GT&T should have advised about likely calls block - company chairman

by Robert Bazil
Guyana Chronicle
January 11, 2000

ATLANTIC Tele-Network (ATN) Chairman, Mr Cornelius Prior, yesterday admitted that the Guyana Telephone and Telegraph Company (GT&T) which it owns should have informed customers that its contract with the American giant AT&T for calls from the United States to this country could have ended abruptly on December 31.

He told a press conference at the GTV Channel 11 studios in Georgetown that it came as a big surprise that AT&T had eventually kept its word and terminated its operating agreement with GT&T.

According to Prior, the local company did not think AT&T would have risked losing its customers by taking such action.

AT&T yesterday confirmed it has made alternative arrangements for its customers to call Guyana, but spokesperson Valerie Hasselbach declined to name the carrier.

She said AT&T was still talking to GT&T on the matter.

Prior said MCI, another U.S. carrier was now paying GT&T US$0.85 to terminate calls in Guyana which AT&T refused to pay after December 31, pressing for a lower accounting rate of US$0.23.

He said GT&T has the exact form of contract with MCI that it had with AT&T, which requires one year advance notice of termination.

Asked what will happen when MCI brings down accounting rates in keeping with a U.S. Federal Communication Commission (FCC) ruling that puts a ceiling on the rates paid to foreign telephone companies by U.S. phone firms, for calls originating from the U.S., Prior said it was not clear that MCI will abide with that.

The company is continuing to explore with its lawyers in Washington D.C. the actions it can take to keep GT&T's rates at the current levels, he said.

"We have another year to negotiate...MCI does not seem to be in any particular rush...they have given us no pressure whatsoever to reduce rates and it is not clear that they will reduce rates in the year 2001."

On contingency plans the company has in the event that the arrangement with MCI falls through, Prior stated that another U.S carrier, Sprint, called ATN in its St. Thomas, U.S. Virgin Islands base indicating an interest in opening up direct links with them.

Noting that Sprint is the third largest U.S. carrier, Prior said he hopes to carry those negotiations forward in the months ahead.

He feels it is unlikely now that AT&T will change its mind and pay the original fee after going through years of negotiations which resulted in the cancellation of the contract.

On the implications for the domestic rate if GT&T complies with the FCC ruling, Prior pointed out that about two-thirds of the company's revenue come from international inbound long-distance traffic from all over the world - half of it from the United States.

According to him, if a major reduction of accounting rates for incoming traffic is forced on GT&T for international rates, this will put great pressure to increase local rates to provide the 15 per cent rate of return on investment provided for in GT&T's contract with the Government of Guyana.

"The return on investment comes from rates of all kind...if one rate is forced to go all the way down then, obviously, there has to be some other rate that comes up, because the total revenue requirement has not changed," he argued.

The ATN Chairman maintained that the investment in plant in Guyana was now over US$115M and that does not change just because AT&T decides to terminate arrangements to send traffic here.

He could not say how much revenue was lost over the holidays because of the AT&T/GT&T fallout, but said he has since examined the traffic for the first six days of the year.

By January 6 the number of minutes from the world to Guyana reached 245,000 compared to 249,000 the year before. There was no traffic from the United States from AT&T on January 6 this year, compared to 115,000 minutes the year before.

But MCI, which only had 40,000 minutes of traffic in 1999 for the same period, had gone up to 161,000 this year, he reported.

"This year the minutes were 161, there was a temporary disadvantage while the AT&T customers had to scurry around and realise that their long distance company was not being completely honest with them; that circuits were not blocked and it was possible to dial around AT&T, Sprint or any other long-distance carrier who connected to MCI in order to get here," he said.

Prior stressed that the numbers show that the situation has gone back to normal and the AT&T action has not had any lasting damage.

He confirmed that callers were now getting through on AT&T circuits but could not say which was the carrier to Guyana.

"I am happy to say that although there was some inconvenience for the American customers on AT&T, it was a very temporary situation...the lines have now been completely re-routed through MCI and traffic is back to normal from the United States," he reiterated.

Prior said a formal approach to the Public Utilities Commission (PUC) for an increase in local rates was made on December 30, 1997. Among other things, it calls on the local residential rate to go from US$1.50 to US$5.

This case has been pending for two years and has been the subject of media attention from time to time, he noted.

