PSC orders ISDN rate cut Bell Atlantic's proposed pricing rejected at hearing

July 04, 1996|By Abbe Gluck | Abbe Gluck,SUN STAFF

The Public Service Commission of Maryland yesterday lowered the price of digital access to the Internet by as much as $13 a month below the rates proposed by Bell Atlantic-Maryland Inc., in a decision that still disappointed consumers.

The decision covered Bell Atlantic's Integrated Services Digital Network (ISDN), a technology that allows data to be transmitted over phone lines five times faster than by conventional modems. Last year, Bell Atlantic introduced ISDN on a trial basis, with prices as high as $1,200 a month for unlimited use.

Yesterday, the commission considered Bell Atlantic's proposed lower ISDN rates, hearing recommendations from the state and the Consumer Project on Technology, a Washington group affiliated with consumer activist Ralph Nader.

Calling ISDN an "other-than-competitive service," Ann Dean, a regulatory economist for the PSC, said she agreed with Bell Atlantic that rates should differ according to use, but recommended slashing the proposed rates across the board.

ISDN now costs $1,200 for unlimited monthly service, $155 for 140-hour service and $83 for 60-hour service, Dean said.

Bell Atlantic proposed cutting unlimited service to $249, 140-hour service to $60 and 60-hour service to $45.

The state recommended that unlimited access cost $236, 140 hours cost $48 and 60 hours cost $35.

Current ISDN prices are based on an average $28 start-up fee, plus per-minute charges that vary by time of day. The new prices are for prepaid packages.

PSC Chairman H. Russell Frisby said the committee supported its staff's recommendation, and ordered Bell Atlantic to refile its rates as of yesterday, with the PSC's adjustments.

But Frisby said the PSC will also conduct another investigation of ISDN's costs and hold another hearing.

"The only thing clear today is that both proposed rates are better than the estimated trial rates," Frisby said.

Bell Atlantic said it would continue to try to raise rates.

"Our prices reflect what our costs are plus an additional contribution," said John Dillon, vice president of external affairs for Bell Atlantic. "Our contribution has been cut in half."

CPT members said the state should not have accepted Bell Atlantic's stated costs.

"The staff dropped the ball," said CPT attorney Todd Paglia. He cited a Delaware study that found that, after initial hardware costs of around $27, the average monthly cost to providers per user was $1.60.

"It's a partial victory," CPT Director James Love said. The average Maryland user will now pay $45 instead of about $100 per month for ISDN service, he said. "But we're not going to accept what Bell says its costs are."

Frisby also rejected CPT's case for a flat rate, saying, "The committee needs to make sure the average user does not subsidize" more frequent users.

The state compared Bell Atlantic's prices nationwide with other ISDN providers.

"For 60 hours, the Bell Atlantic rate is one of the lowest in the country," Dean said.

The average consumer wants a 60-hour-per-month package, which Bell Atlantic offers for $45, said John Walker, regulatory counsel for the company.

But Love argued that for those who need unlimited access to ISDN, "the flat rate Bell Atlantic is offering is far higher than any other rate in the nation. The $249 rate is about 10 times higher than in any other state."

In Ohio, Ameritech provides a flat rate of $32.20 for unlimited use, Love said.

Yesterday, Delaware's PSC finalized plans for unlimited service at $28.02.

NATCO, an Arkansas provider, offers ISDN service for $17.50 to the 4,000 residents it serves. The rest of Arkansas' residents pay $97.50.

"They don't seem to want residents to subscribe," said David Lescher, an engineer who testified on his own behalf.

Since its introduction, only about 450 residents have signed up for ISDN, according to CPT.

Calling the pricing "discriminatory," Michael Walsh, another engineer, said, "The tariff ensures that only mid- and upper-class households have access."

Many said children with ISDN access have an educational advantage.

Jonathan Lasser, a student at Goucher College in Towson, said that since he lives off-campus to save money, he does not have college access to ISDN. Since he cannot afford it at home, he said he is "at a competitive disadvantage."

The two sides also disputed whether Internet access was a discretionary service.

"At this point it looks discretionary, but when the phone was invented only the wealthy had it," said Theresa V. Czarski, assistant people's counsel for Maryland's People's Counsel. "In a few years, ISDN will be considered standard, so make it basic now."

Pub Date: 7/04/96

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