Bert Caldwell : There are a few hangups in this phone bill
Legislation that would allow telephone companies to increase residential rates by one-third or more over five years was introduced in the Washington House and Senate last week.
Beyond five years, the companies would be free to raise rates with no say-so from the state’s Utilities and Transportation Commission, which has regulated the pricing of land-line telephone service for decades. The commission’s role would largely be limited to resolving consumer complaints.
Verizon Communications helped draft the bill, which spokesman Kevin Laverty says is a response to steep declines in the number of customers using basic, land-line telephone service. Since 2002, 25 percent of Verizon’s land-line customers have canceled the service and turned to cellular or Internet telephone service.
Verizon sells cellular service, and would like to expand its fiber-optic network, and with it broadband services that could include television. The utilities commission does not regulate cell or Internet service pricing.
With land line, cellular and broadband, Verizon would be able to bundle the services the way non-traditional telephone service providers like Comcast are doing.
Bundling is good. Getting customers who will not be the beneficiaries to carry that bundle is bad. Those customers live in Eastern and Central Washington.
That’s a problem for utilities commission Chairman Mark Sidran, who says many rural customers will have no choice but to absorb higher rates for basic phone service. Even where alternatives are available, he says, the costs are much higher.
He likens the $1-per-month rate increase Verizon or other telephone companies could impose every year in the first five years after enactment of the bill to “boiling a frog.”
A $1-per-year rate increase may seem small, he says, but the cumulative impact is not. The commission has never allowed Verizon or Qwest Communications, Washington’s largest phone company, rate increases anything like $5 over five years.
And the legislation would also allow a telephone company to charge customers in Eastern Washington a rate 20 percent higher than that imposed on Seattle-area customers. Historically, all customers in the state paid the same rate despite an obvious fact — the cost of delivering telephone service in, for example, Okanogan County is higher than it is for Snohomish County.
But Edmond customers can choose cellular or Internet-based telephone service if they do not want to pay a higher Verizon bill, Sidran says. Someone in Tonasket does not have all those options.
“Is Verizon going to roll out its broadband network in all areas where it provides land-line service?” he asks. “There are all kinds of issues in play.”
Although Verizon claims increased revenues would be plowed back into its Puget Sound-area broadband network, Sidran notes, “there’s no obligation to invest that money anywhere, in anything.”
He adds that Qwest, rather than seeking relief from regulation in the Legislature, is working with the commission under rules that give telephone companies more pricing flexibility so they can remain competitive.
“We think the process works really well,” says Qwest spokeswoman Sasha Richardson, who adds that the company is not taking a position on the Verizon bill.
The new bill gives companies the option of sticking with traditional regulation, follow Qwest in seeking more flexibility, or Verizon’s alternative.
Sidran says the path Qwest has adopted at least keeps regulators in a position to review rate changes to assure a balance between the public interest and the business needs of telecommunications carriers. The commission wants to be accommodating.
“Our state policy is to favor competition over regulation,” Sidran says.
Traditional regulation was designed to restrain the monopolies that for decades controlled basic telephone service. Although monopolies are largely history, consumers without the service options available in a Seattle or Spokane still deserve protection.
Verizon’s bill would prematurely strip that away.