High in-state toll to keep in touch

Telephone: A General Assembly bill would give the state Public Service Commission a push toward competition in residential service.

January 31, 2001|By Michael Dresser | Michael Dresser,SUN STAFF

When Cindy Garagiola picks up her phone in northern Montgomery County and dials her mother in New Jersey, she pays 7 cents a minute for the call. When she calls her sister in Cockeysville, just 57 miles away, she must pay 10 cents a minute.

It's a disparity that affects phone customers all over Maryland. Garagiola calls it "pretty ridiculous."

In Maryland and most other states, the gap between the cost of state-to-state and in-state long-distance calls remains untouched five years after the passage of landmark federal legislation intended to bring competition and fairer prices to the phone system.

Spurred by consumer complaints, the General Assembly will take up the issue of telecommunications competition tomorrow as a House committee holds hearings on legislation intended to speed freedom of choice in the phone system.

The bill, sponsored by Del. Joan F. Stern, would create a task force to encourage telephone competition in the state. The Montgomery County Democrat says the legislation would give the state Public Service Commission "a big shove" to break the virtual monopoly Verizon Communications Inc. holds in the state's residential telephone network.

"It's not been a priority with the PSC. The PSC has been dealing with electric deregulation the past three years," she said.

Stern said her constituents in northern Montgomery County are upset over several issues that she believes would be alleviated in a competitive market. Some complain that decades-old local calling areas force them to pay toll charges to call Bethesda and Silver Spring. Others object to having to pay 10 cents a minute to call Baltimore, Frederick or Annapolis when they can call Seattle for as little as 5 cents under some pricing plans.

The Montgomery Village lawmaker says the high price of calling is a barrier to closer economic ties between the Baltimore region and the Washington suburbs. "It pulls the state apart," she says.

The disparity, which has nothing to do with the actual cost of completing a phone call, is also a de facto tax on customers who have close personal ties with people in other parts of the state.

Garagiola said she and her sister, Nancie Picciuto, pay heavily for their close relationship. "It's $200 a year I'm spending to call her," she said.

Her telephone bill is further swelled by the fact that she works in Frederick, 20 miles up Interstate 270 from her Germantown home but across another long-distance boundary.

"It seems ridiculous that I can't go to work in Frederick and call my doctor in Germantown without paying long distance," she said.

Patching the state into a more unified telecommunications market is no simple matter, however. It involves a complicated series of decisions on how to determine the price potential competitors would have to pay to use Verizon's network to complete calls. One effect could be an increase in basic telephone rates.

For the five members of the powerful PSC, opening the telephone market is a daunting task. They must wade through the voluminous and highly technical pleadings of the incumbent phone company and a host of potential competitors -- upstart local exchange carriers as well as powerful long-distance giants such as AT&T Corp. and WorldCom Inc.

Maryland jumped to the forefront of the national move to deregulate telecommunications in the mid-1990s when the PSC became one of the first state regulatory bodies to declare its intention of opening the local market to competition.

Verizon's virtual monopoly

But the PSC in 1996 set rates for leasing the local network that have had limited success in stimulating business competition and virtually none in drawing Verizon's rivals into the residential market. Meanwhile, long-distance companies continue to pay higher rates to complete toll calls within Maryland than they pay for federally regulated calls across a state border.

In 1998, AT&T asked the PSC to cut Verizon's intrastate long-distance access rates, charging that every year consumers are being overcharged $66 million to call other parts of the state. That request, opposed by Verizon, has been bogged down for more than two years. An effort to re-examine the cost of providing service to every home, a vital step toward competition, has been on hold since 1997.

Catherine I. Riley, who became chairwoman of the PSC in November, said Maryland is in about the middle of the pack in telephone competition. She acknowledged that the commission's attention has been diverted by electric deregulation, but added that she has made jump-starting telephone competition a priority.

Mark Cooper, a telecommunications specialist with the Consumer Federation of America, said Maryland has fallen far behind such states as New York, Texas and Pennsylvania.

Competition in N.Y.

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