CUB Protects Basic Local Service in Qwest Settlement

Qwest has been trying to deregulate phone service in Oregon for quite a while. You may recall a bill to that effect in last year’s Legislative Session. Then last fall they filed a case with the PUC asking for deregulation and the ability to raise rates. CUB has been working defense on this issue for some years now, working to keep land-line phone service protected for those who rely on it, and we’ve recently reached a settlement.

Just a little background: Many states in the West have been convinced to go with telecommunications deregulation, including Idaho and California, which are moving toward complete price deregulation; and Washington, which deregulated everything except basic local service, and even that is going up 25%. Legislators and regulators are being persuaded when Qwest and other telephone companies plead for deregulation, due to the fierce competition they’re getting from wireless companies (an industry which has never been regulated). In this case, Qwest asked to deregulate most features and raise the rate of basic local service (the first residential line) by $2 (or 15%) during the next 4 years, and even more after the 4 years was up.

We came into our talks with Qwest in the current case at the Oregon Public Utility Commission with a few key goals: 1) protect basic local service; 2) protect unlisted numbers and a handful of other features which could be essential for reasons of safety or financial hardship; and 3) help customers negotiate the maze of telecomm pricing.

Well, we achieved what we set out to do. Basic local service will see no rate increase for at least 5 years. This means that the cost of basic local service will remain where it has been since before 1991, a milestone for CUB Executive Director Bob Jenks, since that is the period of time he’s been at CUB, and it means that basic local telephone service has not increased on his watch.

In addition, a key group of features has been capped at current rates, features such as unlisted numbers, call trace (the ability to trace a number which has called harassing a household), toll restriction (the ability to prevent long-distance or toll calls from being made from a phone), extended area service, and switched access (access to the long distance network).

Qwest also agreed that when speaking with a customer, their service representatives will always give the customer information about the lowest cost item or feature to suit their needs.

Finally, Qwest has agreed to fund an independent organization to provide comparative pricing information about telecommunications services (including wireless) to consumers. The details of the organization have yet to be worked out, but the $2 million over 5 years that will make it possible, has been agreed upon.

Deregulation was not to be completely avoided, however; Qwest will be able to raise rates under the settlement for other, non-essential features, which includes caller ID, call waiting, and call forwarding (voice mail was deregulated some time ago); but the PUC would maintain the ability to reregulate these services if the prices were no longer just and reasonable. These features are most often purchased as part of a “bundle,” which is not and never has been subject to price regulation; very few Oregonians purchase these features individually anymore, which we hope mitigates the price impact on the majority of customers.

Furthermore, in comparison to the deal many neighboring states are getting, we feel that the deal we negotiated for Oregon was a good one. Most importantly, we were able to protect basic local service, so that the many thousands of low-income people and seniors in Oregon who rely on their one land-line will not be adversely affected by the changes. And we will let our members know when clear information becomes available through the soon-to-be-created independent telecommunications consumer information organization.

We here at CUB are not big fans of the concept of deregulation in general. Deregulation of pricing, or giving a utility company complete pricing freedom, tends to be great for the company and bad for the consumer, who often has little recourse in terms of an option to switch companies. Utilities tend to be monopolies, and that’s one of the main reasons we regulate them. While many state regulators are moving ahead with deregulation, we think it is misguided and will do all we can to ensure that Oregon does not deregulate basic local telephone service.

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