Dec. 12, 2001 – Cornelius Prior got the biggest Rotary II applause Wednesday on St. Thomas when he responded to the last question of the day: Why hasn't he gone into global telecommunications, where there's much more money to be made, instead of staying with local telephone service?
Because, he said, "I'm happier doing what I know, among my friends of 14 years."
Prior, owner of Atlantic Tele-Network and its subsidiaries Wireless World and VIAccess, said he has been spending most of his time lately in Haiti, Bermuda and Guyana. Speaking on "The Future of the V.I. Telecommunication Industry" at a luncheon at Marriott's Frenchman's Reef Beach Resort, he briefly traced the growth of local telephone service from the days when companies were very small and without interconnectivity. "Poles and lines were all up and down the streets of New York City," for example, he said.
Theodore Vail, an American capitalist who had been active in telephone companies and had introduced electric street lighting in Buenos Aires, considered interconnectivity crucial, Prior said. Vail started and became president in 1907 of American Telegraph and Telephone Co., which would hold a comfortable monopoly of America's phone business for over 50 years.
AT&T was a good thing for the Virgin Islands, Prior said, as the company provided minimal poles and efficient monopoly operations. During that time, in the Virgin Islands and in the United States, he said, the first government regulatory oversight emerged — the idea of public utilities commissions.
Entering this picture at the end of World War I was a Virgin Islander, Sosthenes Behn. After acquiring a small telephone company in Puerto Rico, he decided to start IT&T — International Telephone and Telegraph Corp. Abroad, Prior said, most governments insisted on "being the phone company," thus instituting regulated monopoly systems. Behn wanted to tap into that potential market.
(In 1959, ITT — having dropped the ampersand — bought the Virgin Islands telephone company from the V.I. government. It would own the company — Vitelco — until Prior and his then-partner Jeffrey Prosser and their company, ATN, acquired it in 1987.)
Privatization became a buzzword of the last two decades of the 20th century, Prior told the Rotarians. In 1981, Prime Minister Margaret Thatcher privatized British Telecom, thus starting Europe on the new trend toward systems patterned on the United States idea of private telephone companies.
In 1991, Prior said, Guyana went to privatization, with a monopoly subject to a regulatory commission. (That monopoly has since been held by ATN.) Curacao is looking now for private buyers, as it joins world governments "changing their minds about owning the phone companies," he said.
With local and long-distance services separating, the idea of competition was introduced among public and private companies in 1984, Prior said. Competition for local exchange business prompted passage of the federal Telecomunications Act of 1996, which requires existing carriers, upon reasonable request, to interconnect directly with the facilities and equipment of other carriers.
Companies immediately took up the idea in cities, Prior said, but Congress, recognizing a different situation in rural areas, passed a "rural exemption" which empowered small communities to make independent decisions through their public utilities commissions about whether to allow competition.
Last year, Prior said, his company Wireless World notified Innovative Telephone, formerly Vitelco, that it wanted to compete as a local provider, and it petitioned the Public Services Commission to do so. The PSC asked its legal counsel, Frederick Watts, to hold hearings and make a recommendation, as the two companies were not able to reach agreement.
The "rural exemption" condition has a three-fold test, Prior said: First, is allowing competition technically feasible? Second, will a competitor not "unduly burden economically" the present company? And third, will the concept of "universal service" be maintained? He said "universal service" has been defined as "affordable phones for virtually all residents."
Prior said Watts recommended against the petition on the third basis, saying if competition were allowed, there would be danger that customers would suffer. "It is reasonable," Prior quoted Watts as saying, "to expect Innovative to rebalance by increasing residential users' cost." (For the Source account of the PSC decision and Watts' comments, see the September story "PSC says no to local telephone competition".)
Prior told the Rotarians he disagrees, noting that the telephone company could increase rates only with PSC permission. He said the ruling seemed to suggest that "in the future, the PSC might change from its historical reluctance to allow increased rates." But if Wireless World were to enter the market with cheaper and better equipment, he said, Innovative's response would not be to raise rates.
(Innovative, formerly Vitelco, is owned outright today by Prosser, Prior's former partner. The two of them split up a decade after buying Vitelco. Prosser kept the V.I. phone company and Prior retained ATN and its other holdings, notably the Guyana phone company.)
Wireless World has appealed to PSC to reconsider the decision, and Prior said he hopes hearings will be considered soon.
