Group objects to phone rate hike
Published 10:56 am Monday, November 10, 2008
CHESAPEAKE — It could mean a possible $21 more a year in what some Lawrence County residents pay for phone service, says the Office of Ohio Consumers’ Counsel.
And the watchdog agency questions the need for the rate hike and the way it could come about.
However, the phone company counters that competition from all sides makes it necessary. Now it’s up to the Public Utilities Commission of Ohio to decide.
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Verizon, which provides basic residential telephone service to the Chesapeake area, put in a request to PUCO on Aug. 29 for what is called in the industry “alternative regulation.”
That allows any utility to increase rates at will, without getting PUCO approval beforehand. Normally, if a utility wants a price hike, it must go each time to the regulatory agency and justify its actions.
However, with “alternative regulation” as long as the utility can prove it functions in a competitive environment and that there is no barrier to the entry of other competitors, it can act at will. But there are restrictions. With alternative regulation there is an annual cap of $1.25 per month for basic service and 50 cents a month for caller ID, which could add up to a maximum of $21 a year.
That could translate into “pricing freedom so rates can go up and up,” says Ryan Lippe of the Consumers’ Counsel.
In March 2006 the PUCO approved rules for alternative regulation of basic local phone service, according to the Telecom News Updates Web site.
“The rules comply with House Bill 218 which authorizes the commission to either exempt from regulation or grant alternative regulation for basic local phone service in exchange areas where competition exists and there are no barriers to entry,” the Web site reports.
There is a test set up by the Ohio PUCO whereby a utility is supposed to show the competition in its service area and what phone service options its customers have, Lippe said.
“It is really up to the PUCO whether the utility company has met its burden of proof that there is competition,” Lippe said. “We would maintain that it is not true. There is no alternative.”
For the customer who wants more elaborate options including wireless service, dish TV, bundled packages, there are options as far as company choices, Lippe says. For the customer who wants the basic service — a dial tone — and caller ID, the counsel contends there is no competition for these subscribers..
“All these cases … do come on our radar screen,” Lippe said. “Without competition, (the subscriber) is left with the choice of paying a higher rate or dropping service. They just want to be able to call their community, to do it with a reasonable price. It would put pricing in the hands of telephone.”
However, Verizon says all it’s looking for is a “more level playing field,” says Lee Giercyznski, Verizon spokesman.
“The telecommunications industry has dramatically changed over the last decade and companies like Verizon face some stiff competition from other telephone service providers, wireless service, cable companies, internet-based phone providers as well as competition from technology like instant messaging that allow people to communicate with a telephone,” he said. “The way the competitive environment operates we need to be able to respond quickly. This type of flexibility will allow us to do that.”
The PUCO has until Dec. 29 to make a decision.