WisBusiness: SBC says detractors overreacting to rate raise

By Brian E. Clark

MADISON – SBC and its detractors are again trading sharp words, this time over a decision by SBC to raise rates for several of its economy calling plans by $1 or less in January.

Spokesmen for the consumer group Citizens’ Utility Board, AARP and competitors TDS Telecom, AT&T and MCI all said they expect more increases from SBC.

But Jeff Bentoff, a spokesman for SBC, said the critics’ charges are “ridiculous and illogical and part of a plan by them to bully the state Public Service Commission into rolling back the wholesale rate increases it granted SBC in October.”

Earlier this month, the competitors asked the PSC to reconsider its decision to let SBC 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.

PSC spokeswoman Linda Barth said she expects her agency to hold a hearing on the opponents’ request by Dec. 2.

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

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.

SBC argued that it was unfair to make it subsidize its competitors. But the commission decided the new rates were are “fair and balanced.”

The panel also predicted that competition from wireless, Internet and cable providers would continue to grow in the state to help hold down prices.

During the run-up to the decision, both sides bought 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 were filled with opinion pieces backing or opposing SBC’s request.

Drew Petersen, director of legislative affairs for TDS Telecom, predicted the coming SBC residential price increases are just the beginning of a wave.

Because of the wholesale rate increases granted by the PSC, Petersen said his company has dropped plans to compete with SBC in North Milwaukee, Sheboygan, Stevens Point and other areas.

“Without competition, SBC will almost certainly be increasing its prices,” he said.

“They promised they wouldn’t raise rates, and boom, they are already here. They also said they would be hiring new employees and instead they are laying off thousands.”

Instead of soliciting new retail customers, he said his company will focus its efforts on attracting small businesses. He said he did not know if his company, which has 250,000 customers in the state, will be increasing its rates.

“Even though SBC says otherwise, at the end of the day this should give pause to policy makers who were sold a bill of goods,” he said.

Charles Quigley, executive director of the Citizens’ Utility Board, said he too expects phone rates to rise.

“SBC has been aggressive in other states and I expect them to do the same here,” he said. “Consumers should get ready for higher retail rates. It’s misleading for SBC to say otherwise.”

Poppycock, responded Bentoff.

“Their charges don’t make sense,” Bentoff said.

“If we are getting more money from our wholesale customers, then logic would tell you that we could lower our retail rates,” said.

“Price increases on these less-popular plans have nothing to do with the PSC decision and it is unseemly for TDS and others to claim that it is so.

“It is pure politics, trying to pressure the PSC,” he said.

Bentoff said SBC’s competitors were looking for any opening to criticize his company.

“You notice they aren’t saying anything about us dropping the DSL rates $10 at the same time,” he said.