Archive for Friday, August 31, 2001

KCC OKs phone rate changes

Decision allows higher local charges, reduced in-state long distance

August 31, 2001

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— State regulators have agreed to allow Southwestern Bell, Sprint and AT&T; to increase their local phone rates for customers in Kansas.

This week's 2-1 decision by the Kansas Corporation Commission will decrease some in-state long distance rates.

Commission Chairman John Wine and Commissioner Cynthia Claus voted to approve the plan, a negotiated agreement between commission staff and the phone companies. Commissioner Brian Moline voted no.

"I just don't see the benefit to the residential customer at all," Moline said.

Walker Hendrix, consumer counsel for the Citizens' Utility Ratepayer Board, said he likely would challenge the ruling in court.

The agreement calls for Southwestern Bell's residential phone rates to increase from $1.65 to $2 a month. Sprint's local rates will go up from $4.50 to $6.75 a month, phased in over three years. The new rates are expected to be in effect in October.

To offset those hikes, AT&T; and Sprint both agreed to reduce prices for in-state long distance.

How much rates will be cut is unknown to the public because the companies filed the cuts under seal as private business information.

The commission staff has estimated that Southwestern Bell customers who make 90 minutes of in-state long-distance calls a month will benefit from the plan. The break-even point will be four hours of in-state long distance a month for Sprint.

Driving the agreement was an effort by telephone companies to cut access fees that they pay to complete calls through the local phone systems. State and federal laws require that the fees be based on the cost of providing the access.

In Kansas, access fees are much higher than the cost of providing the service, the agreement's proponents said.

AT&T; officials have said that their company pays Southwestern Bell about 2 cents a minute to use local lines, while the cost of providing the access is only about one-half a cent.

Wine said he supported the change because the current access charges were forcing toll-call users to subsidize lower rates for local service.

Claus said she agreed with that it was necessary to raise local rates in the short run to jump-start phone competition, which has the potential to bring down rates in the long term.

"We need to get ourselves aligned so that competition can flourish," she said.

Moline said, "I probably can't disagree with you more."

He said access charges for the long-distance providers do need to be reduced. But Moline said the cost of doing that should be spread across all telecommunications services that rely on the local network.

Southwestern Bell spokesman Mike Moffet said any short-term benefits "will depend on how customers use their phone."

Hendrix called the commission's decision "incomprehensible."

The main beneficiaries, he said, will be medium to large businesses, including telemarketers, who make a lot of in-state calls.

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