PUC’s Phone Scheme Is a Wrong Number

The Public Utilities Commission is about to make one of the most momentous decisions in its history, the decision to begin loosening regulation of California’s telephone industry. Most consumers don’t know about it--and, at the pace being taken by the commission, the entire process could be over before they do.

Some observers have charged that the commission is out to deregulate telephone service. The commission prefers to call it “regulatory reform.” But either way, the bottom line may be the same: potentially higher charges for telephone service of an increasingly uncertain quality.

Usually when the commission undertakes a proceeding of this magnitude, it takes its time. There should be no deadline when so much is at stake: the future of the $10-billion-a-year telephone industry, the welfare of California’s 10 million telephone customers, and the ultimate shape of our state’s “information society.” In most matters of this importance, hearings are scheduled far in advance because witnesses must be flown in from around the country, testimony is rigorously scrutinized, and the public is given adequate notice about the substance and progress of the investigation, so that it can participate.

But the commission is treating the current telephone proceeding differently. At a hearing in October, the presiding commissioner told a stunned roomful of participants that the commission intended to close the book on traditional telephone regulation by March, 1989. Under pressure from telephone customers and other parties, the commissioner subsequently relented, promising to delay the onset of hearings and testimony. He said nothing about extending the March deadline, however. A proceeding of similar import but that was far less extensive took more than six months to complete. Is five months enough time for deciding to throw out 75 years of regulatory tradition and replace it with laissez faire ?

In place of more traditional processes, the commission proposes to expedite the investigation through invitation-only workshops and settlements. The workshops--private conferences among special interests--produce agreements on how the utilities are to be regulated. Rather than using its own judgment, the PUC more and more relies on these agreements to decide how to do its job. Such a deviation from the norm threatens to make the telephone proceedings a mockery of due process.

The commission’s Division of Ratepayer Advocate, mandated by legislation to represent the ratepayers’ interests, now is protesting that it may not be able to do so. It doesn’t have the resources and the stamina to work on the hurried telephone investigation and, at the same time, adequately represent the ratepayers in equally important gas, transportation, and electricity proceedings. The division and consumer advocates further argue that there are regularly scheduled telephone-rate reviews to be done and literally billions of dollars waiting to be refunded to customers. These necessary actions are taking a backseat to the commission’s rush to give the telephone companies more freedoms.

Moreover, there are fundamental policy issues that must be considered, but that are not being given the attention they deserve. One example is the expedited processing without a hearing of Pacific Bell’s application to provide new telephone services (electronic mail, videotext, and computer-conferencing) that will dramatically change how we use the telephone. Can the commission properly regulate these new services when it is preoccupied with loosening the reins in general?

In an even more radical departure from tradition, the commission wants to do away with general rate cases for telephone utilities, the heart of the regulatory process. It is the one regularly occurring opportunity for the PUC and the public to examine in depth the rates and performance of the telephone utilities. If the commission abolishes this procedure, it will deprive the public of the only reliable forum in which it can make its case for better service and lower rates.

All this is bad news. Because of its large, widespread population, California is heavily dependent on reliable, affordable telephone service. Regulatory decisions made in haste, without adequate deliberation and public comment, are more likely to be wrong. No one benefits from gross regulatory errors made virtually in private--not the utilities or their customers or the public.

California’s Constitution requires the Public Utilities Commission to responsibly regulate public utilities in the public interest. Careful deliberation of all the issues, and not a pell-mell dash to deregulation, is what the people expect of the commission.

During the five years that I have chaired the Utilities and Commerce Committee, the commission has fought efforts to streamline procedures, without sacrificing the essential elements of fair regulation: thoroughness, accuracy and openness. Now, however, its reputation is on the line. The current telephone proceedings give the commission an opportunity to take the traditional path of fairness or to lose itself in a wilderness of prejudicial opinion and expediency.