Bell Atlantic tries to stall rate cut Firm acts after MCI and people's counsel sought bigger discount

December 31, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

In a move that threatens to delay a 2.5 percent cut in the average Marylander's phone bill, Bell Atlantic Corp. has asked the state Public Service Commission to stay enforcement of its Nov. 8 order for Bell Atlantic to cut its rates by $32 million.

The traditional local phone monopoly took the move Dec. 23 after MCI Communications Corp. and the state Office of the People's Counsel appealed the PSC's order to the Circuit Court in Wicomico County in hopes of forcing a much larger rate cut.

Bell Atlantic's position: With the case in court, anything is possible, including a rate cut smaller than the one the commission ordered, even though the PSC order was heavily criticized as too kind to Bell Atlantic. The People's Counsel, which represents ratepayer interests before the PSC, had recommended a $218 million rate cut; the PSC's staff recommended $117 million.

"We really don't know [if the court will reduce the commission-ordered rate cut], but there's always that possibility," Bell Atlantic-Maryland spokeswoman Sandra Arnette said. She said that if the company went ahead and cut rates, only to see the Wicomico court overturn the rate reduction, Bell Atlantic would not be able to recover the money it lost.

That rationale brought tart responses from both AT&T Corp. and MCI.

"Disingenuous is how I would describe their filing and their attitude toward customers," said MCI governmental affairs manager Seth Maiman. "This is $32 million people should be getting in their pockets. You don't have to be a rocket scientist to know we're not going to be in there asking for less."

AT&T spokesman Dan Lawler called Bell Atlantic's move the latest of a series of delaying tactics by Bell operating companies since the new federal telecommunications law passed in February began to open the door to more competition and lower prices.

"It's another example of Bell Atlantic holding onto the cash at the expense of the customer," Lawler said.

The specific rate cuts involved in the wrangling are reductions in the charges long-distance carriers pay to local phone companies to carry long-distance calls into customers' homes and offices from the long-distance carriers' networks.

Long-distance networks carry calls between cities but do not have the comprehensive, house-by-house coverage of local phone systems, forcing AT&T, MCI and the like to buy that service from local carriers. The price of that service is regulated because the local phone service industry has traditionally been a Bell-dominated monopoly.

But long-distance carriers have charged that the prices Bell companies charge for completing calls are six times higher than the cost of providing the service.

Maryland's looming cuts in access rates were part of a broader order that shifted the state's rules governing phone rates toward regulating prices rather than regulating profits. The shift to a so-called "price cap" system, a move most states made before Maryland acted, is designed to encourage innovation by letting Bell Atlantic keep money it saves by making its network more efficient, instead of being forced to pass the savings on to consumers.

In addition, it sets standards for phasing out regulation completely as more companies enter the local phone service business.

People's Counsel Michael Travieso said his office's petition challenging the order, filed Dec. 4 but not accompanied by a formal public announcement, was filed in Wicomico County because the People's Counsel thinks the commission's order will harm rural consumers the most.

"It's entirely possible that because of the prices and some of the other terms in the order that competition will come first to business services and urban areas," Travieso said. "With better provisions and better rates, competition could have come sooner to rural areas."

AT&T added yesterday that Bell Atlantic's move endangered AT&T's plan, announced Dec. 18, to cut rates for long-distance calls within Maryland by 17 percent, or $18 million, effective tomorrow.

That cut was designed to pass along the cut in the charges AT&T pays Bell Atlantic to complete its calls, but AT&T last week told the PSC it wants to delay the new rates until the access charge issue is resolved.

"Here we are, ready to pass along the access charge reduction and now there's nothing to pass through," Lawler said.

Daniel Gahagan, executive secretary for the PSC staff, said the commission will have to approve the stay before it becomes effective.

Pub Date: 12/31/96

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