Phone rate hikes have landline customers ready to cut the cord

He said there's more competition for new wireless services such as phones you can plug into any outlet and access your home number. "Prices are going down for the products that people are moving to," Kasselman said.

Perhaps. But that doesn't justify higher prices for the products that people have had for decades. A 50% rate hike in just two years?

"That's not the right way to look at it," Kasselman replied. "You have to look at it from 1994. Our rates were frozen for 14 years."

Um, no. AT&T's and Verizon's rates were regulated for 14 years, meaning that state officials had to approve any price increases. If phone companies could make a reasonable case for why they needed to increase prices, they could do it.

According to the PUC's Division of Ratepayer Advocates, AT&T charged $10.69 a month statewide for its cheapest basic phone service in 1994. The rate remained unchanged until 2008, when it rose to $10.94 — and continued rising every year to $23 now.

Verizon charged $16.85 for basic phone service in 1994, climbing to $17.25 in 2008 and hitting $22 next month.

Talk about making up for lost price hikes: Since the middle of the Great Recession, AT&T has raised basic rates 115% and Verizon will have hiked them nearly 31% as of next month.

The fact that prices for landlines remained relatively stable under regulation reflects the fact that the companies were making a fair profit in officials' eyes. They certainly weren't losing any money offering these services.

Now that their regulatory leashes have been removed, all that extra revenue is just gravy.

Nearly a third of all U.S. households are now completely wireless, according to a government report released last year. That means 69 million adults and 27 million kids have cut the landline cord.

AT&T's landline revenue has fallen about 16.5% over the last four years. Verizon's landline revenue has dropped about 19%.

Yet even as the number of people with landlines steadily dwindles, Nusbaum at the Utility Reform Network said AT&T and Verizon are socking landline customers with ever-higher rates.

"They're basically funding other things and paying off debt on the backs of landline customers," he said.

The companies are also using higher landline prices to prod customers into going wireless and thus relieve AT&T and Verizon of the financial burden of investing in older networks, Nusbaum said.

If so, the effort seems to be working. Both Aguon and Nardi said they're planning to cancel their landlines because of the rate hikes.

Call that a win-win for the phone companies. If people stick with their landlines, AT&T and Verizon clean up with sky-high rates. If people switch to wireless, that's more business for the products the companies want to focus on.

"We think people have more choices than ever before," AT&T's Kasselman said.

Except they're of the damned-if-you-do-damned-if-you-don't variety.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to