LOCAL PHONE RATES - Kristen Friend-Weaver

08/28/03

Verizon and Sprint, two of Florida’s largest local phone companies, submitted plans with the state on Wednesday to increase local service rates for individuals and small businesses. The two companies are taking advantage of a new Florida law that allows the phone companies themselves to determine when rate increases are necessary. WMNF’s Kristen Friend-Weaver has more…

If Verizon and Sprint get the rate changes that they are asking for, individuals and small business could see a dramatic increase in the cost of their local phone services over the next two years. Verizon, the bay area’s largest provider, plans to raise local rates by $2.25 the first year and $2.36 the second year. This amounts to an overall increase for individuals of up to 46 percent. Sprint, which provides service in Citrus, Hernando and Pasco counties, is seeking an increase of $3.23 the first year and $3.63 the second. The overall rise in cost for some individuals under Sprint’s plan may be up to 90 percent. Small businesses, or those that have only one phone line, will also see an increase in the cost of their local phone services. However, local rates for large businesses will remain unchanged.

The proposed rate hikes are possible because of a law signed by Governor Bush this May. The law was written entirely by Florida’s major phone companies, and it provides a drastic deregulation of Florida’s phone rates. According to the law, large phone providers may choose to increase local rates if they simultaneously reduce the amount they charge long-distance companies to access their networks. Phone companies say that this will lead to long distance savings and increased competition in local markets. However, according to Make Twomey, a lawyer for Florida Utility Watch, phone companies are actually attempting to make individual customers responsible for 369 million dollars in lost access fees. He called the move a sham, and said that he believes many lower income individuals may loose phone service as a result…

Twomey also said that it was ironic that big phone companies are claiming to be encouraging competition…

Previously, the Public Services Commission, an independent body, was responsible for regulating local phone rates. And many consumer groups feel they should still be in charge. Bill Newton, the director of the Florida Consumer’s Action Network said that individual customers loose when special interests are allowed to write the laws…

However, the Public Services Commission does still play a small role in determining whether or not the rate increases will go into effect. The PSC now has ninety days to approve or reject the changes, but the specifics of how they will do so are not clear. FCAN and other critics of the legislation say that it was written so that the PSC must act as a rubber stamp for the will of the phone companies. Mike Twomey agrees that the power of the PSC has been restricted, but says that they may still be able force some changes in the phone companies’ requests. Twomey says that at a minimum, the PSC should increase the number of years over which the rate increases take place. He points out that when the bill was moving through congress, the phone companies promised their customers that any rate increases would take place gradually over four or five years. And he says, phone companies should have to stick to their promises…

Despite such criticism, Verizon spokespeople insist that deregulation will provide savings in the long run. But Bill Newton points out that even with increased competition, phone rates are unlikely to fall below their current levels. And, he says any savings will most likely affect big businesses, not individuals…

The Public Service Commission is scheduled to meet on Tuesday to determine how they will hear testimony on this issue. For WMNF News, I’m Kristen Friend-Weaver.

comments powered by Disqus