The U.S. Pacific Territories and Federal Telecommunications Policies: a Blueprint for the Future

THE U.S. PACIFIC TERRITORIES AND FEDERAL TELECOMMUNICATIONS POLICIES: A BLUEPRINT FOR THE FUTURE

Thomas K. Crowe*

Due to remote location, limited population and I. HISTORICAL BACKGROUND historically scarce representation before federal policy-makers in Washington, D.C., the U.S. Pacific A. Governmental Status of U.S. Pacific Territories territories have become the "lost children" of the United States in terms of telecommunications policy. Although there are three U.S. territories located in Not only do the territories pose thorny legal the Pacific that fly the United States flag, the Com- problems for the Federal Communications Commis- monwealth of the Northern Mariana Islands sion ("FCC"), but the FCC has been slow and hesi- ("CNMI"), the Territory of Guam, and the Terri- tant in moving to address Pacific territory issues. tory of American Samoa are not part of the fifty The problem is now so severe that the Pacific terri- states. CNMI has held U.S. commonwealth status tories risk being left off the emerging "Information since 1986.' By contrast, Guam is an "organized" Superhighway." Ironically, action by the FCC and territory since its civil government was established other federal policy-makers is precisely what is under the Guam Organic Act of 1950.2 American needed with respect to the territories. Federal inter- Samoa is an unorganized territory; it has a legisla- vention establishing rate integration, mandating ture and an elected governor, but the operation of equal access, and resolving numbering issues would the civil government is not the result of the enact- 8 promote more accessible, lower cost communications ment of an organic act. between the territories and the continental United The primary difference between a commonwealth States. and a territory is that the latter arguably entails a Part I of this paper discusses the inconsistencies greater level of autonomy and self-government over that exist in applying FCC policy to the U.S. Pacific internal matters." Indeed, Guam is currently seeking 5 territories. Part II discusses ways in which federal commonwealth status. The territorial status of the telecommunications policies may aid in integrating Pacific islands is not likely to become an issue with the U.S. territories into the U.S. social and economic respect to the application of federal telecommunica- infrastructure. Such solutions include applying three tion policies. primary federal policies: toll rate integration, North American Numbering Plan integration and equal B. Inconsistencies in Applying FCC Telecommuni- access. cations Policies to U.S. Pacific Islands

The Communications Act of 1934 ("Communica- tions Act") was enacted "[f]or the purpose of regu- lating interstate and foreign commerce in communi-

* Thomas K. Crowe is an attorney in private practice in Interior with Respect to the Northern Mariana Islands, Nov. 3, Washington, D.C. who currently serves as Regulatory Counsel 1986, 51 C.F.R. 40401 (1986), reprinted in, 48 U.S.C. § 1681. to the Society of Telecommunications Consultants. The author 2 48 U.S.C. §§ 1421-1428e (1988). gratefully acknowledges the invaluable assistance with respect to 8 See Jon M. Van Dyke, The Evolving Legal Relationships technical issues of Robert F. Kelley, Jr., formerly of Manage- ment Communications Services. The content of this article was Between the United States and Its Affiliated U.S.-Flag Islands, 14 U. REV. presented at the Pacific Telecommunications Conference held in HAW. L. 445, 450 (1992). Hawaii on January 22-26, 1995. 4 Id. at 451. 1 Exec. Order No. 12572, Authority of the Secretary of the 6 Id. COMMLAW CONSPECTUS [Vol. 3

