Telephone Competition Should Be Encouraged


by Jon Poston
Consumer Coordinator
Arizonans for Competition in Telephone Service

As consumers, nothing makes us angrier than to pay full price for an inferior product or service. Yet that is exactly what is happening month after month to US West telephone customers in Arizona.

From January through July of this year, the Arizona Corporation Commission received 3,395 complaints about the 646 utilities they oversee. Of those complaints, 55 percent were about one company ... US West.

The most common complaints are about telephone lines that go out when it rains, the length of time it takes to make repairs, and just plain misinformation from the telephone company.

In a free market, consumers would take care of the problem themselves by switching to a competitor. Bad service would cut the number of customers, and service would either improve or the company would go out of business.

But this is US West, with a government-authorized monopoly. So we must rely on the Corporation Commission to insist that US West meets the minimum levels of adequate service.

For three years, this has meant a series of fines, totaling more than a million dollars. Those fines have done little more than annoy US West. There has been no improvement in service. In fact, service complaints are higher this year than last year.

At a recent Corporation Commission meeting on telephone service failures, customers told one horror story after another.

The day-long meeting concluded with the usual dog and pony show from US West in which the company marshaled its excuses. They included such gems as "Arizona is hot" and "Arizona is growing fast." Of all the familiar refrains, only "the dog ate the homework" was missing.

It is obvious that the current system of fines is getting us nowhere, and that other measures are required.

We recommend a simple solution. The Corporation Commission should set rates that encourage competition. The whole purpose of the 1996 Telecommunications Act was to introduce competition as a means of bringing local telephone customers the same benefits of better service and lower rates already obvious in the long distance telephone market.

Unfortunately, the Arizona Corporation Commission has strangled competition, not nurtured it. This has been done under the guise of encouraging construction of new facilities, when in fact it protects the US West monopoly.

As an example, the current wholesale rate for a residential line, set by the ACC, is $21.98 a month, $8.55 a month more than the retail rate. The resale discount rate, at 12 percent, is less than half the discount recommended by the Federal Communications Commission. It is ridiculous to expect competition to flourish in an atmosphere in which regulators set wholesale rates higher than retail rates.

As our own U.S. Senator John McCain, Chairman of the Commerce Committee, said in a letter to the commissioners, "The resale discount appears so low, and the loop rate so high, that they may effectively prevent competitive local telephone service in the state of Arizona."

There is no reason for Arizonans to suffer with less than adequate telephone service. Neither is there any reason for consumers to suffer with a Corporation Commission that protects the utilities rather than the people it was elected to serve.

Arizonans for Competition in Telephone Service is a statewide consumer group composed of business and residential telephone customers who believe competition for local telephone service will bring stable, affordable rates and better service.

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