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Record Phone Rate Hike Heads to State's High Court

Posted on: Thursday, 10 March 2005, 03:00 CST

The largest telephone rate hike in state history will have its day in court this week.

On Friday, lawyers from the state attorney general's office, the Office of Public Counsel and the AARP will tell the Florida Supreme Court that a $355 million increase in local phone rates from the state's three dominant local phone companies will not benefit consumers.

BellSouth Corp., Sprint-Florida Inc. and Verizon Communications Corp. will tell the court that the rate hikes will spur competition, and customers will see lower phone prices over the long term.

Attorney General Charlie Crist and others are challenging a decision by the Florida Public Service Commission, which approved the rate hike in December 2003. The basis of the challenge is that the commission did not follow state law to the letter; the phone companies disagree.

A decision could be appealed to the U.S. Supreme Court, but it's considered unlikely that it would be heard there, meaning that the state court's decision essentially will be final.

PSC commissioners cannot discuss the details of pending cases, but Chairman Braulio Baez and longtime Commissioner Terry Deason did say the phone-rate case was one of the toughest issues they've had to decide.

"It has a direct impact on pocketbooks, but I have to have some outlook on the future," Baez said. "I stand by my decision."

Deason said the commission "went to great effort" to listen to Floridians, who would be faced with higher phone bills.

"The commission had to make a decision consistent with the law," he said.

That law is the Tele-Competition Innovation and Infrastructure Act, which Gov. Jeb Bush signed into law in 2003. The law, which tackles other telecom issues such as Internet telephony, says the Public Service Commission can let BellSouth, Sprint and Verizon raise what they charge for basic phone rates as long as they decrease what they charge long-distance companies to use their phone lines. The long-distance companies are supposed to pass on the savings to customers.

BellSouth customers would be paying an additional $3.14 a month at the end of the increase, which was to be phased in over three years.

"We believe the case we presented to the commission met the test of the statute," said Marshall Criser, Atlanta-based BellSouth's vice president of regulatory affairs.

But would the higher rates really matter to every Floridian? As other ways of communicating become increasingly popular, cheaper and more efficient, fewer people are being tied to their land-line phones.

The Cellular Telecommunications and Internet Association reports there are more than 176 million cellphone subscribers. Experts point to 2005 as the year Internet telephony really makes it big, and wireless Internet is rising.

"What we see in this market is just this massive movement toward mobility," said Joe Farren, a spokesman with the Washington, D.C.- based association.

Telephone companies report a larger jump in customers and in revenue in the areas of wireless, high-speed Internet and Internet telephony, otherwise known as Voice-over Internet Protocol or VoIP. Cable companies tout broadband services, allowing them to offer VoIP and get into the phone business as well.

"A person with a reasonable income is going to have plenty of alternatives," said Bob Ackinson, at Columbia University's Institute for Tele-Information.

But that's no help to seniors and people on fixed incomes who consider cellphones and other means of communicating beyond the regular land line a luxury.

"In Florida, it's a bigger issue than it is in many other states, and older people need the security of phone service," Ackinson said.

Land-line service has morphed into the "provider of last resort," which is something the Florida Public Service Commission recognized when it made its decision to let phone companies raise their rates, said Sanford Berg, who heads the Public Utility Research Center at the University of Florida.

- kristi_swartz@pbpost.com

Assessing the increases

Here are the access rate reductions and service rate hikes approved by the state Public Service Commission:

Access rate Basic monthly

Company reduction service rate hike

BellSouth Corp. $135,000 $3.14 (over 3 years)

Sprint-Florida Inc. $147,000 $6.68 (over 4 years)

Verizon $80,000 $4.73 (over 4 years)

Source: Florida Public Service Commission

Source: Palm Beach Post

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