WisBusiness: Commission allows SBC to boost ‘last-mile’ leasing fees

By Brian E. Clark

MADISON – The state’s Public Service Commission Thursday to let SBC Wisconsin increase the fee it charges competitors to lease the so-called “last mile” of telephone wire to homes and businesses by 13 to 20 percent.

The wholesale price hike of between $1.50 and $2 follows decisions by regulators in Illinois, Michigan, Indiana and California to approve increases.

Officials from both SBC and the companies that lease lines from the regional carrier criticized the vote, as either too little or too much.

SBC had asked the commission to nearly double its rate here in Wisconsin – from an average of $10 to about $19 – but the panel whittled that down considerably Thursday, agreeing in some areas with SBC’s accounting and disagreeing in others.

In a statement, the commission’s three members said the new rates are “fair and balanced.” They also said they believe competition should continue to grow in the state and that SBC will be sufficiently compensated for use of its network.

Competition among telephone providers continues to increase in Wisconsin, the statement said, which helps to drive prices down and creates more service choices for customers.

The commission will draft a final written order that will include the new rates by Oct. 13, the legal deadline for the order. The rates will take effect when the order is issued. Commissioners said they will closely monitor the telecommunications market to make sure competition continues to flourish and customers have service choices at reasonable rates.

SBC’s competitors – including TDS Telecom, AT&T and MCI – all had argued that SBC was already being fairly compensated for lines the federal government says it must lease to rivals.

They charged that the SBC rate hike was aimed at driving competitors out of business and would result in higher rates for customers, decreased competition and diminished service, especially for small business operators.

SBC officials, however, said keen competition from wireless, cable and Internet phone service providers would hold down prices – though they acknowledged it might cut into competitors’ returns.

The controversy heated up noticably in recent weeks, with both sides buying numerous ads worth hundreds of thousands of dollars to take their case to the public. In addition, the editorial pages of the state’s newspapers and Web sites have been filled with opinion pieces backing or opposing SBC’s request.

Drew Petersen, a spokesman for TDS, said his company was dismayed by the commission’s decision.

“This represents an unnecessary and unwarranted financial subsidy for SBC and an unexpected tax on consumers and the competitive local phone providers who have brought better service, lower prices and more innovative products to our state’s residents,” he said.

In a statement, SBC officials also expressed disappointment with the ruling. They said the $9 hike requested by SBC would have allowed the company to recover its actual costs.

Even with the wholesale rate increase, they said the Badger State’s wholesale rate will continue to be one of the lowest in the country.

“Wisconsin missed a great opportunity to improve the outlook for telecommunications investment and job creation and retention,” the statement said.

“The failure to significantly reduce large government-mandated subsidies does little to show that Wisconsin’s business climate is conducive to additional telecom investment and job growth.

“Despite false claims made by several other providers, a vote to bring wholesale rates much closer to cost would have been good for consumers. Telecom competition in Wisconsin is vibrant.

“Requiring other providers to pay the actual costs of using leased lines would have strengthened competition and brought consumers greater benefits.”