President Tommy E. Remengesau Jr. returned to OEK House bill 10-116,HD1,SD1 which sought to extend moratorium on issuance of new telcom business licenses for 10 years and to allow PNCC to deduct its RUS loan payments and other related cost from its Universal Service Access Fee.
Current law, RPPL 10-17 require all telecom service providers to pay 15% of their revenue to a Universal Service Access Fund, administered by the Bureau of Communications under the Ministry of Public Infrastructure and Industries. The law says that the Bureau will use the funds it collects to pay RUS loan obligation first and then fund projects that expands into the “underserved” or have limited telecom access. These funds can be applied for by the licensed telecom service providers in Palau.
Remengesau says that although he supports the intention of the bill to “smooth administrative issues in our Bureau of Communications”, the bill as it is written “would be a large step back toward preferential treatment for PNCC” and “neutralize the Bureau’s universal access role almost entirely.”
In his referral letter to OEK leadership on the bill, Remengesau said that the purpose of RPPL 10-17 law was “to mark a new era in telecommunications for Palau”, referring to the Telecom Act of 2017. Furthermore, he said that the intent of that law was not to “protect a government monopoly” but “to ensure that Palauan consumers receive reliable telecommunications service at a reasonable and competitive cost.”
That law he said also did not “unfairly prejudice existing providers” and allowed them two-year head start by establishing moratorium on new licenses in two years- time. It also gave Bureau of Communications authority to extend moratorium for two more years if needed.
The law also created universal access levy or tax in order to generate funding for “projects in underserved communities” approved by the Bureau of Communications. The law also sought to spread the PNCC’s legacy debt to RUS by having Bureau of Communications collect the levy and pay RUS first.
The bill as it is written will essentially remove PNCC from the Universal Access System and eliminates the role of the Bureau of Communications, “a large step back toward preferential treatment for PNCC.”
Remengesau proposed that the process requested by PNCC to pay RUS directly proceed but the term “deducted” be changed to “credited” to reflect the correct relationship between PNCC and Bureau of Communications which is PNCC’s regulator. Furthermore, he recommended that the language which says “any other cost associated with PNCC providing telecommunications services to underserved communities” be deleted otherwise it will “neutralize the Bureau’s universal access role almost entirely”.
Extending a moratorium on new telcos for 10 years is too long according to Remengesau and he recommended that the Bureau of Communications be authorized to adjust the moratorium on year-by-year basis based on proper justifications.
The bill was introduced seeking a 10-year moratorium on issuance of new frequencies and new telecommunications businesses citing challenges faced by existing providers due to COVID impact. It also sought to amend the language of the Telecom Act of 2017, allowing PNCC to pay its loan to RUS directly and have it deducted from its 15% Universal Access Levy in additional to other costs it acquires by expanding its services to “underserved” communities.