cation by wire and radio so as to make available, so Connecticut and have an aggregate population of ap- far as possible, to all the people of the United States proximately 223,000 people. Moreover, the territo- a rapid, efficient, nation-wide, and world-wide wire ries are located approximately 5,500 miles from the and radio communication service . . ."I Section 153 continental U.S., closer to Japan than Hawaii. In of the Act defines the United States as "the several addition, the territories have limited representation States and Territories, the District of Columbia, and in Washington, D.C., where federal policy is cre- the possessions of the United States, but does not in- ated. As discussed below, unless the U.S. Pacific ter- clude the Canal Zone."7 Thus, it was clearly Con- ritories are to be excluded from the national telecom- gress' intent that all U.S. territories (even those not munications and information infrastructure, the yet in existence in 1934 when the Communications FCC and other federal policy-makers must take a Act was enacted) be subject to the Communications greater interest in the territories and affirmatively Act and federal telecommunications policy. However, consider them in policy-making actions. the FCC has been slow in exercising jurisdiction over the territories, as well as in applying federal II. A BLUEPRINT FOR THE FUTURE policies. Notwithstanding its statutory authority over the On September 15, 1994, the National Telecom- territories, the FCC has never quite known how to munications and Information Administration treat the Pacific territories from a regulatory stand- ("NTIA") released an "Agenda for Action" for the point. There is little question that the FCC has been National Information Infrastructure." The Agenda extremely reluctant to apply mainland U.S. telecom- for Action describes the role of government in pro- munications policies to the U.S. Pacific territories. moting the development of the telecommunications Most FCC policy actions simply fail to address, in and information infrastructure by the private sector, one way or another, whether general policies and in ensuring that all Americans have access to adopted will apply to the Pacific territories.' In fact, this infrastructure." The infrastructure is predicted the FCC has rarely exercised its authority to apply to connect the nation's businesses, residences, schools, federal telecommunications policies to CNMI or health care facilities and public information provid- American Samoa. It was not until 1992 that the ers through advanced, interactive, high-speed net- FCC expressly recognized the applicability of the works." One of the overarching themes of the Communications Act to the Territory of Guam.' Agenda for Action is that all Americans without ex- However, other FCC actions involving the Pacific ception have access to the emerging telecommunica- territories have led to confusion. For example, the tions and information infrastructure. Indeed, the FCC has expressly ruled that Guam is a domestic Agenda for Action is peppered with references to this point, 10 however telecommunications traffic originat- concept. For example, the Agenda for Action states: ing or terminating in Guam is processed through the International Division of the FCC and is tariffed as As a matter of fundamental fairness, this nation cannot accept a division of our people among telecommunications international traffic. Although Guam is deemed a or information "haves" and "have-nots." The Administra- domestic point, the FCC regulates virtually all tele- tion is committed to developing a broad, modern concept communications facilities between Guam and the of Universal Service-one that would emphasize giving all contiguous United States as international points. Americans who desire it easy, affordable access to advanced communications and information services, regard- The FCC's historical disinterest in the Pacific ter- less of income, disability, or location." ritories can be attributed to many factors. The most obvious is that CNMI, Guam and American Samoa The Agenda for Action also states: "because infor- together are approximately the size of the state of mation means empowerment, the government has a

