Phone Companies Lining Up For Local Service Federal Law, Puc Open Door To Competition For Local Customers

Remember the blitz of phone companies calling at dinner time, trying to sell you their long-distance service?

“You ain’t seen nothing yet,” said Joe Cusick, telecommunications section supervisor at the Idaho Public Utilities Commission.

Now that Congress has ordered local phone service deregulated, big changes are in store. Three companies already have won approval to compete with GTE to offer local telephone service in North Idaho. Nine more applications are pending.

How all this will play out is partly up to the Idaho Legislature, which is being asked to enact legislation this year putting the federal changes into effect. That’s why dark-suited telecommunications lobbyists are swarming the Statehouse, proposals are flying and consumer groups are getting nervous.

“I don’t know what will happen. It depends on how it’s done,” said Al Fothergill, head of the Idaho Citizens Coalition, which represents low-income customers in phone rate cases. “The chances are with a Legislature such as ours, they may not know either. And they may make a wrong move.”

The stakes are high because there’s so much money in telephone service - close to $100 million a year just in Idaho - and because companies stand to gain even more by using local phone service as a hook to get customers to buy into their full range of other telecommunications services.

“It’s going to mean lowering of prices, better technology and a higher end of customer service,” said an enthusiastic Mitzi Sachs, vice president/general manager of Vancouver, Wash.-based GST Telecommunications.

Her company already is laying fiber optic cable in downtown Spokane, and planning to offer businesses in Coeur d’Alene and Post Falls a full array of phone, long distance, data transmission and Internet services. It even offers web site design and web site hosting.

But GST won’t offer residential phone service. And that’s where prices may rise.

One problem with opening local phone service to competition is that there’s only one network of lines running to folks’ homes. That hasn’t been a problem, as long as the business was a regulated monopoly.

But because it’s not practical for competitors to run competing lines to everyone’s homes right off, Congress has ordered existing telephone companies to let competitors use their lines, and to give them a discount.

That’s caused an outcry from the existing companies, who say they’ve been subsidizing residential phone service by charging more for businesses, long distance and other services. If current rates are the standard, they say, they’ll have to give their competitors a deal that won’t even cover their costs.

US West, the main phone service provider in southern Idaho, has responded by requesting a huge rate increase. The company also wants to charge competitors a fee to cover the $16 million it says it’s spent to prepare to open its system to competitors. Both requests are pending before the Idaho Public Utilities Commission.

The PUC staff disagrees with US West’s arguments on what subsidizes what, and has recommended against the increase.

GTE hasn’t requested a rate increase - yet.

“We have no plans right now on a rate increase, no,” said Fred Logan, a GTE official in Beaverton, Ore. But as the process of deregulation moves forward, Logan said, “That could take place.”

GTE has filed with the PUC plans to restructure its rates for toll calls, to make them simpler and to lower them a bit overall. That fits in with national trends toward simple long-distance rates that can be easily advertised to the public.

Bob Wayt, public affairs manager for GTE for Oregon and Idaho, said, “We have supported competition in the industry for quite a while. We feel that it will bring a wide range of benefits to our customers, including faster delivery of products and services at competitive pricing.”

Eileen Benner, who held Cusick’s job at the PUC until September, when she became an executive with AT&T, said, “I think the long-distance market is a good example of what will happen.”

Before AT&T was broken up in 1984, many feared escalating rates and confusion, she said.

“As it turned out, the sky did not fall on AT&T. … AT&T now earns more revenue than it did then, even with a significantly reduced market share, and even though it’s reduced its rates substantially.”

That’s because the explosion of facsimile machines and online computer use created “more phone lines than could ever have been imagined 10 years ago.”

“We are entering a second era,” Benner told a joint meeting of the House and Senate State Affairs committees recently, “this one promising to bring innovation, efficiency and service improvements to the local telephone markets.”

AT&T has won approval to compete for local phone service in Idaho and is working now on reaching interconnect agreements with GTE and US West.

“We are definitely in the local phone service business for the entire nation,” she said.

Companies have called out the big guns for the fight over how Idaho should handle deregulation.

The industry gave Idaho legislative candidates more than $60,000 in the last election, according to campaign finance records.

The army of lobbyists working on the issue in Boise includes a former PUC commissioner, a former Idaho Attorney General, and last year’s Senate majority leader. And that’s just a small sampling of the more than two dozen lobbyists that companies have registered so far.

The existing phone companies and their prospective competitors are working on competing legislation designed to look out for their interests. The Public Utilities Commission has written its own version.

Small, rural phone companies are worried and have their own lobbyists in Boise, although the federal law specifically exempts them from competition.

The American Association of Retired Persons is concerned that the changes don’t happen in a way that makes basic phone service too expensive for those who depend on it.

“A telephone is so important to many senior citizens,” said Don Reading, a Boise consultant to the AARP. “You just have to have a telephone for health and safety reasons.”

Fothergill said of the big companies all pushing their versions of change, “They certainly have got all the weapons.”

Said Benner of AT&T: “We’re serious, and we hope to begin service as soon as possible.”

, DataTimes MEMO: This sidebar appeared with the story: Competitors Three companies have won approval to compete with GTE to offer local phone service in North Idaho. They are: AT&T Citizens Telecommunications GST Telecommunications Nine more applications are pending at the Idaho Public Utilities Commission. After winning PUC approval, the companies must reach agreements with GTE to use its system before they can begin offering local phone service.