Phone Rates

Date: Mar 14, 2005
Contributor: Annabelle Alto

SBC asking legislature for ability to set its own phone rates

The supersonic changes in telecommunications are pushing phone giant SBC to seek legislation allowing it to set its own rates.

The company wants the power to set its own rates because of growing competition from cellular phones, Internet-based phone services and cable companies.

"We should be excited about what this means for consumers," said SBC Illinois president Carrie Hightman during a state Senate committee hearing last week. "Four years ago the situation was dramatically different."

Hightman argues competition is robust enough for rates to be set by the market.

With all the technological changes, SBC estimates it has lost 1.6 million hard lines over the last four years. Currently, phone rates are set by the Illinois Commerce Commission, and changes can take up to a year to win approval.

The Illinois Alliance of Competitive Telephone Companies argues that the "competition" provided by newer technologies are not widespread enough or are in their infancy.

"There is a big difference between engineers creating something that works in the lab, than something that works in the field and then finding something that works in the marketplace," said Mike Ward, an alliance representative.

Martin Cohen, executive director for Citizens Utility Board, argues these new services are out of the reach of the poor, who cannot afford the high-speed Internet connections needed to run telephone services such as Vonage.

SBC is calling for a three-year cap on basic phone rates. This would not apply to people that had additional phone services such as Internet or voicemail.

This session's discussion of telecommunication deregulation comes after a Federal Communication Commission ruling that companies such as SBC are no longer required to share its infrastructure with competitors. Currently, SBC argues it must provide access below cost.

Ward charged that this ruling is a "doomsday" scenario for many small phone companies that either cannot afford increased costs or SBC may choose not to enter into contract with.

"You would have to create an alternative network," Ward said.

Hightman said her company is willing to work with competitors on an agreement.

The company also wants the General Assembly to remove special penalties placed on SBC as part of the 2001 state rewrite. At the time, the company had problems with service.

If the phone company fails to meet certain criteria, it faces a $20 million permanent rate reduction for customers and an additional $30 million fine.



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