Regulators Adopt New Phone Rules

By JOHN McCARTHY, Associated Press Writer

COLUMBUS, Ohio (AP) - Rules approved Thursday that will allow local phone companies to raise rates for certain services without regulatory approval drew the same response from backers and opponents -- they likely will ask state regulators to reconsider.

The Public Utilities Commission of Ohio unanimously approved the rules that give phone utilities like Ameritech and Cincinnati Bell permission to raise rates for second phone lines, call waiting and other services.

The companies will be free to raise rates two years after applying for the alternative regulation program. The increases will be capped at 10 percent a year.

In exchange, the phone companies will not be allowed to raise rates for basic telephone service and Caller ID while they are taking advantage of the plan. PUCO chairman Alan Schriber said Caller ID was exempt because many people need the service to ward off potentially threatening calls.

The phone companies that participate also would have to agree to lay the groundwork for high-speed Internet service across their coverage areas.

The rules grew out of a law the Legislature passed last year to encourage competition in the telecommunications industry. However, the commission left too many restrictions in place for the "second-tier" services such as call waiting and second phone lines, said James Smith, president of SBC Ameritech Ohio.

Under the commission's order, Ameritech could raise the price of call waiting, currently $4.15 a month for residential customers, by 41 cents after the two-year wait. But Smith said the market would dictate the price, not regulation.

He also argued that Caller ID should not be considered a basic service, because wireless telephone companies compete with Ameritech in the market.

"It's a little bewildering, actually," Smith said. "I'm disappointed the commission didn't follow the lead of the Legislature in making the determination that is not, in fact, basic."

Smith said Ameritech likely would ask the commission to rehear the case. The company has 30 days to file the request with the PUCO, which then could take another 30 days to reconsider. Should the commission uphold its ruling, Smith said Ameritech was "very much up in the air" on whether it would apply for the new regulation program.

Ohio Consumers' Counsel Robert Tongren, whose office represents residential customers in rate cases, said he also would ask the commission to take another look at the plan. Commissioners missed the opportunity to set goals for local telephone companies to move customers to competitors, he said.

Only one telephone company, CoreComm, competes with Ameritech for residential customers in Ohio. CoreComm has about 44,000 of Ohio's 5 million telephone lines.

"These rules are designed to provide one thing -- deregulation. If you provide deregulation without competition, you totally defeat the purpose of the exercise," Tongren said.

However, Schriber said competition was not the focus of alternative regulation.

"Consumer demand controls the pricing here, not the absence or presence of competitors," Schriber wrote in an opinion that accompanied the order. "The commission cannot force competitors to enter the market; we can only eliminate the barriers to entry."

Companies that want to compete in the local telephone market had opposed the new rules, saying it would give utilities too much freedom to raise prices.

Wayne Hill of the Coalition for Customer Choice, a competitors' group that includes Corecomm, Time Warner and AT&T, said that giving local telephone monopolies the freedom to price certain services without meaningful competition means "the chances of actually having that competition will be almost nil."

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