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Archive for Wednesday, January 25, 2006

AT&T pushing for price deregulation on local service

January 25, 2006

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— Rebuffed last year by regulators, the state's largest provider of local telephone service is asking legislators to move Kansas toward deregulating the prices it charges consumers.

The Senate Utilities Committee opened hearings Tuesday on a bill sought by AT&T, which previously provided local service in Kansas as SBC Corp. The company hopes legislators will deregulate its prices in Kansas City, Topeka and Wichita and allow deregulation in other areas under certain conditions.

David Kerr, AT&T's Kansas president, told the committee the rapid growth of competition and of alternatives to traditional land-line service over the past five years show the need to update regulatory laws. He said deregulation will drive down prices for consumers.

Some committee members remained skeptical that there's enough competition to warrant deregulation.

"I like the idea of competition, but I think there are a lot of questions that need to be answered," said Sen. Mark Taddiken, R-Clifton.

SBC supported similar legislation last year, but Kerr acknowledged the company concentrated more on trying to persuade the Kansas Corporation Commission to deregulate prices for 31 separate services in Kansas City, Topeka and Wichita.

Last year, SBC's parent acquired AT&T, the long-distance company, kept the AT&T name and made it the largest phone company in the nation.

The KCC rejected most of AT&T's proposals, concluding there isn't enough competition to take controls off prices.

Committee Chairman Jay Scott Emler, R-Linsborg, said he wasn't sure now is the "appropriate time for Kansas" to move toward deregulation.

Kerr argued that the rise of cellular telephone use, high-speed DSL and broadband Internet service and voice service over the Internet have made it the right time.

AT&T has a third fewer land lines in Kansas than it did five years ago, or 890,000 compared with 1.34 million, Kerr said.

Under the bill, the state wouldn't regulate the price of services when they're "bundled" in one package for consumers. Outside the three largest metropolitan areas, price deregulation would occur if there are two or more local service competitors.

Kerr said AT&T needs the freedom to change prices in response to market conditions.

But David Springe, chief attorney for the Citizens' Utility Ratepayers Board, a state agency representing residential and small-business customers, said AT&T wants the ability to raise the price of basic no-frills local service enough to make bundled services attractive.

Springe also said poor and elderly Kansans are the most likely to opt for having a single land line and no other services.

"The only outcome this provides is that some of the consumers who are least able to have competitive options have their rates raised," Springe said. "A lot of people are going to get hurt."

To address concerns about potential rate increases for basic service, Kerr offered an amendment to prevent providers from raising rates by more than $12 a year until 2009.

But Springe and Sen. Janis Lee, D-Kensington, noted that the rate increase would still amount to 6.5 percent in 2006.

"We don't have real competition throughout service areas," Lee told Kerr. "It's only in urban areas."

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