PUC Secretary, Mr Anthony Nurse said Sunday that the GT&T/AT&T incident will be discussed at a meeting today.

After news of the disruption broke last week, Nurse said the PUC's main interest was that of the subscribers.

Over the weekend there appeared to have been an unblocking of the calls from the U.S. with AT&T customers being able to call Guyana without trouble.

GT&T last week blamed the disruption on AT&T but the U.S. firm charged that it was the local company that began blocking calls from midnight December 31 last December because it was not agreeing to a lower accounting rate.

Also at the press conference yesterday were GT&T's Deputy General Manager Public Communication, Mr Terry Holder; General Manager External Affairs, Mr Godfrey Statia and General Manager Internal Affairs, Ms Sonita Jagan.

...confirms no dividend yet for government

CHAIRMAN of the Atlantic Tele-Network (ATN), Mr Cornelius Prior, yesterday confirmed that the Government of Guyana, a 20 per cent shareholder in the Guyana Telephone and Telegraph Company (GT&T), has not yet received any dividend from the 10-year-old company.

"If you mean cash in their hand, the answer is none...if you mean how much of the US$115M of investment in telephone plant does the government own, the answer is approximately US$30M," Prior told reporters.

He claimed that the government's investment in GT&T has multiplied extraordinarily because of the success of GT&T in going from 13,500 lines to 63,000 lines today.

"They own 20 per cent of a much larger company...and it is worth a lot of money today," he said.

"The question is a complicated one because you have to make a decision like any company does as to whether you would rather pay dividend or invest the money in more plant and facilities," he argued.

He said that in past years, although some parts of the government have been crying for dividend, other sections have been quite happy that "we have expanded" the network.

"...And the money has gone into the expansion of the network alongside of Atlantic Tele-Network's (ATN) money...for every ten dollars that goes to provide new telephone service, the government has provided two dollars", he claimed.

Prior maintained that the government has been receiving the benefits of the increased net value of GT&T, adding that it owns 20 per cent of a company with more than US$100M in net worth at the present time.

Critics of the arrangement have argued that while GT&T claims it must have a higher international calls accounting rate to maintain the level of foreign exchange flow into the country, the government gets none of this currency.

Residential customers will suffer from competition
- GT&T boss claims

THE Guyana Telephone and Telegraph Company (GT&T) is not opposed to competition in principle, but if introduced, residential customers will suffer, parent Atlantic Tele-Network Chairman, Mr Cornelius Prior claimed yesterday.

Asked at a press conference in Georgetown whether he was willing to open GT&T to competition, he replied, "as long as everybody understands what is involved."

He said this will mean a trade-off of the ability to provide low-cost service - (US$1.50) a month to residential subscribers, in favour of offering lower rates for the business community and large international users.

Prior charged that this will result in few new phones being added to the system and rates for residential customers will climb.

In 1991 ATN signed a contract with the Government of Guyana, which, in return for receiving a monopoly, the firm agreed to invest substantial sums of money here.

"We have gone way beyond what was required...we have now invested US$115M in the telecommunication infrastructure in Guyana," he said.

Prior argued that the telephone penetration has gone from two per cent to 11 per cent today which was only possible because of massive investment over this period.

"I think that we are witness to the fact that with this huge investment, which has to be paid for...and I urge the government to agree with Dr (Roger) Luncheon (Head of the Presidential Secretariat) that this contract was made in good faith", he said.

"...and that Guyana has obtained the beneficial results...expected from that contract and that it should continue to observe that contract," he urged.

On a social level, he added that there is a strong argument to be made in keeping the contract the way it is.

Prior argued that in countries where competition has been introduced, 90 per cent of the beneficiaries are the business community because they have the large monthly bills.

He declared: "So if you are going to start competing with GT&T, who are you going to go after? The lady in West Ruimveldt (Georgetown) with the chicken farm? Or are you going to go after Demerara Distillers Limited and Banks DIH Limited?"

He added that it does not take long to figure out where competing companies will go, stating that that is exactly what has happened when competition has been introduced in the developed world.

The competition is intense in New York City while in Iowa it practically does not exist, he said.

"Everybody who starts to get into telecommunications business goes for where the action is, where the big money is to be made; and the result of opening it up to competition is that no one is going to want to provide lines to the people of some areas," he contended. (ROBERT BAZIL)

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