- 47 U.S.C. § 151 (1988)(emphasis added). eign common carrier communications, originating or terminating Id. at § 153 (g). on Guam, to this Commission (footnote omitted)." Id. para s See, e.g., infra note 15. 1250. See In re IT&E Overseas, Inc. and PCI Communications, '0 See In re PCI Communications, Inc., 7 FCC Rcd. 63 Inc., Memorandum Opinion and Order, 7 FCC Rcd. 4023, (1992). para. 4-5 (1992). According to the FCC, "it is clear that the 11 See 58 Fed. Reg. 49,025 (1993). Communications Act was intended by Congress to apply, and applies, in every respect, to all radio and wire communications 12 Id. originating or terminating on the Territory of Guam, and that is Id. Congress gave exclusive jurisdiction over all interstate and for- 1I Id. at 49028 (emphasis added). 19951 U.S. PACIFIC TERRITORIES duty to ensure that all Americans have access to the In [the] case of message telephone service (MTS), any resources of the Information Age." 1 such proposal shall give maximum effect to the elimina- tion of overall distance as a major cost factor and should With this overriding universal service goal clearly be designed, in specific time phases if necessary, to inte- articulated, federal policy-makers must become more grate these three United States points into the uniform proactive in applying established procompetitive pol- mileage rate pattern that now obtains for the contiguous icies to the Pacific territories. The communications states, with all that such approach implies in terms of na- policies which will extend the information infra- tionwide cost averaging and equalization for interstate rate-making purposes.18 structure to the Pacific territories are already in place; however, they simply have never been applied to the territories. The balance of this paper identifies Since the FCC mandated rate integration over two three primary federal policies which, if applied to decades ago, rates for Alaska, Hawaii, Puerto Rico the Pacific territories, would significantly integrate and the U.S. Virgin Islands have been included them into the U.S. economic and communications within nationwide rate averaging. Consequently, in- infrastructure. terstate MTS rates for off-shore consumers at these locations have been greatly reduced. 9 The inclusion of CNMI, Guam and American Sa- A. Toll Rate Integration moa in mainland toll rate integration will signifi- Perhaps the best illustration of how the applica- cantly lower costs between Guam and other U.S. tion of federal telecommunications policies to the Pa- points. In the past, limited international facilities re- sulting in high costs may have been the reason that cific territories will benefit the citizens of those terri- 0 tories is rate integration." Rates between CNMI, Guam was left out of toll rate integration. Today, Guam and American Samoa are arguably three however, high capacity fiber optic circuits and a U.S. times higher than rates for calls of comparable dis- licensed communications satellite at longitude 174 tances under rate integration. Applying rate integra- degrees west make possible the full integration of tion to the Pacific territories, which can only occur Guam into mainland policy. by means of FCC intervention, will substantially re- An argument has been made before the FCC that duce off-island calling rates and, in the process, gen- non-integrated rates between the Pacific territories erate greater social and economic integration with and the United States are unlawfully discriminatory the mainland United States. under section 202(a) of the Communications Act."' In the early 1970's, before toll rate integration, in- Indeed, the FCC itself has stated that "a rate struc- terstate telephone rates for Telecommunication Mes- ture that uses different ratemaking methods to deter- sage Service ("MTS") to and from Alaska, Hawaii, mine the rates that different users pay for compara- Puerto Rico and the U.S. Virgin Islands were more ble services is inconsistent with the national policy than twice as high as interstate rates for comparable prohibiting unjust or unreasonable rate discrimina- distances within the contiguous states. In conjunction tion as expressed in section 202(a) of the Communi- with the introduction of satellite technology in the cations Act." 22 At this point, there seems to be little domestic telecommunications market, the FCC con- justification for the establishment of rate integration cluded that the charges for off-shore communication between certain off-shore points, such as Hawaii, services between Alaska, Hawaii, Puerto Rico and Puerto Rico and the U.S. Virgin Islands and not be- the Virgin Islands, and the contiguous states should tween other U.S. off-shore points such as the Pacific be integrated into one domestic rate pattern.1 7 The territories. In other words, such disparate ratemak- FCC mandated that: ing practices may be unlawful.

Id. at 49027 (emphasis added). F.C.C.2d 665 (1972), affd sub nom., Network Project v. FCC, 10 Rate integration recognizes that the advent of satellite 511 F. 2d 786 (D.C. Cir. 1975). communications has eliminated the physical cost considerations 1" See Integration of Rates and Services for the Provision of inherent in previously-existing land-based communications sys- Communications by Authorized Common Carriers, 50 Fed. Reg. tems, rendering satellite communications "distance insensitive." 41,714 (1985). As a result, distance, theoretically, is no longer a crucial factor in 20 Id. the ratemaking process, allowing rates to become "integrated." 21 See In re Guam Telecom, Ltd., L.C., File No. SCL-94- 17 In re General Communication Incorporated v. Alascom, 003 (filed Jul. 22, 1994). Section 202a of the Communications Inc., Memorandum Opinion and Order 2 FCC Rcd. 6479, para. Act states "[i]tshall be unlawful for any common carrier to 7 (1987). make any unjust or unreasoanble discrimination in charges, 1" Establishment of Domestic Communications Satellite Fa- practices . . . " 47 U.S.C. 202(a) (1988). cilities, 35 F.C.C.2d 844, para. 37 (1972), afTd on recon., 38 22 See supra note 19, at 41,716. COMMLAW CONSPECTUS [Vol. 3

