| State of New Jersey
Department Of The Public Advocate
240 West State St.
P.O. Box 851
Trenton, NJ 08625-0851
Phone: (609) 826-5090 Fax: (609) 984-4747
|JON S. CORZINE
For Immediate Release:
January 10, 2008
Rate Counsel Opposes Deregulation of Phone Service
Higher Phone Rates, No Directory AssistanceCall Discounts for Consumers Projected
Newark, N.J.— The Public Advocate’s Division of Rate Counsel today called on the Board of Public Utilities (BPU) to deny a request for deregulation of basic telephone service.
In testimony that will be filed today before the BPU, Rate Counsel Director Stefanie Brand said that rates for all consumers of basic telephone services would increase significantly if the BPU approved the request made by Verizon NJ and EMBARQ Corp.
“Deregulation of phone service will cost all New Jersey consumers, especially those with low incomes,“ said Brand. “With no real competition in this industry, rates will rise and service will decline.”
Rate Counsel is filing testimony in response to Verizon NJ’s and Embarq’s requests to have their retail residential and business services declared “competitive.” Under state law, the BPU can deregulate a service if it finds sufficient competition in the market.
At Verizon’s request, the BPU opened an investigation in 2007 of whether basic phone service is competitive enough to be deregulated. The petitioners, Verizon NJ and EMBARQ, provide 83 percent of the phone service to New Jersey residents. Brand said Rate Counsel disputes Verizon’s claim that these services are competitive and found that consumers would be unfairly impacted if deregulation is granted.
“People looking for basic landline services or Lifeline services don’t have any real choice but to go with Verizon or EMBARQ,” Brand said. “There is no real competition, and the Board should not abrogate its obligation to ensure affordable phone service for these consumers.”
Rate Counsel’s testimony raised the following concerns about the impact of deregulation on consumers:
Basic service rates for residential customers could increase from $8.95 a month to over $30 per month, costing the estimated 1.3 million residential customers who buy only basic service more than $312 million.
Single-line business rates could increase from $15 per month to over $35 per month, costing over 60,000 single line business customers more than $19 million.
Residential customers will lose the four free directory assistance calls that the companies previously agreed to provide. Increased rates for directory assistance could cost consumers approximately $187 million per year.
Approximately 500,000 Lifeline Assistance customers could see their rates increase to $30 per month from the current top rate of $2.50 per month. The estimated cost increase could exceed $150 million. Lifeline Assistance program participants receive discounts on their monthly residential telephone service rates based on monthly income eligibility standards.
In June 2007, the BPU deregulated the companies that are trying to compete with the incumbent carriers. Those companies provide local phone service only to an estimated 585,000 customers. Rate Counsel has appealed that decision, but its impact is insignificant compared to the current request. “When they broke up Ma Bell, they hoped competition would lead to lower prices and better service, and reduce the need for regulation,” said Brand. “But the fact is, New Jersey citizens do not have lower priced alternatives for basic phone service in this state. If we stop looking at what these companies charge or how they provide service, we will have no way to protect consumers. Telephones are literally a lifeline for many people. We are asking the Board not to cut them off.”
The Division of Rate Counsel is a division within the Department of the Public Advocate and represents the interests of consumers of electric, natural gas, water/sewer and telecommunications and cable TV service. Additional information on this and other utility matters can be found at the Division’s website at http://www.state.nj.us/rpa/. The Department of the Public Advocate website is http://www.njpublicadvocate.gov.