Rate Cuts Allowed for Local Phone Services

Local phone companies will be permitted to cut charges for such special services as call-forwarding, three-way calling and speed-dialing whenever they want under a ruling Wednesday by California regulators.

Regulators have yet to decide, however, how big those cuts can be.

The ruling by the Public Utilities Commission marked the first step in an anticipated general overhaul of the way it regulates local phone service in the state.

While the action likely will mean lower rates next year for some residential customers who subscribe to the extra services covered by the order, by far the biggest beneficiaries will be big businesses that buy Centrex phone systems or lease high-speed digital private-line service.

Pacific Bell, the state’s largest local phone company, welcomed the decision, calling it “good for both business and residence customers. It lets us compete more effectively for large business customers, and that will help us keep basic residence rates among the lowest in the country,” said Bruce Jamison, the company’s executive director of state regulatory issues.

The intent of the commission’s ruling is to help Pacific Bell, GTE California and other local phone companies to compete against other companies offering special phone services and equipment. Jamison said the revenue lost to such competitors has put pressure on Pacific Bell to boost its basic phone rates for small businesses and residential customers.

The PUC order makes the prices existing at the time the new tariffs take effect the maximum that can be charged and requires local phone companies to submit minimum prices that are not less than the cost of providing the services. Once the PUC approves those minimums, the companies will be free to change their prices within those limits.

Pacific Bell spokesman Lou Saviano predicted that it will take “three or four months” to gain approval for the new price ranges. However, the commission ordered Pacific Bell and GTE California--the state’s two largest local phone companies--to submit new tariffs for high-speed digital private-line service by Oct. 5.