By Jerri Stroud

Of the Post-Dispatch

02/11/2005

SBC Communications Inc. is asking Missouri regulators - and legislators - to free it from regulations that limit price increases.

The Missouri Public Service Commission recently completed hearings on the company's proposal to reclassify nearly all of its services as competitive. Currently, rates for basic local services may increase no more than the consumer price index for telecommunications services. Other services can increase up to 8 percent. Neither limit would apply if the services are considered competitive.

SBC said the proposal and related bills in the Missouri House and Senate reflect increasing competition for telephone service from wireless phones and those that use a high-speed Internet connection to transport calls.

The Senate Committee on Commerce and the Environment will hold a hearing on Senate Bill 237 at 8 a.m. Tuesday in Jefferson City. The bill would declare services competitive in any area where three companies provide services, whether they are wired, wireless or computer-based voice-over-Internet-protocol services.

SBC is seeking the changes "absolutely based on the changing nature of the industry," said spokeswoman Ellen Bogard. SBC competes with cable system operators and wireless companies for customers, but those industries aren't regulated. That puts SBC at a disadvantage, she said.

But Mike Dandino, senior counsel in the Office of Public Counsel, said wireless and computer-based phones are incomplete substitutes for regular phone service. Both are more expensive than basic local phone service, and there are no discount plans for low-income users.

"It's providing competition, but I don't think it provides the competition that's necessary to really serve as a counterbalance to SBC having virtually no constraints on increasing prices or offering services," he said.

Competitive phone companies contend that the change in classification could lead companies to raise prices on stand-alone telephone service while cutting prices on bundled-services that combine local, long-distance, wireless, satellite television and high-speed Internet service, for example. Customers might end up paying more for a less robust service.

Large telephone companies could raise rates for basic residential service in areas with limited competition and use profit from those areas to woo business customers that have switched to competitors, said Ed Cadieux, senior regulatory counsel for NuVox Communications Inc.

Jerry Howe, president of Big River Telephone Co., said: "The biggest concern I have is that if they were given the freedoms proposed in the bill, they could keep rates high in some areas and make them low where they had competition."

He noted that SBC isn't asking to deregulate access fees it charges to terminate calls from long-distance companies and other carriers. SBC and other phone companies collect $485 million a year in access fees that are supposed to keep basic rates low.

Greg Harrison, president of the Missouri Cable Television Association, said, "We just don't feel like the time is right to be talking about total deregulation. We feel like it's premature."

Parties in the PSC case are expected to submit briefs by Friday, and a decision could come in the spring.

Reporter Jerri Stroud

E-mail: jerristroud@post-dispatch.com

Phone: 314-340-8384

From the St. Louis Post Dispatch