Verizon hike put on hold

Published 11:14 am Thursday, January 1, 2009

CHESAPEAKE — It may sound like a belated Christmas present for those in Chesapeake who are Verizon customers. Apparently the regulatory agency that can say yea or nay about an increase in phone bills has put a request by Verizon on hold.

Back in August, the phone service company asked the Public Utilities Commission of Ohio for what in the industry is called “alternative regulation.” That allows any utility to increase rates at will without getting PUCO approval beforehand.

If alternative regulation is granted, it doesn’t mean that phone rates automatically go up. Simply, the utility has that option without going before the PUCO.

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Normally, when a utility wants a rate hike, it must go to the commission each time it wants an increase to 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.

That is what Verizon is seeking, which could mean a possible $21 more a year on each phone bill, says the Office of Ohio Consumers’ Counsel. That Columbus-based watchdog has questioned the need for a rate hike and for the approval of alternative regulation.

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 mean for Verizon “pricing freedom so the rates can go up and up,” Ray Lippe of the Consumers’ Counsel said in an interview in November.

On Monday the PUCO entered an order stating “in order to provide additional time for the Commission to evaluate all evidence on the record, this matter shall be suspended.”

There is a test set up by the 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 has said. “We would maintain that it is not true.”

For the customer who wants more elaborate options including wireless service, dish TV, bundled packages, there are options as far as company choices, according to Lippe. For the customer who wants the basic service — a dial tone — and caller ID, the counsel contends there is no competition.

However, Verizon contended it has asked for alternative regulation because it is looking for a “more level playing field,” Lee Giercyznski, a Verizon spokesman, said.

“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 did not state any reason for the suspension or a date when it would reconsider it.

“At least to put it on hold is better than approving it,” Lippe said on Wednesday. “We would certainly hope they would consider denying it. We do not think there is enough competition.”