Groups Oppose Plan to Hike Phone Rates

A broad coalition of public interest, minority and union groups Thursday voiced opposition to significantly increase rates for basic monthly residential phone service in California.

“What we are facing is, in effect, a regressive tax increase during a major recession,” said Robert L. Gnaizda, a public interest lawyer, addressing a joint meeting of the California Assembly and Senate utility committees in Los Angeles.

Monthly basic residential service rates may jump by as much as 60% over three years, to $13.35, under a Sept. 23 proposal by Pacific Bell that, if accepted by regulators, would amount to one of the nation’s largest phone rate hikes. At the same time, the plan would reduce rates on intrastate long-distance calls by between 20% and 30%.

The state Public Utilities Commission is expected to rule on the proposed changes next year after statewide public hearings

Pacific Bell officials argued that the proposed rate increases are necessary to remain competitive in anticipation of a growing number of competitors for long-distance service within the state. The higher rates on such calls have subsidized lower rates on basic monthly service, officials say.

“A large amount of competition already exists in our service territory and is increasing all the time,” said Bruce Jamison, assistant vice president of regulatory proceedings.

But many critics argued that changes proposed by Pacific Bell and GTE would lead to the development of a highly sophisticated phone system for businesses and the wealthy and outmoded service for low-income consumers who rely on basic service.

“We are moving to two classes of telephone systems,” Gnaizda said. Lower income and minority groups “want to be part of 21st-Century technology.”

Janice Wood, an official with the Communications Workers of America, said she feared the entry of new competitors would force phone companies to develop high profit services for the affluent while ignoring less lucrative universal service.

“Our concern is universal service as we begin to see increased competition,” Wood said.

Rate hike opponents and utility committee members also expressed concern that the complicated nature of the rate changes would confuse consumers and discourage their involvement in public hearings.

“It will be the most difficult phase for our constituents to understand,” state Sen. Herschel Rosenthal said.

“Consumers have very little public participation in those hearings,” said Edith Adame, general counsel of the Latino Issues Forum. Adame also noted that a statewide survey of Latino phone users found that half already said their phone costs were too high.