Phone-Rate Hike Goes before Florida Regulators

Dec. 10–The state’s three largest local telephone companies and consumer advocates will square off in front of regulators in Tallahassee today over what could be the state’s largest phone rate increase.

BellSouth Corp., Sprint-Florida and Verizon Communications Inc. have asked the Public Service Commission for permission to raise the amount they charge residents and businesses with one phone line for basic local phone service. The rate increases would start in January.

Atlanta-based BellSouth, Florida’s dominant local phone provider, plans to tack on $3.50 a month over the next two years. Rates could go up as much as 20 percent after that.

After vetoing the bill a year ago, Gov. Jeb Bush signed off on legislation in April that allows the local phone companies to petition the Florida Public Service Commission to increase phone rates in exchange for lowering the amount they charge long-distance companies to use their networks.

Long-distance carriers are supposed to pass that savings on to consumers through lower in-state phone rates.

The law is designed to spur competition; phone companies must prove to the PSC that the rate rebalancing is revenue-neutral and does encourage other phone companies to enter the market.

“The pricing of these services right now is below the actual cost,” said Marta Casas-Celaya, a BellSouth spokeswoman. “It is the low social-pricing structure, frankly, the antiquated model, in order to ensure that consumers could have access to telephone service.”

Mike Twomey, the Florida Utility Watch president who is representing the AARP in this issue, said the telephone companies want a rate hike just to recover the $350 million they will lose in reducing access charges.

“They are losing their shirt on access from competition — the very thing they say they want to experience,” Twomey said.

The three days of technical hearings, which come after months of public hearings, may be a moot point if Florida Attorney General Charlie Crist and Public Counsel Harold McLean get their way. Last month Crist asked regulators to throw out the phone companies’ request because it was unclear whether it was in the public interest. McLean’s office joined Crist’s petition.

“We are seeing residential rates going up, and they are getting nothing in return other than theoretical competition,” said McLean, who was named public counsel two weeks ago. “They come to the table with no evidence of benefits for customers.”

AT&T Communications Corp. filed confidential testimony with the PSC showing how the savings would be passed onto consumers, spokeswoman Brandi Langford said.

Atlanta-based telecommunications analyst Jeff Kagan said phone companies in other states have stumbled when it comes to showing cost savings.

“The structures are changing, and it’s like comparing apples to oranges, so it’s difficult for customers and regulators to know if the effective prices have come down.”

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