Legislature

Basic telephone rates may increase sharply

A report says a House bill would drive up basic service costs by as much as 20 percent per year.

By MICHAEL SANDLER, Times Staff Writer
© St. Petersburg Times
published April 10, 2003

TALLAHASSEE -- A legislative analysis confirms the fears of consumers who worry that a controversial proposal to deregulate Florida's telephone industry would lead to higher rates with little oversight.

The bill would increase the average monthly bill for basic phone service by as much as $7.25 in the next four years, according to a report to the House Committee on Business Regulation. After that, basic service could increase by as much as 20 percent a year, the report found.

Supporters say the measure is designed to stimulate competition among phone companies and eventually lead to lower monthly bills for most consumers.

But there's no guarantee that will happen, said a spokesman for the Public Service Commission, which would oversee the rates under the proposal. Consumers who make few long distance calls would be the big losers.

Gov. Jeb Bush vetoed a similar bill last year after he was bombarded with complaints from consumers who feared rates would rise.

This year's version, written by phone companies, includes a provision giving the Florida Public Service Commission some authority to deny rate changes and additional discounts to low-income customers. That satisfied the governor, but not consumer activists.

"Everyone is dancing around the fact that when utilities ask for rate increases, (the PSC) will have to give them," said activist Mike Twomey.

Rate increases would be allowed only if they are "revenue neutral." That means reductions in long distance rates would offset increases in basic rates. For basic rates to go up, access charges for in-state long distance would be lowered.

But there are no guarantees those reductions would be passed along to consumers, and even if they were, they do little to help low-income people who use only basic service.

The PSC would be authorized to approve or deny requests for higher rates. But it could not set rates on its own and would be required to follow a limited set of criteria aimed at increasing competition.

The PSC says it has no way of knowing if that will actually happen.

"There's some uncertainty as to whether it would improve competition," Greg Shafer, a spokesman for the PSC, told the House committee Wednesday. "I don't have a crystal ball on that one. I don't think anyone really does."

The bill was discussed but not voted on Wednesday because of time constraints. The committee will take the issue up again next week.

In a rare moment of candor, House members acknowledged the telephone industry drafted the measure.

"It was a proposal brought to us by the industry, that they agreed upon, and they have done an excellent job," said Rep. Curtis Richardson, D-Tallahassee.

Twomey and other opponents were pleased the House delayed voting on the bill for a week. They want to know why the Legislature waited until the session was half over before unveiling the bill.

"There are rules to this game," Twomey said. "The reason they have bill filing deadlines is to put the public on notice. The have obviated and skirted this issue as much as possible."

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