PUC Offers Plan to Reduce Cellular Phone Rates
California’s chief utility regulator offered a plan Thursday to make it easier for California cellular telephone operators to lower their rates, now among the very highest in the nation.
And if the operators don’t lower them, Public Utility Commission Chairman Daniel Fessler said, “we’re going to have to lower rates for them.”
Fessler’s proposal is the latest and boldest plan yet to push the state’s three cellular operators to reduce their charges for the first time since wireless phone service began in California nine years ago. It will be voted on by the full commission in two weeks; Fessler said Thursday that it has the necessary votes to pass.
The plan arises from the commission’s nearly 3-year-old investigation into why cellular rates in California, which has more wireless subscribers than any state, remain at their introductory levels.
Cellular operators have said prices have remained for three key reasons:
* A need to generate cash to expand the network.
* Continuing high consumer acceptance of the service at current prices.
* A fear that any cuts could not be restored in the future.
Under the plan, the PUC would remove the last barrier, the inability to easily raise rates again if necessary. Fessler’s proposal would allow the carriers to restore any cuts without regulatory approval.
Characterizing the plan as both “a carrot and a stick,” Fessler, a law professor at UC Davis, said that if the carriers don’t respond with immediate price cuts, the state will know that they have not been genuine about their willingness to consider lowering charges.
“If rate decreases haven’t happened within 60 days of passage of my plan, we’re going to have to do it for them,” Fessler said late Thursday. He said he wouldn’t be satisfied with anything less than cuts “of at least double digits.”
A PacTel Cellular spokesman called the proposal a “good first step,” but said the company still has “some concerns.” LA Cellular said the plan “appears to be a move in the right direction.”