There can be little argument that rate integration only U.S. states or territories that are not located in, will substantially reduce off-island calling rates to the NANP. Unlike the NANP, countries historically the benefit of citizens of the Pacific territories. Lower located in World Zone six and in other World Zones rates for calls between the Pacific territories and the each have distinct two or three-digit country codes. mainland U.S. will provide U.S. citizens living in the The country codes for the territories are as follows: territories with more affordable access to telecommu- CNMI-670; Guam-671; and American Sa- nications services, as well as promote social and eco- moa-684. Calls to the three U.S. territories can be nomic integration between the territories and the placed from countries either outside or within Zone U.S. mainland. However, this will only occur six by dialing the country code followed by the na- through federal intervention. tional number. Since the U.S. Pacific territories historically have been geographically located outside of the NANP, B. North American Numbering Plan Integration calls between the territories and all other points within the United States necessitate, the dialing of Assigning the U.S. Pacific territories either a col- additional digits. A call from Washington, D.C. to lective area code or their own unique area codes CNMI (or vice-versa) requires a thirteen digit dial- under the North American Numbering Plan would ing formula, in the format 011-670-NXX-XXXX. better serve to integrate the territories into the U.S. By including the U.S. Pacific territories under the communications infrastructure. Global telephone NANP, federal policy-makers would simplify dialing numbering historically has been broken down into between the United States (and other NANP points) nine "World Numbering Zones.""8 Geographically and the territories. Simplified dialing would make proximate countries have comprised each of the calling between the territories and the rest of the World Numbering Zones. For example, World United States easier, which in turn, would promote Numbering Zone one, also referred to as the North greater calling activity. Inclusion of the territories American Numbering Plan ("NANP"), consists of within the NANP would also bring the territories the United States, Canada, Bermuda and a number into the United States 1-800 toll free network. Such of Caribbean countries. Calls to countries in the a step would foster the integration of business mar- NANP can be placed from countries either outside kets in the mainland U.S. and the territories. Most or inside the NANP by dialing the country code importantly, a unified numbering zone would elimi- ("1") followed by the national destination code or nate the perception that calls between the mainland national number. U.S. and the territories are international, encourag- The NANP is unique in that all countries in the ing greater economic activity between the territories NANP have the same country code: "1". This means and the United States. simplified dialing for intra-NANP calling. For ex- Inclusion of the U.S. Pacific territories within the ample, a call placed from the Commonwealth of the NANP has been proposed before. The U.S. Depart- Bahamas (an NANP country) to Washington, D.C. ment of the Interior has explored the issue with the (also within the NANP) is only an 11-digit call, in NANP Administrator with the goal of promoting the the format 1-NPA-NXX-XXXX. The three U.S. "economic, social, and political development of the Pacific territories, by contrast, have historically been territories and the commonwealth". 2 4 The NANP located in World Numbering Zone six along with Administrator described the proposal as "technically Australia, New Zealand, the Republic of Singapore, feasible," and proposed three alternatives for accom- 5 Thailand, and numerous other countries in the south plishing this goal.2 These alternatives contemplate Pacific. The three U.S. Pacific territories are the assigning a collective area code to the three territo-

