Verizon, BellSouth and Sprint alter their proposals, but their biggest critics are not mollified.
By LOUIS HAU
Published December 13, 2003
TALLAHASSEE - Verizon, BellSouth and Sprint made modest 11th-hour changes to their requests for big local rate increases Friday in an apparent bid to improve their chances of winning approval from the Florida Public Service Commission.
The commission scheduled a vote on the rate increases for Tuesday.
The phone companies revealed the last-minute changes to their applications during their closing arguments Friday, following three days of PSC hearings. The changes included expanding eligibility for the state's Lifeline phone service discount program.
But consumer advocates reacted skeptically to the changes. Mike Twomey, an attorney representing AARP and Common Cause, derided them as "sweeteners of dubious value" that might make it easier for the commission to approve the rate hikes.
Attorney General Charlie Crist, the most prominent critic of the rate increase requests, urged the PSC not to be swayed.
"By sweetening the pot, that does not do justice to the people of Florida," he said.
Crist said he would probably demand reconsideration if the PSC approves the rate hikes. He also said he would likely appeal the decision to the state Supreme Court.
Under the revisions, Verizon, which serves Pinellas and Hillsborough counties and most of Pasco County, plans to increase its monthly local basic rates by about $4.60 over two years, down slightly from its earlier request for $4.73. The company's current local basic rates range from $10.12 to $12.10.
Verizon plans to make up the difference by increasing onetime charges more than originally planned.
BellSouth, which serves most of Hernando County and a small portion of Pasco County, reduced its planned rate increases over two years to $3.14 or $3.50, depending on how the PSC structures the rates, down from $3.50 or $3.86. The company's current local basic rates range from $7.57 to $11.86.
Like Verizon, BellSouth will add to its planned increases in onetime fees.
Sprint, which serves Citrus County and parts of Hernando and Pasco counties, didn't change its plans for a $6.86 rate increase on its current rates of $7.63 to $11.48. But the company agreed to spread the increase over three years rather than two.
In addition, all three companies have agreed to extend Lifeline benefits to households with incomes at 135 percent of the poverty line rather than 125 percent. Verizon and Sprint also plan to match BellSouth's offer to shield Lifeline customers from rate increases for four years, rather than two and three years, respectively.
In testimony, the local phone companies said the sharp increases in local basic rates, offset by anticipated reductions in long-distance rates, would help unleash a new era of competition and innovation in Florida's telecommunications market.
Consumer advocates responded that the result would be a sharp net increase in many phone bills, hitting residential customers, the poor and the elderly hardest.
The phone company officials and their expert witnesses testified that their proposed rate increases would bring substantial benefits to consumers by sparking competition in the market for local phone services.
Economist Kenneth Gordon, who testified on behalf of Verizon, Sprint and BellSouth, said the result would be more innovation and investment in local services and improved opportunities for alternative telecommunications technologies such as wireless, cable and Internet-based calling services.
"Clearly, competition will be enhanced and all of this means more long-distance calling, more investment, more competitive entry," Gordon said. "It will increase economic activity and economic welfare in Florida."
But the Office of Public Counsel, the state's consumer advocate on utility issues, countered that the increases would hurt residential customers, who the new regulations say must benefit from the changes.
Of the rate increases planned by the three local phone companies for residential and single-line business customers, residential customers will shoulder the burden of 93 percent of Verizon's rate hike, 87 percent of BellSouth's and 86 percent of Sprint's, deputy public counsel Charlie Beck said.
Those figures, along with the proportion of savings from reduced instate access fees that long-distance carriers estimate in confidential filings they'll pass on to residential customers, would result in "a massive transfer of wealth from residential customers to business customers," Beck said told the commission.
Beck also said figures compiled by Verizon estimating how much the rate hikes would affect the average total residential bill showed that senior citizens would be hit by the largest increases.
Benjamin Ochshorn, an attorney for Florida Legal Services in Tallahassee, warned the commission that phone rate hikes would hit low-income households particularly hard. Ochshorn said expanding Lifeline eligibility would have little impact, noting that less than a fifth of Florida's low-income households currently qualify for Lifeline assistance.
- Louis Hau can be reached at hau@sptimes.com or 813226-3404.
