Verizon deregulation on the horizon

BOISE – North Idaho’s major telephone service provider has filed notice with the Idaho Public Utilities Commission that it plans to take advantage of a new state law allowing deregulation of local phone service – a law that allows phone rates to rise as much as 10 percent a year for the next five years.

Verizon, which provides basic local telephone exchange service to 31 exchanges in the North Idaho Panhandle, said it plans no immediate price increases. However, under the new law, it could raise prices at any time, and must simply notify the PUC of the new prices.

“Unless they raise it above the cap, there’s nothing we can do about it,” said Gene Fadness, PUC spokesman.

“It just gives us that flexibility,” said Kevin Laverty, Verizon spokesman.

The new law, HB 224, was pushed by Qwest Corp., the company that provides phone service to much of southern Idaho and Eastern Washington, but Verizon backed it. The controversial bill passed the House 48-22, but barely squeaked through the Senate, where Lt. Gov. Jim Risch broke a 17-17 tie to pass the bill. Gov. Dirk Kempthorne, a big supporter of the deregulation plan, signed it into law on March 29, and it took effect July 1.

That very day, Qwest filed its notice with the PUC to take advantage of the new law and deregulate its phone rates, though it told the PUC it planned no immediate rate changes. On Tuesday, the PUC issued a formal notice that Qwest is being removed from price regulation Aug. 1.

Verizon filed its notice with the PUC on July 7, but did not say in its notice whether or not it planned to raise rates. Instead, it wrote in its filing, “The company will file price lists with the Commission for its telecommunications services with an effective date of August 8, 2005.”

Fadness said the commission has been awaiting that price list before it issues its formal notice of the deregulation, but the move has been approved without discussion on a consent agenda. The law gives the utilities commissioners no choice in the matter.

“I would guess within the next few days we’ll be issuing a notice on Verizon as well,” Fadness said.

Laverty said, “It obviously does give us more flexibility as we look at competition in the state, there’s no question about that.”

Basic monthly telephone charges in North Idaho range from $11.85 to $20.10.

Qwest initially asked the PUC in 2003 to deregulate telephone rates in Idaho, citing increased competition from wireless and other services, and saying basic telephone service should no longer be regulated. The PUC denied the request.

In 2004 Qwest turned to the Legislature to override the PUC, but the legislation failed in the Senate by one vote, cast by then-Sen. Jack Noble, R-Kuna, who first voted for the bill, then changed his mind. By the 2005 vote, Noble had left the Senate after facing unrelated ethics charges.

The new law allows prices for basic telephone service – described by Fadness as the charge for having a dial tone – to rise 10 percent a year for the next five years, but also ties urban rates to rural rates, which could limit some increases. That link persuaded some lawmakers that rural rates wouldn’t soar because competition in cities would keep prices from going too high.

In North Idaho, that means the deregulated company’s basic residential and small-business rates in rural areas couldn’t go higher than its rates for customers in Coeur d’Alene.