The Public Utilities Commission (PUC) on Monday rebuffed charges by the Guyana Telephone and Telegraph Company Limited (GT&T) that it was tardy in dealing with its application for rate increases.

The PUC in a press release was responding to statements made by GT&T CEO, Sonita Jagan at a luncheon for the media on Friday on the company's financial position particularly in the light of a US Federal Communications Commission (FCC) ruling which has severely cut revenue from calls from the US to Guyana. This development has raised the issue of rebalancing of local rates to compensate for the loss of foreign revenues. GT&T has charged that the PUC was not responsive enough to this need.

In its rebuttal, the PUC pointed out that both itself and counsel for the consumer bodies had since 2000 tried to persuade the company to withdraw its application made in 1997 for rate increases and to file a fresh application to take account of the FCC's order. The PUC said that GT&T declined to do this. It was only after the FCC had refused GT&T's petition seeking a waiver of the lower rates in November 2001 that the company re-applied to the PUC for a rate increase taking account of the FCC order.

On this basis, the PUC said it had difficulty with the remark by Jagan that GT&T had sought to have rates rebalanced since 1997. The PUC pointed out that what the phone company applied for in 1997 were increases on local rates based on three grounds: devaluation of the local currency, dependency on audio text revenue and expansion of its network.

The PUC further pointed out that in 2001 Guyanese could not make contact with their relatives in the US as GT&T refused to negotiate with the US carrier AT&T on a reduction of the settlement rate paid to GT&T from US$0.85 to US$0.65. GT&T instead petitioned the FCC for a waiver through its parent company Atlantic Tele Network (ATN)

According to the commission, whilst rates in the Caribbean were gradually being adjusted to accommodate the US$0.23 benchmark rate from January 2002, GT&T wanted the US$0.85 settlement rates to remain in effect for the next five years.

The PUC noted that GT&T referred to its own court actions which helped stall the process. When the current Chairman Prem Persaud took over, PUC hearings on the 1997 application resumed in July 2000 and continued until December 2000. Jagan had pointed out that hearings only continued in June 2001 - a six month hiatus - but the PUC pointed out that she failed to explain why.

The PUC noted that in December 2000 the Commission had overruled an objection to counsel for the consumers and had ruled in favour of GT&T that it was entitled to a 15% rate of return. This prompted a challenge of the PUC's ruling in the High Court by the consumers and it was only on the completion of this challenge that the PUC was able to resume hearing the matter.

The PUC's release further outlined that rates in the Caribbean have been reduced gradually in keeping with the proposal by the FCC to phase in lower settlement rates.

"In other words, whilst rates in the Caribbean were gradually being reduced to reach 23 cents in 2002, GT&T wanted the rates with respect to Guyana to continue at 85 cents for the next five years". The PUC noted that throughout the Caribbean rates have been lowered and in some cases have gone down to US$0.19 per minute - below the FCC minimum. "The reason? Great increases in the volume of traffic as a result of cheaper calls", the PUC pointed out. The PUC noted that GT&T is aware of this. GT&T has argued that the US carriers do not necessarily pass on these cuts in rates to consumers so an increased volume of calls is not automatic.

The PUC also noted that the standard practice in the telecommunications industry is for settlement rates to be reciprocal. When US carriers pay GT&T US23 cents for calls from the USA, GT&T will in turn pay US23 cents to the USA for calls from Guyana.

The PUC also quoted from the FCC ruling rejecting the ATN/GT&T application for a waiver which said in part "ATN has not demonstrated in its petition that it cannot recover incremental costs at the benchmark of 23 cents... GT&T has had more than four years to make the transition from its consistently high settlement rate with US carriers to the benchmark rate of 23 cents".

The utility body also highlighted in its release that following its December 2001 ruling disposing of GT&T's 1997 application, it immediately published on its own initiative a notice fixing January 9 for a hearing to consider the consequences of the FCC reduction of the settlement rate. However, according to the commission, GT&T while acknowledging the body's move, decided that it would be more appropriate for it to file its own application.

While reiterating the PUC's commitment to both the company's right to earn profits and customers' right to receive value for their money, it emphasized that it has to hold the balance while not shirking or abandoning that responsibility.