Flood of Opinion on Phone Rates
Forced to reconsider its decision to boost basic telephone rates due to procedural irregularities, the California Public Utilities Commission is giving participants another crack at it.
Local telephone companies and ratepayer advocacy groups have recently filed hundreds of pages of documents seeking changes. Here are some highlights:
* The PUC’s Division of Ratepayer Advocates strongly suggests that the increase in basic residential rates for Pacific Bell customers to $13 from $8.35 is excessive. The division estimates the rate hike would provide a windfall of up to $200 million for Pac Bell.
* Pacific Bell says the division is wrong. It says it could lose toll revenue--money from in-state calls beyond 12 miles--as customers switch to cheaper calling plans and services.
* GTE of California says its residential rates aren’t high enough to compensate for an estimated $215 revenue shortfall. GTE wants to increase charges for basic residential service to $19.50 a month from the current $9.75. The rescinded decision set a $17.80 rate. As an alternative to the $19.50 rate, GTE is asking for a surcharge on all customers.
* The city of Los Angeles called the rescinded decision “anti-business.” It said increases in monthly basic business rates--to $10.86 from $8.35 for Pac Bell and to $25 from $9.10 for GTE--would “discourage business growth and reduce the amount of money flowing into the economy.”
The PUC is expected to issue a new decision this spring.
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Coupon usage clipped: Consumers redeemed 12% fewer coupons last year than in 1992, the first time coupon usage has declined in 23 years, reports the coupon-processing firm of NCH Promotional Services.
The company said that while manufacturers issued fewer coupons last year, usage declined primarily because manufacturers shortened average expiration dates on coupons to 3.1 months from 4 months. The shorter expiration period in 1993 meant there were 26% fewer usable coupons in any given month, the company said.
NCH Promotional Services said manufacturers have tightened expiration dates to limit their liabilities and to move products more quickly through stores. The number of coupons issued declined because some manufacturers shifted to everyday-low-pricing strategies. Procter & Gamble, for example, has lowered prices and eliminated coupons on some items, such as disposable diapers.
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Getting your interest: Mellon Bank this week is introducing a credit card that refunds interest payments to cardholders after 20 years. The bank says that at today’s interest rates, the average cardholder would pay 17.9% on balances and get back $8,700 in 2014.
Is this a good deal? It depends. The bank won’t pay you interest on your interest. So people who pay their balances off monthly and invest what they would have paid in interest could earn double or triple what Mellon will pay in 20 years.
The card makes more sense for people who seldom pay their balances monthly. But these people may want to choose a card that charges less than 17.9% interest and enjoy savings now, not 20 years from now.
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A better idea: “Put Ford quality in your financial future,” says the letter to Ford car owners from San Francisco-based First Nationwide Bank. The Ford-owned thrift is pitching an annuity issued by another Ford unit, Ford Life Insurance Co.
What the letter doesn’t say is that Ford may be taking the financial out of its future. The car manufacturer is reportedly trying to unload money-losing First Nationwide. The life insurance unit, which is separate from First Nationwide, would presumably remain under the Ford umbrella.
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Fast fries: When we spotted “Fast Fries” from Ore-Ida Foods Inc., we thought we’d finally found a frozen French fry that cooks quickly. We were wrong. The label says these fries are ready in 20 minutes, fairly typical for frozen fries.
What makes them fast? The label on the back of the package says the fries are “fast-food style.”
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Oops: We mischaracterized LDDS Communications in last week’s column. The Jackson, Miss.-based firm has a tiny 2% share of the long-distance telephone market, but with about $1.5 billion in revenue, it isn’t small.
