April 07, 2014

By Bill Jaynes
The Kaselehlie Press

April 3, 2014

Pohnpei, FSM — On April 1 the FSM Congress passed Congressional Bill number 18-145 popularly known as the “Telecom Bill”. The bill deals with the liberalization of telecommunications services in the FSM primarily by eliminating the legal monopoly that FSM Telecommunications Corporation has held since it was established over 30 years ago, even before the birth of the nation itself.

“It also establishes an independent regulatory authority, and sets up an ‘Open Access Entity’ for the purpose of owning assets related to a future fiber optic project connecting Palau, Yap, and Guam,” the committee report on the bill says.

According to a blog by the FSM Public Information Officer, President Manny Mori signed the bill into law today.

For the last seven months the FSM Congress Standing Committee on Transportation and Communication chaired by Senator Peter Christian diligently worked first to understand the original bill submitted by the Executive Branch, and then to make it better for all of the involved parties. After all of the hearings both public and private and the fact finding missions that took the committee to Palau, Washington D.C., and elsewhere in the United States, as well as an important hearing at the Yap Legislature in February, the committee was able to recommend the passage of a new “Telecom Bill”.

“Your committee understands that this bill was the result of extensive discussion between TC&I and Telecom,” the committee report says. “These discussions were mandated by your committee in light of the opposition of Telecom to the previous C.B. No. 18-77 (the bill originally submitted by the Executive Branch). It appears that a common ground may have been found.”

The committee report said that part of the impetus for the bill was the possibility of a World Bank grant of $27 million to connect Yap to a proposed Palau-Guam fiber optic cable. One of the conditions of the grant was the participation of more than one country.

There were questions about the progress of Palau on the project but the committee said that the consideration of the “Telecom Bill” is “first and foremost a domestic matter.” It said that the bill should be passed “because it is in the best interest of the FSM to do so, not depending on what a sister country may or may not be doing.”

The report said that the World Bank had also offered a “Country Allocation” of $13 million just for the FSM for a total grant of approximately $40 million.

Unlike the originally submitted bill that the Kaselehlie Press thoroughly reviewed after its submission last year, the new bill “does not attempt to restructure Telecom by altering its shares structure or its Board of Directors,” the committee report says. Under the new law, “…The Open-Access Entity will now be owned by the National Government as represented by the Secretary of Finance and Administration.” In the CB 18-77 the owners were the Secretary of Transportation, Communication, and Infrastructure and the Secretary of Finance and Administration.

According to the committee report, the changes in the new law also dealt with a significant problem in the previously submitted bill, that of cross-subsidization of markets. “The witnesses testified that the bill envision(s) an Open-Access Policy whereby in those markets where there will be competition market mechanisms will dictate pricing; however, in those place where it is unlikely that there will be more than one entity, such as small islands or remote locations, the dominant provider will be subject to regulation by the Regulatory Authority as far as rates are concerned,” the committee report said. “It is envisioned that initially rates will be the same across the country but that may change if more companies enter the market, creating competition and creating a downward pressure on the rates.

The committee said that it “will not shy away from offering amendments or even repeal(ing) this law should in practice the regulatory scheme turn out not to be satisfactory, that is to bring about better and more cost-effective telecommunications services to the country.”

The committee said that it was in favor of passing the bill but also expressed its understanding that the law is “just the first step in a long and involved process involving extensive consultation among several countries and donors.”

The committee report adopted by Congress put in writing its disappointment with the fact that the Executive Branch had been dealing with the World Bank for about three years and only brought Congress in to the process last September. “A lot of the policy decisions envisioned by this bill would have benefitted from earlier consultation with Congress, which would have made this whole process smoother.”

A World Bank spokesperson who visited the Kaselehlie Press office earlier this year said that World Bank did not approach the FSM with a grant offer. The FSM approached the World Bank asking what it could do to help with its telecommunications infrastructure needs. The grants were available but it could not give the grants for the benefit of a single telecommunications operator. She said that the World Bank never lobbies for changes of law in any member country in order to give those countries a grant and it didn’t do so in the FSM. She said then that if Congress did not pass the bill to abolish the Telecom monopoly there was another grant “FSM only” grant for power stabilization in the FSM that it had discussed with the Executive Branch, but the regional grant of $27 million would not have been available.