July 22, 2005 — Will there be telephone competition in the Virgin Islands, as there is on most of the U.S. mainland? A federal judge, working on a case that started in 2001, has reopened the possibility, but the size of the opening is hard to calculate at this point.
Choice Communications (then known as Wireless World, the term used in the court case) wanted to tap into the lines owned by Innovative Telephone (formerly known as Vitelco). When Innovative resisted, Choice then applied in 2001 to the Public Services Commission, seeking to force Innovative to make its lines open to Choice customers. The PSC ruled that Innovative did not have to do so, and Choice went to the federal court seeking a reversal of the decision.
Earlier this month a Senior Federal District Court Judge, Stanley Brotman, upheld part of the PSC decision but sent another part of it back to the PSC for reconsideration.
Under the U.S. Telecommunications Act of 1996, which the judge and other observers regard as pro-competition, rural phone carriers (and the U.S.V.I. is regarded as rural by the Congressional decision) can be forced to open their lines to competitors if three conditions prevail.
In order to force such an opening, the competing firm or firms must convince the state (or territorial) regulatory agency that the desired competition would be: 1) technically feasible; 2) not unduly economically damaging to the incumbent carrier; and 3) would be in keeping with the federal objective of easy access to telecommunications by the public at large. The last of these three "prongs," which was the key element in the dispute, is called the Universal Service provision.
Choice wanted the PSC to waive the protection afforded to rural carriers and argued that the three statutory provisions were not an obstacle. The PSC agreed on the first two, but upheld Innovative's position on the third point. Innovative had argued that it had a fee schedule in which commercial customers paid more than their share of the costs of phone service, so that residential customers could pay less.
If Choice had its way, Innovative said, it would lure away some of Innovative's commercial customers, and thus force Innovative to raise rates on its other customers.
The PSC, following reports by its hearing examiner, issued two orders on these issues, one in May 2001, and the other in August of that year.
Judge Brotman found the PSC's position on the Universal Service provision "ambiguous" and suggested that the two reports, in part, were not in harmony with each other.
He also ruled that the PSC was correct in its ruling on the technical feasibility question, and on the lack of significant economic impact on Innovative, the first two of the three elements in the decision. He rejected Innovative's arguments that it would be financially damaged should it have to share its wires with Choice.
What the judge did, formally, was to remand the PSC decision on the third point back to the local agency, and gave it 60 days to decide what to do in the light of his decision.
In his conclusion, Judge Brotman wrote: "The Court rejects nearly every argument made by Innovative and Wireless World which claim that the Hearing Examiner and PSC erred . . . The Court rejects Petitioner's request for this Court to lift Innovative's rural exemption. Instead of terminating the rural exemption and finding that Wireless World's request is consistent with Section 254 [the universal service provision] the Court directs the PSC to further explore this issue."
Choice Communications CEO Steven Parrish hailed the decision: "This has been a long time coming I trust that the PSC will make the right decision and let all Virgin Islanders enjoy the benefits that competition provides other communities."
Neither Innovative nor the PSC has made public comments since the decision was handed down on July 15.
While Parrish spoke of the utility to consumers of competition in "other communities," there was no discussion in the decision of how, in fact, competition in the telecommunications marketplace had worked elsewhere. Nor was there any mention of another subject raised after the decision by Parrish: "Moreover," he said "even while enjoying the . . . protection of the rural exemption, Innovative requested and received a rate increase from the PSC."
The next decision to be made is the responsibility of the PSC.
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