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    Panel favors phone rate hike

    A House committee approves a plan to let companies raise basic phone charges if they first lower long-distance fees.

    ©Associated Press
    April 15, 2003

    TALLAHASSEE -- A proposal that could raise basic phone rates to encourage competition between telephone companies sailed through the House Business Regulation Committee Monday by a 30-1 vote.

    Only Rep. Manuel Prieguez, R-Miami, committee chairman, voted against the bill (PCB BR 03-06), which will now be formally introduced and assigned to committees.

    Supporters, including local telephone companies, the cable television industry and long-distance providers, said that allowing basic rates to rise in exchange for reductions in long-distance costs would bring competition to the market and benefit customers.

    A legislative staff analysis said basic local service rates could rise from $3 to $7.25 a month, depending on the telephone company, over the next four years if approved by the Public Service Commission. The increases could take place only if the companies reduce the rates they charge long-distance companies for access to their systems by 3 to 8 cents a minute.

    There also could be annual increases of up to 20 percent a year in the future, in contrast to the current limit of 1 percent less than the inflation rate.

    Gov. Jeb Bush vetoed a similar bill last year, but has said the current version is acceptable because it gives the PSC the authority to decide if rates may be increased.

    Critics of the legislation, including AARP, Florida Legal Services and Florida Utility Watch, said it would hurt customers who make few long-distance calls, while failing to guarantee competition.

    Prieguez was the only committee member to agree with the opponents.

    He said many people do not make a lot of long-distance calls.

    "And those people's rates will go up," Prieguez said. "No one can deny that."

    But other committee members, both Republicans and Democrats, insisted that consumers would benefit.

    "I'm willing to try something that will allow competition in the market," Rep. Stacy Ritter, D-Coral Springs, said. "I think it will ultimately help my constituents."

    Rep. Stan Mayfield, R-Vero Beach, said it took him a while to warm up to the bill, but he was convinced it would be effective. Ed Paschall, representing the AARP, told the committee the proposal would almost double basic service rates in two to four years.

    "You would have to make a lot of long-distance calls to get your money back," Paschall said.

    Steve Wilkerson, president of the Florida Cable Telecommunications Association, called himself "a proud member of AARP" but said he disagreed with Paschall.

    "There are going to be a lot of competitors driving down rates," Wilkerson said.

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