August 08, 2005: CUB Fights to Stop SBC Phone Deregulation and Price Hike

  • August 8, 2005
Leah Steinberg

For Immediate Release: August 08, 2005

CUB Fights to Stop SBC Phone Deregulation and Price Hike

MADISON – The Citizens Utility Board filed a legal brief earlier this week with the Public Service Commission of Wisconsin (PSC), urging the PSC to reject SBC Wisconsin’s (SBC) attempt to deregulate and dramatically raise the rates for basic phone service.

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’s legal brief criticizes SBC’s attempt to deregulate basic phone service. CUB notes that SBC said in its filed testimony that not even a $5.00 monthly increase in rates would be enough for it to price basic phone service at “competitive levels.” The retail price of basic phone service is currently regulated at $8.20 per month plus usage charges, and SBC already makes a profit on providing basic phone service.

Beyond exposing SBC’s blatant money grab, CUB rips apart the claims made by SBC that competition exists for basic phone service. CUB notes that wireline competitors serve only about a 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. Therefore, SBC’s near-monopoly dominance for residential telephone service is likely to only increase in the years ahead.

CUB also notes that no other major competitor offers any type of telephone service, whether through telephone wires, wireless, cable, or the Internet, that is comparable to SBC’s basic telephone service, which is still utilized by many customers living in SBC?s service territory. At this time, alternatives to basic telephone service, including cellular phones, cable phones, and Internet-based phones, are always more expensive and frequently do not have the same level of reliability and quality.

“There is no competition for basic phone service,” said Charlie Higley, CUB executive director. “Should the PSC deregulate rates for basic phone service, SBC could drastically raise the price without fear of losing customers to competitors. Customers would be forced to pay higher prices, plunging Wisconsin back into the days when unregulated monopolies like SBC plundered its customers without public oversight,” concluded Higley.

The PSC will decide this case later this fall.