REMARKS OF BLOSSOM A. PERETZ, ESQ.
DIRECTOR, DIVISION OF THE RATEPAYER ADVOCATE
BEFORE THE BOARD OF PUBLIC UTILITIES
PUBLIC HEARING ON THE VERIZON ALTERNATE PLAN OF REGULATION
Newark, New Jersey
September 19, 2000
Good evening, Commissioner Armenti. My name is Blossom Peretz and I am the Director of the New Jersey Division of the Ratepayer Advocate. The Ratepayer Advocate represents the interests of all utility consumers -- residential, small business, commercial and industrial. The Division is a party in cases where New Jersey utilities seek changes in their rates or services and gives consumers a voice in setting long-range energy, water and telecommunications policy that will affect the delivery of utility services well into the future.
Before I present the Ratepayer Advocate’s positions in this proceeding, I would like to take a moment to poll the audience -- play Oprah for a moment, if you will. All Verizon staff, employees and consultants are precluded from participation. I think the audience’s responses may underscore some of the points I will make and will shed some light on some of the claims Verizon makes in its filings.
First off, I’d like to find out how many people here have vertical services as part of their local telephone service - those optional features that Verizon currently charges you extra for. Who here has Call Waiting? Call Forwarding? How about Caller ID?
How many of you don’t have any vertical services at all? Who has what we call POTS - Plain Old Telephone Service? No bells, no whistles, just dial tone and maybe Touch Tone.
Now who here would like to be required to buy three vertical services every month and a bunch of local toll minutes? To have the plain old vanilla cheapest calling plan you can get jump from $8.19 a month to $17.50 a month?
Well, those are the questions my staff and I have heard from consumers all over New Jersey. Everyone from senior citizens and low income residents to Legislators and newspaper editors have told us that they don’t want to be forced to buy services they don’t want, use, or need. I have yet to hear a single rate-paying citizen, except for those on the Verizon team, speak out in favor of Verizon’s scheme to double and triple local telephone exchange rates with services they don’t want or need. I don’t want a package of pet food to include cat food when my pet is a poodle.
I have received a number of letters and e-mails from concerned citizens who strongly oppose Verizon’s plan. Many of them have asked me to make sure that I let you, Commissioner Armenti, and the other commissioners and staff of the Board of Public Utilities know that they are opposed to giving up their right to choose telephone services, especially under the pretense of competition. I’d like to enter into the record as part of my comments some of the letters I’ve received so far.
Verizon’s claim of savings is, quite simply, a myth. Verizon says that its plan will significantly cut the average monthly bill for most consumers. Maybe the few customers who have three vertical services, make 25 minutes of local toll calls every month, and have Touch Tone service will save something every month. The rest of us who, if we have any vertical services at all, usually have only one, will find that our bills will go up. That means that nearly every local telephone customer in the State of New Jersey will experience an increase in the amount of their monthly telephone bill if the Board approves Verizon’s plan. That sounds to me more like a rate increase rather than savings for consumers.
As a side note, you may be interested to learn that if Verizon’s plan is approved, New Jersey will become the only state in the nation that forces telephone customers to take vertical services. Even in other states where package deals are offered by the incumbent monopoly provider, there is always an option available to consumers who choose POTS -- Plain Old Telephone Service. Many people prefer POTS services, whether because they have no need for vertical services, can’t afford the cost of optional services, or because they use a particular line only for their fax machine or home computer.
Why should Verizon be allowed to force a senior citizen, who only uses her phone to call her doctor, her granddaughter, the pharmacy, or 9-1-1 to pay for extra features she’ll never use? What if that granddaughter and her husband have a second line they use for their computer so their son can access the Internet to help do his homework? Why pay for vertical services on a line that will probably never have a human voice travel over it? What about someone who chooses, for whatever reason they may have, not to subscribe to vertical services? Why should they be forced to pay for something they don’t want? Can you imagine if they did that at the supermarket? You go in to buy milk, but you have to buy three bottles of soda and a bag of potato chips, too. If you don’t want the chips and soda, you can’t just buy the milk. In the supermarket, or at the department store, or even at the car dealership, you, the customer, have choice.
In a competitive marketplace, not only do you have options about which items or services you want to purchase, but you have the option of shopping around at a number of different retailers. Telephone customers can already do that with their long distance service and I look forward to the day that they can also do it with their local exchange service.
In 1997 in an address at the Annual Convention of the National Association of Regulatory Utility Commissioners, William Kennard, Chairman of the FCC, in discussing the federal Telecommunications Act of 1996 said that, "Competition is the cornerstone. Many people argue over the best way to get there, but the need for competition is beyond question."
"This is true whether you are buying a car, a pizza, a microwave, or a cell phone. Choice is the engine of our democracy and our economy. And in no area do the American people demand it more than in telecommunications."
But choice cannot only reach large business customers. Choice ultimately must be available to all New Jerseyans, at work and at home, in our urban areas and in our rural and shore communities.
People should be able to choose how much or how little telephone service they want and whether they want to buy a bundled package or individual services priced a la carte. That way, if they want a full seven course meal they can have it. If they only want a salad and soup, they can have that instead.
It is important that customers not only have different choices from the same company but that they have lots of different companies to choose from. When Congress passed the Telecommunications Act in 1996, they envisioned the kind of vibrant competition in the local exchange marketplace that exists in the long-distance marketplace.
Let me play Oprah once more and ask how many of you have been contacted by AT&T, Sprint, Worldcom, or any other competitive carrier or cable company seeking to provide you with local -- not long-distance -- but local service? I bet there are none.
