PUC erred in rejecting rate hike application – says GT&T

Apr 14, 2015 News

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Chief Executive Officer (CEO) of the Guyana Telephone and Telegraph Company (GT&T) Radha

Krishna “RK” Sharma has expressed disappointment over the regulator’s rejection of the application to modify rates.
He said yesterday, in a statement, that the Public Utilities Commission (PUC’s) rejection of GT&T’s effort to modify rates to reflect changes in the market since the last comprehensive rate review over a decade ago, is an unfortunate outcome for consumers. They would have received enhanced services and see long distance rates cut.
“It is also a lost opportunity to remove a roadblock to liberalization by bringing rates in line with costs—an effort we strongly support. Anyone who reads the PUC order can see that it is really just a laundry list of grievances that are without merit in a modern telecommunications sector. It is not based on a logical adherence to the law, a reasonable consideration of the voluminous record, or consistent with past PUC decisions and rulings.”
According to the CEO, the PUC has incorrectly assessed the telephone company’s long history of investments.
“The truth is, we’ve fulfilled all of our obligations and invested US$250 million since our last rate change, and more than US$391 million since our contract began. The order also reaches strange conclusions, such as using the very frequent rate increases for the power and water utilities as a justification for denying our

first request in 15 years for a rate adjustment.”
Sharma argued that it is clear that PUC did not consider the practical effects of its decision, which will force consumers to pay higher long distance rates.
“We have already filed an appeal, and we believe it is essential to keep pushing – after all, Guyana is one of very few countries along with Cuba in the western hemisphere that does not have 3G wireless service. This is nothing short of baffling. The PUC order is emblematic of the frustrating distance between the government’s words and actions when it comes to modernizing the telecom sector.”
He said that even with the setback, GT&T stands ready to work with the government to finally develop a clear and consistent plan based on proven industry practice, fairness to all regardless of connection or influence, and the rule of law for moving the country forward in the telecoms arena.
The application by GT&T had resulted in PUC last month contemplating an investigation to determine the true value of the entity’s assets.
In its ruling, PUC said that it had difficulty in arriving at a decision favourable to GT&T and as such dismissed it.
“The Commission wishes to inform that in view of doubts relating to the true value of GT&T’s asset base, it may consider having an investigation carried out in this regard,” PUC’s

Chairman,
Justice Prem Persaud and Commissioners Badrie Persaud and Maurice Solomon said in the ruling.
The reason for the application, according to PUC, was that GT&T wanted to give effect to a minimum of 15 per cent return on capital dedicated to public use.
The 15 per cent return is provided for under the terms of the licence which provides that GT&T shall be entitled to a minimum rate of return of 15 per cent on capital dedicated to public use.
Making contributions to the public hearings on the application were Guyana Consumers’ Association (GCA), Leonard Craig- a consumer advocate and Valmikki Singh, Chief Executive Officer of the National Frequency Management Unit (NFMU).
Craig, the consumer advocate, argued that, among other things, that GT&T’s landline software had space to expand but the company has 8000 applications that it is not fulfilling.
The regulator expressed concern over the US$30M fibre optic cable brought from Suriname a few years ago by the telephone company. PUC said that GT&T was unable to provide details.
PUC expressed alarm the cable is not part of GT&T’s assets. It was transferred to a wholly-owned subsidiary company,, that the decision by the PUC clearly reflects the fact that the country has a less than clear vision for the future of telecoms. “Unless changes are made, Guyana’s telecom sector is going to fall further and further behind.”
“GT&T repeatedly has requested spectrum necessary to provide 3G and we believe our competitor has done the same. The government could facilitate the deployment of 3G at any time by releasing spectrum to the legally licensed carriers.”
He said that due to inflation, real rates have actually fallen by almost 90 per cent.
“Even with the rate changes GT&T proposed, Guyana’s rates would still have remained among the lowest in the region.”

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