PNCC given exclusive rights over all Telecom in Palau

​Fibre optic bill passed its 3rd reading in the Senate last week, after back-to-back sessions to address two major bills, the fibre optic submarine cable bill and the FY 2016 budget bill.

Congratulations though may not be in order yet, as people are still puzzling over the changes the Senate made to the House version of the Belau Submarine Cable Corporation bill.

The House bill 9-163, Belau Submarine Cable Corporation (BSCC), seeks to establish a public corporation to procure, own and manage a submarine cable to connect Palau to Guam.

Senate version which passed 3rd and final reading Wednesday, changed the corporation from BSCC to PNCC.  Beside giving PNCC ownership and management of fiber optic cable, it amended Title 15 Chapter 3 of Palau National Code, giving PNCC exclusive rights over telecommunications.  It asserted, “The PNCC has exclusive rights over all commercial telecommunications and telecommunications services within the Republic of Palau.  No one may operate a telecommunications services within the Republic of Palau without first obtaining a permit from PNCC.  PNCC may charge reasonable fees for the issuance of permits.”

PNCC will establish regulations of “fair and impartial process for granting permits…”.  Any telecommunications service already in operation, have one year to obtain license from PNCC, when this becomes law, according to Senate version.

Legislative finding of both House and Senate versions state that Palau’s “ICT policy holds that competitive telecommunications markets will encourage investment, improve service quality and choice, and allow for efficient pricing.”  

House version states, “…ADB has made the Republic’s establishment of a company to be the implementing agency for the project, capable of treating all service providers using submarine cable capacity in a non-discriminatory manner, to be a pre-requisite for ADB board approval …..this bill establishes a state owned corporation known as Belau Submarine Cable Corporation…”.

Senate version strikes out the House and inserted the following, “”….ADB desires that the agency responsible for implementing the project treat all service providers using submarine cable capacity in a non-discriminatory manner. This bill specifically authorizes Palau National Communications Corporation (PNCC) to procure and manage the fiber optic cable and to treat all service providers using submarine cable capacity in non-discriminatory manner.”

In the Senate Committee report, it cites as its major concern the fact that a project of this scale will cause Palau to incur debt citing specific government and government entities debts, including PNCC’s debt to RUS.  It cited that according to PNCC reports, cost of servicing the RUS debt is a root of its failure to generate profit.

Committee report cites that PNCC will be at” disadvantage amongst its potential competitors” and that “liberalization at this time ….may jeopardize the existence of universal services PNCC provides to people of Palau….  We must ensure as well the job security of the many citizens who at PNCC by not jeopardizing its existence under disadvantageous circumstances the law may cause to occur”, states the report.

The committee report also cites World Bank documents that states that Palau’s “legal and regulatory framework is outdated, extremely limited and deals only with radio spectrum regulation….have no laws governing basic telecommunications market oversight” and therefore the committee recommends that PNCC should be the implementing agency of the fiber optic cable project.

“It is the Committee’s view that these changes will allow PNCC to pay down its existing debt incurred from the RUS loan and present the most efficient way to improve telecommunications service within Palau.”

The bill tasks PNCC to work with the government to seek out sources of funding for the submarine cable.

It is noted that the recently held Leadership Forum, it was clarified that ADB will not entertain a loan to PNCC due to its current debt which is about $30 million dollars.

The Senate version of the bill also included commitment funds for Sea-US Cable and procurement waiver.

Asked whether this version of the bill will be able to garner ADB Board approval of loan funding, Director Silas of MicroPal said no.