1983-07-20 Public Hearings and Regular Meeting

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Junud'y, June To, iylsj AustiOnerican-Statesman • Bell claims increase to replace rate • By BRUCE RIGHT subsidy American -Statesman Staff from long-distance, The $1.7 billion rate increase proposed by Southwestern Bell Telephone Co. hinges largely Greene also wrote that "the fostering of compe- on the contention that long-distance rates have tition in the telecommunications field need not. subsidized residential rates to keep them unnatu- and should not be the cause of increases in local rally low — but that does not wash with the com- telephone rates." pany's critics. If the Public Utility Commission grants Bell its request, Austin residential bills would jump from $9.05 per month to $28.65. Until January, when the commission will rule on the request, lively debate can be expected over the subsidy issue. Bell officials say the proposed tripling of resi- dential rates is only what it takes to make residen- tial service pay for itself. For years, they say, residential — and to a lesser extent, business — rates have remained low because the company subsidized them with long-distance profits. The subsidy ends Jan. 1, when Southwestern Bell and 21 other local Bell companies become in- dependent from American Telephone & Tele- graph Co. AT&T will keep the bulk of the long-distance business. Bell Vice President Paul Roth repeated Friday, when the company filed the rate increase, that residential rates had never paid their own way AWthat "local rates can no longer hide behind g-distance." THAT LONG-DISTANCE would no longer sub- sidize local service should mean lower long-dis- tance charges, and that was the only consolation Roth could offer consumers. Don Butler, attorney for the Texas Municipal League, denounced Bell's claim as a mas- sive propaganda job to justify a big rate in- crease. Don Butler ing the AT&T divestiture. "There has never been any proof that there was a subsidy," he said. Another critic of the subsidy rationale is U.S. District Judge Harold Greene, who is oversee - In an April court memo Greene wrote that the Federal Communications Commission, despite years of regulating AT&T, "was never able to de- termine whether, in fact, local rates had been sub- sidized by long-distance rates." GREENE SAID THAT there is no legitimate s for using the reorganization of the Bell sys- iass a means for undermining the universal ser- vice objective or as an excuse for raising local rates. Universal service is a long-standing national policy of keeping local rates as low as possible so that the maximum number of people can afford a home telephone. Although the Texas utility commission has stopped short of declaring that long-distance sub- sidized local rates, it raised intrastate long-dis- tance charges last year to keep down Increases in local rates. In last year's Bell rate case, the company asked for a $471.5 million increase, of which $407 mil- lion was to come from residential and business monthly charges. THE COMMISSION chopped that $407 million to $96.5 million — in part by accepting a hearing examiner's recommendation to boost, over Bell's objection, in -state long-distance charges by 10 per- cent to raise $79.8 million. Among the intervenors in the upcoming Texas rate case will be AT&T itself, which 18 months ago decided to give up its 22 local Bell companies to free itself of a federal antitrust suit that had kept it in court since 1974 and to get around government controls that had prevented it from entering the computer business. AT&T, however, will keep the interstate long- distance business and the bulk of the intrastate long-distance. It faces competition with other companies, like MCI Telecommunications Inc., for long-distance business. The local Bell companies will keep their mo- nopoly on the supposedly money -losing local resi- dential and business lines and retain about 25 percent of the intrastate long-distance business. Not all of the $1.7 billion increase is directly at- tributable to Bell's loss of long-distance revenue, but a good chunk is. BELL WANTS $249 million of the $1.7 billion to come from a new access charge on residential and business lines to help make up the loss of long-dis- tance. Of the $19.60 increase in the monthly resi- dential bill sought by Bell, $4 of it comes from this new "access charge" (access to long-distance service). On top of the $4 sought by Bell, the FCC has or- dered its own $4 access charge. Conceivably, then, residential customers could end up paying $8 a month in access charges even if they never use long-distance. Another $504 million would come from new ac- cess charges against AT&T, MCI and other long- distance companies themselves. Those companies can pass the charges on to their own customers — and AT&T still has more than 90 percent of the long-distance business in Travis County. Paul Roth