in a document 'Telecommunications in Guyana - Portrait of an Industry in Trouble'.
Jagan explained that GT&T had to file for rate increases, the last in 1997, when the FCC issued the order. She recalled the company appealing to the Government and the PUC for gradual increases, noting that in four years, it would have been enormous.
"...but I guess no one was listening or they just did not hear", Jagan stated.
She said the reality now is that "nothing happened" over the past four years and the FCC order has come into effect.
The company made a rate-filing with the PUC with the expectation that some proper rate structure or variations would have come into effect with the FCC order.
It projected earnings at a 1.05 per cent rate of return on its invested capital for wire-line services. It said that to achieve the minimum 15 per cent rate of return, GT&T requires additional revenues of $5,556M by way of increased rates and charges.
GT&T said it is now at a crossroads and its viability is threatened by the fundamental changes in the settlement of international traffic and regulatory inertia.
The PUC held a hearing Wednesday with the phone company, but the application for increased rates the company made in its quest to recoup revenue it says it expects to lose through the reduction of the international settlement rates, was suspended for six months.
The first hearing to fix temporary rates was set for today 15 at the Hotel Tower in Georgetown at 16:00 hrs.
The consumer groups are, however, unhappy that the commission will grant GT&T a hearing for a temporary order. Ms Eileen Cox of the Consumer Advisory Bureau and the Guyana Consumers Association noted that this is "just as bad" as a permanent order.
GT&T said retrenching of staff members is a possibility if there is no positive response to its proposal for the rate increases.