PUC Chief May Seek Cut in Cellular Rates

The president of the state Public Utilities Commission said Tuesday that he is considering asking the panel to cut California’s cellular telephone rates, which are among the highest in the nation.

“I’m thinking about it, but I’m not convinced that ordering a reduction would be the appropriate thing,” Daniel Fessler told the state Senate’s Energy and Public Utilities Committee.

Fessler said that in the early 1980s, the PUC set cellular rates that were “guestimates to allow the industry to grow.”

Despite growing demand, basic rates haven’t dropped, although they are lower when inflation is taken into consideration, Fessler said.

“There is this haunting fact that is of concern to me: that we have in California some of the highest rates in the U.S., and those rates are high when compared to other impacted markets,” Fessler said.

Sen. Henry Mello (D-Watsonville) complained that cellular service in rural areas is often poor. “We’re paying high prices and we’re getting nothing,” he said.

Wayne Perry, vice president of McCaw Cellular Communications Inc., said his company has been investing more money in its California cellular operations than it has been making.

He said it is true that basic rates “have not declined significantly,” but he added that McCaw has introduced alternate rate plans. “The typical customer gets about a 7% price reduction using one of those plans,” he said.

Perry claimed that California’s more than 1 million cellular customers would pay less to use their phones if the state regulated the industry less.

“Cellular regulation discourages price reductions,” he said.

Peter Casciato of the Cellular Resellers Assn. said California rates could drop sharply if the PUC sticks by a decision made last year that aids resellers’ ability to compete in the cellular market.