Home phone costs may rise
-- PUC to act: Rules to promote competition expected to benefit business users
before residential customers.
By David Bank
Mercury News Staff Writer
Residential telephone customers who have been waiting for the long-promised
benefits of competition in the local phone market are advised to keep two things
Don't hold your breath. Watch your wallet.
The Public Utilities Commission is expected today to propose guidelines to allow
cable television operators, long-distance telephone providers and other
telecommunications companies to get into the local telephone business that has
been the province of monopolies such as Pacific Bell and GTE Corp.
After a period for public comment, the commission could enact interim rules as
early as June to allow limited competition later this year. The commission has
set a deadline of Jan. 1, 1997 for full competition in California.
Competition in the local telephone market is considered the key to unleashing
the power of new technologies, leading to new services and lower prices.
``What you will see first are benefits going to big business users,'' said Helen
Mickiewicz, an attorney with the PUC's Division of Ratepayer Advocates. ``How
long of a gap there will be before benefits reach residential customers is
The reason is that capital investments can more quickly be recouped from
high-volume business customers, particularly those in dense urban cores.
Competition in the residential market is likely to come much more slowly.
For other reasons, both Pacific Bell and a coalition of would-be competitors and
consumer advocates have criticized the early draft of the PUC's rules as
damaging to residential telephone customers.
Tom Long, an attorney with Toward Utility Rate Normalization, a consumer group
in the coalition with the cable and long-distance companies, said the proposed
rules would cause competitors to charge prices so high that they could not
compete. The rules include charges for connecting calls from a competitor's
network to Pacific Bell's and allowing customers to keep their phone numbers
even if they choose to use a different provider.
``This could kill residential competition,'' Long said. ``If the commission is
interested in getting competition started, it shouldn't impose charges for calls
to be completed between local telephone companies.''
For its part, Pacific Bell has warned that allowing competitors to pick off
lucrative business customers while leaving Pacific Bell responsible for
providing service to all others would lead to higher residential telephone
bills. Already, Pacific Bell has raised basic monthly service from $8.35 to
$11.25 to compensate it for the lower prices on local toll calls that resulted
from the opening of that market to competition on Jan. 1.
The company said last week that the proposed rules ``will let other companies
give price breaks to big business customers while leaving most residential and
small-business customers holding the bag.''
Mickiewicz said basic monthly prices would rise if Pacific Bell is allowed to
target lower prices to geographic areas where it faces competition. She said
such a practice also would undermine the competition before it gets under way.
In the short term, she said, there is likely to be pressure to raise basic
monthly rates above $11.25 in many areas. In the long term, competitors are
expected to offer packaged services of local, toll and long-distance calling,
along with services such as voice-mail and call-waiting that could result in
savings for some users.
Published 4/26/95 in the San Jose Mercury News.
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