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Court: Phone rate hikes allowed

The state Supreme Court upholds a PSC vote approving phone companies' request to raise rates up to 90 percent.

By LOUIS HAU
Published July 8, 2005

Floridians could soon face the largest phone rate hikes in the state's history following a long-awaited decision Thursday by the Florida Supreme Court.

In a unanimous ruling, the court upheld a controversial December 2003 Public Service Commission vote approving requests by Verizon Communications, BellSouth and Sprint to increase their local basic rates for residential customers by 26 to 90 percent over two to three years, the steepest hikes ever approved by the commission.

The decision was welcomed by the phone companies, which had argued that the rate increases would foster greater competition for phone services.

But consumer advocates and state Attorney General Charlie Crist, who had appealed the PSC decision to the Supreme Court, said they were disappointed by the court's ruling and warned that the rate hikes will hurt customers, particularly the poor.

"I think it's grossly unfair to the people of Florida," Crist said. "To hit them with the largest rate increases in the history of our state is patently unfair."

Representatives for Verizon and BellSouth said Thursday that it wasn't yet clear when they would ask for the rate hikes to take effect, noting they will have to adjust their figures to reflect changed market conditions. Sprint spokeswoman Nancy Schwartz estimated that Sprint customers will see their rates rise in the next two to three months.

Verizon, which serves Pinellas and Hillsborough counties and most of Pasco County, had sought rate hikes totaling $4.60 over two years.

Sprint, which provides local phone serve to customers in Citrus County and parts of Hernando and Pasco counties, had sought increases totaling $6.86 over three years.

BellSouth, which serves most of Hernando County and a small portion of Pasco County, had sought rate hikes totaling $3.14 over two years.

The phone companies applied for the rate hikes after Gov. Jeb Bush signed into law legislation drafted by phone industry lobbyists which dramatically rolled back the state's regulation of local basic phone rates.

After the initial rate hikes are complete, the law also allows phone companies to raise their local rates by up to 20 percent a year without PSC approval, and does away with quality standards for customer service and repair response times.

In exchange for the first round of rate hikes, the phone companies must provide commensurate cuts in the access fees they charge long-distance carriers to complete in-state long-distance calls, which should lead to lower in-state long-distance rates. But such reductions won't benefit customers who don't make such calls or who use their cell phones to make long-distance calls.

In its ruling, the Supreme Court said the PSC's approval of the rate hikes was consistent with the spirit of the new law. The court noted that it has historically treated PSC decisions with "great deference" and that "the Commission's factual findings are entitled to a presumption of correctness."

In a separate statement supporting the unanimous ruling, Justice Fred Lewis said he believed there is "undeniable tension and resulting conflict" between the PSC's statutory responsibilities to ensure competition and to ensure the continued affordability of basic telecommunications services.

"The statutes reflect the policy that the benefits of increased competition cannot be achieved without an increase in the rates for local telecommunications services," Lewis wrote. "In some circumstances, such increases will, most assuredly, negatively impact the affordability of basic local telecommunications services for certain of Florida's citizens."

But Lewis wrote that the court wasn't empowered to address such statutory conflicts, and thus concluded that the court's decision was "justifiably and sensibly narrow."

Consumer attorney Mike Twomey, who represents senior advocacy group AARP, said the court should have sent the case back to the PSC for reconsideration due to changes in the federal phone regulations since the board had made its decision.

Last year, a federal appeals court overturned Federal Communications Commission rules requiring established phone companies to let competing carriers have access to their networks at regulated rates. The ruling prompted some carriers, such as AT&T and Sprint, to cease marketing of local residential phone services in areas where they weren't the dominant carrier.

Verizon spokesman Bob Elek argued that the federal court ruling hasn't prevented the company from negotiating new access agreements with competing carriers.

[Last modified July 8, 2005, 01:39:14]