Chuuk stakeholders apply pressure to implement fiber optic services as fast as possible

By Bill Jaynes

The Kaselehlie Press

August 1, 2018

Palikir, Pohnpei—Senator Victor Gouland, Chair of the FSM Congress Standing Committee on Transportation and Communications called an oversite hearing that was held today on the matter of the implementation of the Chuuk fiber optic cable.

President Christian has sent appropriations bills with changing amounts to facilitate the final installation of the fiber optic cable that was landed in Chuuk several months ago.  It is an issue that has become politically charged as stakeholders try to implement fiber optic service as quickly as possible, so much so in fact that the highly paid CEO of FSM’s Open Access Entity (OAE), Adolfo Montenegro resigned last week from the FSM Telecommunications Cable Corporation (FSMTCC, not to be confused with FSMTC).  Even during the committee hearing, it was difficult to know which, if any of the stories that witnesses gave completely represented the story which is still being sorted out.

As best we understand it from the committee hearing, several months ago FSMTCC (OAE) put out a request for bids to handle all aspects of the operationalization of the fiber optic cable in Weno.  That project would have been paid for by a grant from the World Bank.  FSMTC (FSM Telecommunications Corporation) did not bid on that project.  FSMTCC (OAE) proceeded to negotiate with a landholder for the construction of a small building on the grounds of the L5 Hotel to house the equipment for the cable.  The cable would then run from that small building to FSMTC.

Apparently, though the negotiated lease was for a period of time that coincided with the expected life of the cable, concerns arose that the building was to be built on non-government land.

FSMTCC (OAE) says that it would take about a year to implement the plan as they had organized it and agrees that if it didn’t have to build a new facility it would be much quicker.

Chuuk’s stakeholders in the government asked if a quicker solution could be found so that Chuuk could get fiber service as fast as possible.  FSMTC offered a building on their property that they said could be used.  FSMTC CEO Fredy Perman testified that FSMTC has already spent a significant amount of money on renovations and equipment for that building.

At the hearing, Perman said that if they were to take on the project in the building they offered, the fiber could be up and providing services as soon as September or October of this year.  He said that if another contractor was hired to handle the other components of running the cable, the timeline would be dependent upon however long it took that contractor to do the work.

FSM Chief of Staff Leo Falcam testified that the President would need to downscale the supplemental budget request he sent to Congress in order to reflect savings the FSM would realize if the cable is housed at FSMTC.  The most recent figure sent by the President was $1 million.  By the end of the committee hearing, no final figure had been decided, though the numbers that were discussed were significantly lower than $1 million.

Though on the face of it the situation appears to be a simple one, it’s actually quite complex due to the requirements of the World Bank funding and the FSM relationship with World Bank which anecdotally has already provided and has committed to provide more funding to the FSM than anywhere else in the Pacific. The initial grants to run the undersea fiber optic line were predicated on telecommunications liberalization in the FSM.  FSMTCC (OAE) was established as the FSM response to World Bank’s requirements that mechanisms for free and fair competition be put into place.

Even OAE has agreed that mechanisms can be put in place to ensure that, even if the cable facility ends up on FSMTC’s grounds, it doesn’t interfere with competition, so that may not be the most important issue.  At issue now, based on our understanding of the hearing, is the question of whether or not the World Bank would reimburse the FSM if the FSM proceeds with providing money to establish the cable that it then gives to FSMTC to do work on a project it didn’t bid on in the first place.

Perman didn’t respond to our request for information on the implementation of the Chuuk fiber optic line and did not testify at the hearing on the reasons that FSMTC decided not to bid on the project.

FSM Department of Finance and Administration consultant Rob Solomon testified that in the 24 hours before the hearing, World Bank had indicated that they would be alright with having the facility at FSMTC.  He described conditions under which World Bank could reimburse installation expenses if the cable was housed at FSMTC. 

Gordon Segal, Acting CEO of FSMTCC (OAE), later said that he also has direct contact with World Bank but his understanding is different.  He said that World Bank requires a bidding process and FSMTC did not bid.  He indicated that the situation is much more complex than what he heard at the hearing.

At press time, the matter is still before Congress during the special session that President Christian called, in part, to deal with this issue.