" See Numbering Plan for the ISDN Era, International NANP. The ITU is a specialized agency of the United Nations Telephone and Telegraph Consultative Committee ("CCITT"), whose primary function is to set technical standards for world Recommendation E.164, (1991). The CCITT has recom- telecommunications. mended, although the recommendation has not yet been formally "' See Letter from Stella Guerra, Assistant Secretary, Terri- adopted, that the break-out of country codes by World Number- torial and International Affairs, U.S. Department of the Inte- ing Zones be eliminated. See Complement to ITU-T Recom- rior, to Fred G. Gaechter, NANP Administrator (May 28, mendation E.164, CCITT, List of ITU-T Recommendation E. 1992) (on file with CommLaw Conspectus). 164 Assigned Country Codes (1994). Ultimate adoption of this "5 See Letter from Alfred Gaechter, Jr. , NANP Adminis- recommendation by the International Telecommunication Union trator, to Stella Guerra, Assistant Secretary, Territorial and In- ("ITU") would have no impact on the practical effect of as- ternational Affairs, U.S. Department of the Interior (July 17, signing the U.S. territories a collective area code under the 1992)(on file with CommLaw Conspectus). 1995] U.S. PACIFIC TERRITORIES ries; sharing an existing area code, such as Hawaii's mainland to CNMI, still require the full-blown 011 809 NPA code; and assigning a unique area code to dialing scheme. Apparently, 1+ dialing only can be each of the three territories. The NANP Administra- used in the CNMI for calling among the three popu- tor concluded in 1992 that assigning a collective area lated islands of Saipan, Rota and Tinian. Equal ac- code is the "only workable plan". 6 cess also has not been implemented in American Sa- There should be little question that assigning to moa. As of spring, 1995, the FCC has taken no the U.S. Pacific territories either a single area code affirmative action to implement equal access in either or their own unique area codes and including them the CNMI or American Samoa. under the NANP would better serve to integrate the By contrast, significant progress is being made to- territories into the U.S. communications infrastruc- wards the implementation of equal access in Guam. ture. There are no existing technical obstacles to this After extended legal proceedings on this question, step. Such a step would facilitate easier access to the the FCC, on September 16, 1994, issued a ruling communications infrastructure. A coordinated effort mandating that equal access be implemented in by the FCC, U.S Department of Interior, the U.S Guam.3 Although proceedings are ongoing before State Department, and the NANP Administration the FCC with respect to implementation details, the could make this a reality. local telephone company which serves Guam, Guam Telephone Authority ("GTA"), is currently in the process of converting its central office switches to the C. Equal Access FGD protocol. Implementing equal access2 through "1 +" dial- The FCC's decision to require the implementation ing in the U.S. Pacific territories is another step of equal access in Guam is based upon several con- which could be taken to facilitate integration into the siderations. First, the FCC found that equal access U.S. mainland economy. Equal access, or "l +" di- would maximize interexchange or long distance ser- aling, is a form of local exchange access that permits vice competition in Guam which, in turn, would end users to access the facilities of a predesignated drive down prices and lead to the introduction of in- 2 interexchange carrier ("IXC") by dialing "1," fol- novative service offerings. Specifically, the FCC lowed by the area code and seven digit telephone found that FGD permits access to more that 900 number.2 8 One of the features of equal access is IXCs, whereas the access arrangement currently "presubscription," which enables end users to pre- used on Guam, Centralized Automatic Message Ac- select a primary IXC prior to a central office conver- counting/Automatic Numbering Identification sion to equal access.29 Alternatively, the end user has ("CAMA/ANI"), limits the number of IXCs that the capability of using other IXCs by dialing a five- can serve Guam to ten. According to the FCC, digit access code (10XXX), followed by the area "[i]mposing an unnecessary and artificial limitation code and seven digit number."0 Equal access has on the number of IXCs that can serve Guam, by re- been implemented throughout the contiguous forty- taining the existing CAMA/ANI protocol, would eight states as well as in Hawaii, Puerto Rico and limit the potential benefits from interexchange com- the U.S. Virgin Islands. petition, and would further disadvantage Guamanian 33 Although the local telephone company serving the citizens of the United States." CNMI, Micronesian Telecommunications Corpora- Second, the FCC determined that because the tion ("MTC"), announced a conversion to Feature CAMA/ANI access protocol is a non-standard ac- Group D ("FGD") effective June 17, 1993, true cess protocol, it would be difficult and costly to im- equal access does not exist in the CNMI. Calls from plement upgrades over time. 4 The standard access CNMI to the U.S. mainland, as well as from the protocol in the United States is FGD. Manufactur-

