New Castle News

December 12, 2013

Advocates cry foul over phone deregulation bid

John Finnerty
New Castle News

NEW CASTLE — Consumer advocates and the AARP are warning that a telephone deregulation bill would allow phone companies across the commonwealth to shed price controls that have kept land-line phone bills cheaper than wireless phone bills.

The AARP also argues that the legislation sets such a low standard for “competition” that phone companies could abandon parts of the state, leaving any phone service in those areas to expensive wireless companies.

The bill is due to be considered by the House Consumer Affairs committee Friday.

Local phone companies are subject to regulation by the state Public Utility Commission. Wireless providers are not.

Verizon advertises basic phone service ranging from $13.45 to $17.73 a month for local calling and long distance service of $6 a month plus 40 cents a minute. J.D. Powers and Associates estimates the average family spends $139 a month on cell phones.

Landline phone companies say they need the bill to better compete as their share of the phone market has shriveled. The number of phone lines served by local telephone companies in Pennsylvania dropped from 8.5 million in 1999 to fewer than 4 million in 2012, according to the Pennsylvania Telephone Association.

As of the end of 2012, more than 38 percent of households in the United States were wireless-only, having eliminated landline service entirely. That percentage is forecasted to exceed 50 percent by 2015, according to the telephone association.

The AARP and other critics are overblowing the dangers of deregulation, said Steve Samara, the telephone association’s president. Most of rural Pennsylvania would fail to meet the bill’s standard for competitive markets and remain untouched by the bill, he said.

He could not immediately say what phone exchanges would be considered competitive, Samara noted.

“My sense is that the Philly, Capitol Region, Pittsburgh, Erie and Scranton areas would be eligible for competitive declaration,” he said.

The Pennsylvania Public Utility Commission has not examined the bill to determine how widespread deregulation would be, a spokeswoman said.

Even if rural phone companies have the ability to abandon a market, there is little reason to believe they would, Samara said.

A report by the labor-linked Keystone Research Center in Harrisburg found that similar deregulation efforts have resulted in higher prices for consumers elsewhere.

In Ohio, rates have increased $1.25 per month (the maximum allowed) since a deregulation law passed in 2010. In Illinois, AT&T increased line charge rates by up to 63 percent following deregulation. In California, some rates increased by several hundred percent.

In addition, critics of the law say Pennsylvania’s regulation of the telephone industry has resulted in better service for consumers than in other states. Phone companies were required to roll out broadband. As a result, 93 percent of Pennsylvania has broadband access. That’s the best of any state with a large rural population.

The Keystone Center researchers titled their report “A Bad Deal for Pennsylvania,” but author Nathan Newman told reporters, “It’s no deal at all.”

In other states, lawmakers have made bargains in which phone companies agree to improve service in exchange for deregulation. But Newman said Pennsylvania’s proposed telephone deregulation bill offers no such carrot for consumers.

(Email: jfinnerty@cnhi.com)