October 31, 2005: PSC Decision Means Higher Prices for SBC Phone Service

  • October 31, 2005
Leah Steinberg

For Immediate Release: October 31, 2005

PSC Decision Means Higher Prices for SBC Phone Service

MADISON – The Citizens Utility Board is deeply disappointed by today’s decision by the Public Service Commission of Wisconsin (PSC) to deregulate the prices charged by SBC Wisconsin for local phone service.

“Today’s decision by the PSC will lead to higher rates for phone service for many SBC customers,” said Charlie Higley, CUB executive director. “SBC can now drastically raise the price for phone service without fear of losing customers to competitors. The decision by the PSC will help SBC shareholders at the expense of SBC customers,” said Higley.

Last November, SBC asked the PSC to remove its decades-long oversight regarding the prices charged by SBC for basic phone service, which is simply a dial tone and the ability to make local calls, and does not include features such as long distance service, call waiting, caller identification, and other optional features. SBC claimed that prices for basic phone service would be kept in check because there was sufficient competition; if SBC charged too much for basic phone service, customers could chose another company.

CUB challenged SBC’s attempt to deregulate basic phone service. CUB argued that SBC would likely increase rates for basic phone service, even though SBC already makes a profit on providing this service. CUB provided evidence that competition does not exist for basic phone service. CUB noted that wireline competitors serve only about one quarter of residential customers in SBC’s service territory, and that many of SBC’s competitors are retreating from serving the residential market, due in part to anti-competitive decisions made by the PSC, the Federal Communications Commission, plus several pending mergers such as SBC and AT&T, and Verizon and MCI. CUB also said that alternatives to basic telephone service, including cellular phones, cable phones, and Internet-based phones, are always more expensive and are not comparable substitutes for basic phone service.

The commission rejected CUB’s concerns and sided with SBC by deciding that sufficient competition exists, and that price regulation is no longer needed. Commission Chairperson Dan Ebert said that, as a result of his decision, SBC will raise its prices for basic phone service.

“The PSC’s decision will mean that customers of SBC can expect to pay higher prices for local phone service as they pay higher prices for electricity, natural gas, gasoline, food, and other necessities,” concluded Higley.