26 Id. Divestiture Related Tariffs, Memorandum Opinion and Order, " Equal access has been generally defined by the courts as 101 F.C.C.2d 911 (1985). that access which is equal in type, quality, and price to that pro- 29 101 F.C.C2d 911, para. 1. vided to AT&T and its affiliates. United States v. American 30 Id. Telephone & Telegraph, 552 F. Supp. 131 (D.D.C. 1982), aff'd 3' See In re Guam Telephone Authority Petition for Declar- sub nom., Maryland v. United States, 460 U.S. 1001 (1983). atory Ruling, Memorandum Opinion and Order, 9 FCC Rcd. 2' See In re MTS and WATS Market Structure, Phase II, 4890 (1994) [hereinafter Guam Order]. Notice of Proposed Rulemaking, 94 F.C.C.2d 292 (1983); In re "' Id. para. 8. MTS and WATS Market Structure, Phase III, Report and Or- 33 Id. para. 9. der, 100 F.C.C.2d 860 (1985); In re Investigation of Access and " Id. para. 12. COMMLAW CONSPECTUS [Vol. 3 ers of telecommunications switching equipment and ever, all calls between the mainland U.S. and CNMI software will continue to design product upgrades to must still use the international ("011") dialing pat- be compatible with FGD, not CAMA/ANI." Be- tern, meaning that true equal access does not exist in cause of this, the FCC expressed concern that con- CNMI. "s This issue raises questions as to the tech- tinued use of CAMA/ANI would turn Guam into a nical feasibility of implementing true equal access in "technological 'backwater' ".A Guam. Finally, the FCC concluded that the access dialing The FCC's justifications for requiring the imple- pattern offered by FGD is superior to that currently mentation of equal access in Guam are equally ap- available under CAMA/ANI.3 7 Under CAMA/ plicable to CNMI and American Samoa. In particu- ANI, long distance calls cannot be placed without lar, equal access in CNMI and American Samoa first dialing a three-digit access code corresponding would promote IXC competition and lower prices; to a particular IXC." FGD, by contrast, only re- ensure that the access protocol in these territories quires the dialing of a one-digit access code "1" to does not become technically outmoded; and provide a route calls over the facilities of the presubscribed more rapid response system in the event of an emer- carrier. According to the FCC, gency. In addition, equal access implementation in all the territories would promote dialing uniformity [o]ne digit access is also faster than three-digit access for throughout the United States so that American long-distance emergency calls from Guam, where a rapid travellers and tourists would be familiar with dialing response may be essential to the national defense, or the patterns whether they are in the territories or on the safety or life or property. Given the frequency of typhoons mainland. In short, equal access in the territories on Guam, the recent earthquake, and Guam's remoteness would enhance the access of U.S. citizens in the Pa- from other portions of the United States, this considera- cific territories to the telecommunications tion may be of particular importance. 80 infrastructure.

Equal access implementation issues involving Guam are still being resolved before the FCC. For III. CONCLUSION example, subsequent to the FCC's ruling, IT&E Overseas, Inc. ("IT&E"), a major IXC serving the Guam market, filed a Petition for Clarification re- The existing federal policies of rate integration, questing that certain misstatements in the FCC's equal access, and inclusion in the NANP should be Order,"0 be corrected."1 The most significant issue applied to the U.S. Pacific territories in order to bet- involves the FCC's reliance upon the conversion to ter integrate the territories into the U.S. social and equal access which allegedly occurred in the CNMI. economic infrastructure. Just as important, these In particular, the FCC's decision appears to accept federal policies would help implement the Agenda the CNMI experience as support for the proposition for Action and ensure that U.S. citizens in the terri- that GTA will be able to "implement FGD so that tories have access to the "Information Superhigh- calls to Guam from the mainland will still use the way." Applying these policies would promote greater international ("011") dialing pattern, while calls to accessibility to communications services as well as the U.S. mainland from Guam will be on a "1 +" lower the cost such services between the territories basis."" As IT&E points out in its Petition, how- and the United States.

85 Id. ,' See Guam Order supra note 31. ae Id. para. 13. 41 See In re Guam Telephone Authority Petition for Declar- I7d. para. 19. atory Ruling, Petition for Clarification, filed Oct. 17, 1994. For example, MCI can be accessed by dialing 011, fol- [hereinafter IT&E Petition] lowed by 1 + (area code) + (seven digit number). The three- • Guam Order, supra note 31, para. 17. digit code must be used to place all long distance calls. 43 See IT&E Petition supra note 40 at 5. This is another a Guam Order supra note 31, para. 19. illustration of FCC inconsistency with respect to the territories.