[Eug-lug] Fwd: Qwest files to deregulate phone rates

[Ben Barrett]

I think we all pretty much feel the same way about qworst... :)
fwded along from some OCF people


Begin forwarded message:

*From: *Oregon CUB <cub at oregoncub.org>
*Date: *October 29, 2007 3:17:50 PM PDT
*
*
*Subject: **Qwest files to deregulate phone rates*
*
*

News from the Citizens' Utility Board of Oregon



Qwest files for phone rate deregulation

Qwest is at it again. Unsuccessful in attempts to move through a plan to
deregulate rates (and therefore raise them) for basic phone service on the
Governor's Telecommunications Task Force of 2006, and in the Oregon
Legislative Session of 2007 (note *earlier mention of SB
2621*<http://ent.groundspring.org/EmailNow/pub.php?module=3DURLTracker&cmd=
=3Dtrack&j=3D171093181&u=3D1701844>),
Qwest has now filed a case with the Public Utility Commission trying to do
the same thing. We've looked it over, and it isn't pretty.

Qwest has filed a case with the PUC asking to raise the rate of basic local
phone service and erase the price caps on many other additional phone
services, as well. Their argument about needing more revenue lacks strength
since basic telephone service is a declining cost industry, and has been for
several years. Also, although Qwest may have been prohibited from raising
their prices for most local services for several years, customers
*have*seen increases on their phone bills, due to the FCC moving more
of the costs
of the national phone network onto subscribers' local phone service bills.

Qwest's filing would allow them to opt out of their current system of price
cap regulation, which they chose out of a range of possible options in 1999,
when Senate Bill 622 created the model of price cap regulation for Oregon
under which Qwest has been operating. There was an assumption by those
involved in the passage of SB 622 that the price cap regulation was a fairly
permanent status change, and that only another legislative change would
allow a change in that status.

Other options include traditional rate regulation based on the utility's
rate of return (generally utilities earn about 10% above their rate of
investment; this is the regulation PGE and PacifiCorp operate under);
complete deregulation of services, dependent on the utility proving to the
Commission that sufficient competition in providing those services exists to
ensure a fair market; and an alternative form of regulation, which allows
the PUC to set prices without regard to rate of return on investment.
Whether Qwest can legally opt out of their current price cap regulation is a
primary issue, as far as CUB is concerned.

Qwest is seeking price deregulation under a statute that allows the
Commission to set prices without examining a utility's profit. A fundamental
question, however, is whether this is legal. The Commission uses its
regulatory power to set prices; can it use the same power to deregulate and
not set prices? We are skeptical.

What is at stake is, of course, a great deal of customer money, and while
the burden of increased rates would fall on every one of Qwest's customers,
those hardest hit would be those with the least income who have only a
single basic phone line. Those customers would see a $2/month increase
sometime in the first 4 years, and then unlimited increases after that. All
other phone services would be immediately eligible for unspecified (and
uncapped) levels of price increase, including directory assistance, caller
id, call waiting, unlisted numbers, and other optional phone services.
(Voice mail service has been deregulated for some time and DSL service has
never yet been regulated.) So, just for starters, Qwest could earn an extra
$2 million per month on basic phone service, with greater increases from
these additional phone services, and any increases they add to basic after
the 4-year period is up.

What they have offered in return is a $1 million investment in network
infrastructure in places that might not have been cost-effective (they say)
to build in. And *up to* an additional $1 million for high speed connections
for Oregon K-12 schools -- no base level of investment is guaranteed. We
don't mean to be uncharitable ourselves, but do want to point out that a
very small surcharge of less than 10 cents per month on existing basic
service phone lines in Oregon for one year would give the same million
dollars for schools, while Qwest would be pocketing at least an extra $1.9
million per month (or $1.90 per month per line) forever! When they were
negotiating SB 622 eight years ago Qwest offered $120 million in network
investments; it seems to us their negotiation offers have slipped somewhat.

One of the rationales Qwest gives for the attempt to raise local service
rates is that they are subject to competition. We aren't disputing the
increased competition in the telecomm world. But most of the competition
comes from wireless phone services, which offers an increase in portability
and convenience, which this filing doesn't address; and from the bundling of
basic phone services with options such as cable television and internet,
DSL, or wireless together on one bill (Qwest's main competitor in these
fields is Comcast), and Qwest is quite capable of competitive bundling
without this filing.

We're not impressed with the arguments put forth in Qwest's filing and we're
not impressed with their going over well-traveled ground either, repackaging
previous failed efforts to deregulate prices. But Qwest has successfully
pursued this kind of rate deregulation in other states, and so CUB will file
a response that attempts to keep Qwest's hand out of the proverbial cookie
jar, once again.

Thanks for reading CUB Online. Feel free to forward this message on to your
lists.

Please visit our website:
*www.oregoncub.org*<http://ent.groundspring.org/EmailNow/pub.php?module=3DU=
RLTracker&cmd=3Dtrack&j=3D171093181&u=3D1701845>.

[image: DonateNow]<http://ent.groundspring.org/EmailNow/pub.php?module=3DUR=
LTracker&cmd=3Dtrack&j=3D171093181&u=3D1701846>

Citizens' Utility Board of Oregon


------------------------------


Our postal address is
610 SW Broadway Ste 308
Portland, Oregon 97205
United States
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