Feb. 25, 2005 – The debate between Choice Communications and Vitelco over high-speed DS3 telephone lines continued before the Public Services Commission Thursday. This time Choice revealed what it saw as at least one major flaw in Vitelco's assessment of the costs to provide the service.
Innovative could provide Choice the DS3 service it was requesting more easily and at less expense for everyone if it linked Choice's Havensight office to cable that Vitelco, known also as Innovative Telephone, already has in the same area.
The back-and-forth debate between the two competitors has been ongoing since 2002 when Choice first sought access to the DS3 broadband lines. However, Innovative has continually refused to lease the lines to Choice.
A DS3 line, due to the size of its cable, allows the rapid transmission of large amounts of data, including voice messages. Innovative is the only company in the territory that has such lines.
The federal Telecommunications Act of 1996 opened up telecommunications markets to competition. The act requires existing telecommunications carriers, upon reasonable request, to interconnect directly with the facilities and equipment of other carriers at a wholesale cost. The point of the act was to break up the telecommunications monopolies, thus allowing competition to force down prices and improve service.
However, Innovative has always opposed granting Choice access to its lines and the battle has been waged before the PSC, which is charged with regulating utilities and providing avenues for competition that will reduce costs to the territory's consumers.
PSC Hearing Examiner Rosalie Simmonds-Ballentine originally made the recommendation to deny Choice its request for access to Innovative's DS3 lines. The PSC accepted her recommendation, which stated no demand existed locally for the service. (See "PSC Denies Choice Request for Bandwidth Access").
However, that has not deterred Choice.
Thursday's revelation of Innovative's Havensight location came as a surprise to PSC members, who had previously ordered the telephone company to submit a report on how much it would cost to provide Choice the service.
Innovative complied, providing a cost-data analysis to the PSC in November. However, nothing in the report mentioned the company already had the fiber optic cables that Choice required in the Havensight area. Instead, Innovative told the PSC in its report that in order to provide Choice with the requested DS3 service Innovative would have to dig a trench along the Waterfront from its Charlotte Amalie location to Choice's Havensight location. Innovative further stated in the report that it would cost $1.4 million, or a $56,424 monthly charge, to provide Choice the service.
The PSC members, who seemed to be in a great hurry to conduct the people's business Thursday, granted Choice representatives 15 minutes to plead their case. This was after Alecia Wells suggested giving the company only one minute to make a case it had waited months to present.
Choice attorney Maria Hodge and Steve Parrish, an expert witness and engineer for Choice, used the time to review a 12-page technical report and analysis prepared for the commissioners showing that the actual cost to Innovative for providing the service would be about $3,000 a month. "We believe that entire segment is not required," Parish said of the trenching from Charlotte Amalie to Havensight.
Parrish told the commission the phone company already has cables running to a Havensight office. Only 1,200 feet of cable would be required to provide Choice with the DS3 service it seeks – not the 11,000 feet of trenching at $48 per foot that Innovative said it would have to do.
Parrish said that based on Innovative's own cost formula – provided to the PSC in their report – it would cost $40,100 for aerial cables to be run from Innovative's Havensight location to Choice. The $40,100 plus other equipment charges would amount to $77,100 annually – a monthly charge of $3,058 using Innovative's own formula.– and not the $1.4 million figure Innovative had quoted.
The PSC gave Innovative representatives a chance for a rebuttal of Choice's statements. However instead of David Sharpe, president and operations expert providing the rebuttal, Innovative's Washington, D.C. attorney Greg Vogt and Donald Parrish, an economist for telecommunications companies, spoke for the telephone company.
Although PSC Chairman Valencio Jackson said he would allot 15 minutes to Innovative in the interest of fairness, the telephone company's representatives were given more time for their rebuttal than that.
But when Hodge asked the commission to allow another technical expert, who had once worked for Vitelco, to provide information on the telephone company's infrastructure, Jackson waved her off, saying Choice had had its time.
Donald Parrish, who said he could not speak to any of the technical issues, did say it was "virtually impossible" to develop tariffs for only one customer, and companies doing so would have to do it on an individual case basis.
"It is never economically feasible to service one consumer," Donald Parrish said, referring to it as "economic suicide."
Vogt told the commission as far as they knew Choice was the only company which had shown interest in receiving the service from Innovative.
Donald Parrish said further that there was a "fundamental flaw" in Choice's $3,058 per month figure. Even if Innovative had excess capacity in the cables in the Havensight location, he said, Choice seemed think there would be no cost to Innovative to provide the service. Therefore, Parrish said, the cost of providing the service would more than likely fall on the ratepayers.
PSC members Alric Simmonds and Verne David asked Vogt if Innovative indeed had cables in Havensight.
"The company does have fiber optics under the ground in the area to certain offices," Vogt said.
Simmonds asked three times whether the trenching cost would be reduced if Innovative provided Choice service from the Havensight location. Innovative representatives failed to give him a clear answer.
David asked Vogt why the Havensight location was not referenced in Innovative's report to the PSC, and why Innovative was so resistant to providing the service.
"This was done on a hypothetical basis," Vogt said of the cost-analysis report. "It is completely uncertain what the demand is going to be. If the demand is low, the cost is obviously going to be very expensive."
Jackson told the two entities he would continue the discussion at the March hearing.
Hodge requested that Innovative bring its engineers and staff directly related to the matter to speak at the next hearing.
Jackson displayed frustration at having to hear the matter again, gesturing to his forehead and saying he was "up to here with the matter," and threatening to turn it back over to the hearing examiner if the parties could not reach an agreement.
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