Competition clearly does not exist yet in New Jersey. Verizon claims that its bundled service offering will somehow advance competition in New Jersey. Nothing could be farther from the truth. Verizon, as the incumbent monopoly, has a strangle hold on the local phone market. In its service territory, 99 percent of customers are Verizon’s.
I look forward to the time when the final roadblocks to competition are removed and competitive carriers can begin to enter the local exchange marketplace in New Jersey and, of course, Verizon will enter the long distance marketplace. Once we have multiple providers offering local services, we should see lower prices, the introduction of affordable advanced services, and greater choices for customers.
Another question for the audience: Do you know what DSL service is?
DSL is a high speed data transmission service that businesses and individuals use to access the Internet and send information at lightning speed. You can get DSL service just across the Hudson, but you as an individual probably can’t get it here in New Jersey.
Have any of you been contacted by Verizon with an offer to provide you with DSL service? Have you called to request DSL only to be told that Verizon doesn’t yet offer it in New Jersey? Were they able to tell you when you could expect to be able to access DSL service?
We won’t see widespread deployment of DSL or other advanced telecommunications services until the numerous obstacles that impede the progress of any competitive carrier attempting to make inroads in New Jersey are removed. Probably the greatest hurdle is the high cost of Unbundled Network Elements -- those parts of the Verizon network that competitors must lease in order to provide local service. Those prices have been set so high that competitors simply cannot compete because they would lose money on every customer they signed up.
While Verizon wants the market declared competitive, there is nothing in its filing that would make it more feasible for competitors to enter this market. All it does is allow Verizon to charge nearly all of its customers significantly more that they currently do. Those rates would stay frozen for two years. Then at the end of those two years, Verizon could charge its customers and its competitors anything it wants, either for service or for access to its network. That would ensure Verizon’s indefinite dominance of the local exchange market by guaranteeing that no other competitor could possibly afford to enter the market and actually make money.
New York and Texas, the only other states with declared, open competitive local exchange marketplaces, have frozen their pre-competition rates for three years while they allow competition to develop. No other state has allowed the incumbent phone company to raise rates or increase their customers’ monthly bills before both freezing rates and starting down the road to competition. None. Let’s not make New Jersey the first.
New Jersey is a prime candidate for competition and New Jersey’s consumers can look forward to benefits almost beyond belief. We are the most densely populated state in the nation, meaning that it is efficient for companies to provide service here because they can do it at a lower cost. That also means that companies will be more likely to make advanced services widely available.
We are also a state that is home to high tech businesses. We need the availability of advanced telecommunications services to retain those businesses and attract more to our state. Governor Whitman has declared New Jersey open for business and envisions the Garden State becoming the Telecommunications Mecca of the Northeast.
We cannot allow New Jersey to continue to lag behind Pennsylvania, New York, Maryland and other states along the eastern seaboard in implementing local exchange competition. The longer we wait to implement true competition, the longer we send the wrong signal to businesses already in New Jersey and those considering relocating here. The continued well being of New Jersey’s economy could rest on the outcome of this proceeding.
The significance and importance of this proceeding cannot be overstated. That is one of the reasons I was so disappointed by not only the accelerated schedule for this entire proceeding, but the number and timing of the public hearings. This is an issue that will significantly affect nearly 9 million people, yet the Board has scheduled only two public hearings on the matter and both of those at 5 o’clock in locations not readily accessed by the general public. I have received letters and phone calls from numerous concerned citizens, some of whole hold elective office on the state and local levels, who wanted to attend one of the hearings but were unable to because of their time or location.
In conclusion I would like to share with you a story taken from a speech made by FCC Chairman William Kennard on May 3, 1999:
"I want to tell you a story about the people of Ivanhoe, Oklahoma. Ivanhoe was a town that had one street -- Main Street. It had a general store and a barber shop. In the surrounding fields, people eked out a living, mostly working the land.
Then, in 1917, the world changed in Ivanhoe, Oklahoma. The town leaders read that the railroad was due to come to their part of the world. The biggest and most important network in the country was going to reach out to their part of the West. The economic possibilities seemed endless with quick transportation would come new jobs, new businesses, new ideas, and more people.
Except there was one problem. When they studied the plans, the town fathers saw that the railroad was coming, no question about that, but six miles away -- in Texas.
Knowing that being bypassed by the railroad would devastate their town, its leaders made a decision. They decided to move. The entire town. Buildings and all. Now, Ivanhoe, Oklahoma rests six miles to the north and is known as Follett, Texas.
Commissioner Armenti, should New Jersey have to move across the Hudson or Delaware River? Should we move Bergen County or Mercer County across the river to get benefits of local competition or should we bring those benefits to New Jersey?
When drafting the Telecommunications Act of 1996, Congress wisely reached back to a value as old as America itself: choice. The idea is that competition would drive deployment of the networks of the future. And that once given an array of options, individuals can best decide what is best for them.
Because the goal is to bring all Americans the benefits of a competitive marketplace, we must redouble our efforts to bring choice to residential subscribers--choice in local phone service.
In the state of New Jersey, only large businesses have choice of local phone service. If that’s all we get out of the Telecom Act, then we will have failed the New Jersey public.
I believe that an open, competitive marketplace will benefit our state with better service, lower prices, and affordable advanced technologies. This is a goal that we should work towards every single day. That is not the apparent goal or outcome of the Verizon petition.
Thank you.