Serious questions for MTA

I sincerely appreciated the many phone calls I received following my recent Spectrum regarding MTA. One of the most interesting calls came from a current MTA board member who wanted to explain certain issues to me as well as listen to my concerns. I appreciate and respect his efforts. I explained that my frustrations as a long-term loyal member-owner came from wanting my cooperative to survive the multiple issues facing it and my fear that it won’t.

First, he assured me that no current board member attended the Alaska Telephone Association’s meeting in Hawaii. He and I agreed that attending such a meeting does not support Alaska business. He did not, however, speak for the general manager and staff regarding their attendance. He recognized the MTA does in fact face competition, but stated that MTA had lost a smaller percentage of its customers than other telecommunication companies in the state when competition entered their service areas. Losing a “smaller percentage” may look good on the surface; however, the real issue is which customers are going over to the competition.

MTA’s service area is basically the bedroom community of Anchorage and the bulk of MTA’s customers are single-line small businesses or residential services. Competitors can simply cherry-pick the high-revenue customers and leave the lower revenue generating customers to MTA. The “smaller percentage” of lost customers in numbers is not an accurate picture of the effect of competition on MTA. The real question to ask and have answered is what’s the percent of revenue lost?

When asked if the board was aware of the $300,000 commitment to the Palmer Ice Rink, the board member indicated he thought it had been mentioned a couple of times in the general manager’s oral report to the board. In the first place, I have problems with an “oral report” to the board, as there is no paper trail to review and study what was actually said. I did ask the board member if any of the board questioned the $300,000 commitment when it was mentioned by the general manager.

He said not to his knowledge. I asked if the $300,000 was considered advertising, and the board member said yes. I then asked what he thought the owners in Wasilla, Eagle River/Chugiak, Sutton, Big Lake and on up to Healy got out of the advertising investment? He said probably not much.

I also asked him if he thought, upon hearing about the amount of money being invested in advertising in Palmer, one or more of the board members should have spoken up suggesting there might be a better use of those dollars. He said perhaps, but the board had given the general manager the authority to make those kinds of decisions.

In my opinion, this is an excellent example of the board not fulfilling its responsibility to the owners who elected them to make the best decisions for all of MTA’s owners. The board member and I discussed other issues facing MTA: Concerns over the status of the Universal Service Funds (USF) and access revenue; and the need to continually invest in new technology in order to remain competitive. The Universal Service Funds and Access revenues basically are subsidies to maintain services and rates comparable to those in urban areas.

The uncertain status of the USF and access revenue could represent a significant decrease in revenue and that would result in a potential significant increase in the cost of service to MTA owners. The general manager, in his annual meeting speech, clearly stated that these two sources of revenue make up almost 50 percent of MTA’s total company revenue. With competition cherry-picking high-revenue customers and the potential decrease in USF and access revenues, MTA’s board and administration must make better financial decisions than those demonstrated to date.

When I asked about the general manager’s compensation package, the board member indicated that the board felt he was still underpaid. I asked how they came to that conclusion. He indicated they had a survey completed by a nationally reputable firm in order to determine appropriate compensation. I said I assume that survey was taken using other REA telephone cooperative managers. He said no, because there were many small co-ops whose general managers made much less and the board felt MTA’s general manager should be compensated more closely to those executives who run the companies currently in competition with MTA.

At this point, the board member and I decided this was a point on which we would agree to disagree. I think it’s important for MTA owners to recognize that the competing companies are investor-owned companies serving statewide and nationwide service areas, not an REA cooperative serving a much smaller area. I am personally appalled by the board’s method of determining the general manager’s compensation, and even more so when I learned that the board still considers him underpaid. Also, the board did not mention — nor did the general manager in his annual meeting report — the significantly underfunded MTA employee retirement plan. That issue should be of significant concern to the current MTA employees who may face a retirement at a significantly reduced standard of living. Making that plan financially whole will take thousands of dollars.

With all the issues discussed above, I still have significant concerns regarding the financial decisions being made by the general manager and the board (i.e. $300,000 commitment to the Palmer Ice Rink; board’s attitude regarding the level of and method for determining the general manager’s compensation package; annual bonus given to the general manager based on some criteria that does not reflect the reality of MTA’s current situation; and the $1,000 bonus awarded to each employee this past year. Wouldn’t that money be better spent to help the underfunded retirement plan?).

Financial decisions currently being made by the existing board and management appear to be very shortsighted and self-serving. Both the board and management have expressed awareness of the tidal wave of financial issues facing MTA but seem unable, unwilling or unqualified to make the necessary decisions that are in the best interests of all MTA owners.

Faye Palin lives in Wasilla and retired from MTA as a vice president of customer service.