Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 24, 1993 TAG: 9302240057
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: By GREG SCHNEIDER STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
PHONE BILL WILL TOUCH EVERYONE
Every so often a bill gets through the General Assembly that's so important it affects everybody, but so complicated almost no one agrees on what it does.This year, it's House Bill 1563: "A bill to amend the Code of Virginia by adding a section numbered 56-235.5 relating to telephone regulatory alternatives."
Consumer groups, the attorney general's office, cable TV companies and long-distance telephone companies think the bill is a bad idea. The House of Delegates approved it unanimously. In the Senate, only two voted "no." Now its fate is up to the governor.
"This is the most radical deregulation . . . bill of any state in the country that I know of," said Jean Ann Fox of the Virginia Citizens Consumer Council.
"It's a free-enterprise, fair-competition-type bill," said Del. George Heilig, D-Norfolk.
Whoever is right - and both could be - there is a bottom line: If it becomes law, the "phone bill" of 1993 will, sooner or later, reach out and touch everybody.
The measure gives the State Corporation Commission authority to implement new ways of regulating the mammoth telephone industry, including not regulating it at all.
Traditionally, the commission sets telephone rates on the basis of how much it costs the company to provide service, plus a "reasonable" margin of profit.
Like gas, electricity and water, local phone rates are controlled by the state because the service is a monopoly. You can get your dial tone only from whomever owns the local transmission system; in most of Virginia, that's C&P Telephone, which requested this bill.
Technology has opened up all kinds of phone-related businesses in the last few years - cellular communications, video and data transmission and paging services, to name a few.
C&P wants a piece of the action. But as long as it keeps to the carefully controlled waltz of state regulation, it can't jitterbug in the free-for-all marketplace alongside small specialty companies.
At the same time, many of those specialty companies are stepping on telephone company toes. Cable TV outfits, for instance, are laying fiber-optic lines in some areas, positioning themselves to offer not only the high-tech products C&P covets but basic phone service as well.
"To invest in future technology, we have to be assured . . . we can operate on a level playing field," said Ray E. Gross, Richmond area manager for C&P. The deregulation bill "allows telecommunications to be market-driven. You'll get quality for your money."
The corporation commission supported the phone company on this legislation. It wants the flexibility to regulate a rapidly changing industry as it sees fit, said Ken Schrad, spokesman for the SCC. He added that "the commission's ultimate charge . . . is based on the premise of what is in the public's interest."
Sounds safe, mundane. But don't be fooled, opponents say.
"It's a sleeper. I think it's going to have more impact than people realized," said Sen. Janet Howell, D-Reston. She and Sen. Frank Nolen, D-Augusta, cast the only votes against the measure in the whole Assembly.
Howell agreed with Fox's consumer group that deregulation could bring higher phone bills.
"I suspect that the ramifications of this legislation were not clear to legislators. C&P did a masterful job of selling the bill," Fox said.
Much of her concern comes down to a single word in the bill: affordability. Instead of requiring that phone rates be based on cost-plus-reasonable profit, the measure tells the SCC simply to protect "the affordability of basic local . . . telephone service."
That standard is fuzzy because "what's affordable to one family may not be affordable to another," pointed out James M. Paxton, a lobbyist for long-distance phone company AT&T.
To provide its service, AT&T has to pay about half of its revenues to C&P for access to local phone lines. Because it is a big corporation, Paxton said, "what's `affordable' to us may mean a higher price."
A higher price for AT&T would mean higher prices for its customers. Which is why the attorney general's office has opposed the bill, arguing before the assembly that it may not keep consumer prices down.
Fox pointed out that the technological advances C&P wants to take advantage of actually are driving down the cost of telephone services. Under a state-regulated system, that would mean shrinking phone bills.
But C&P, she said, wants to keep rates high "to bolster the bottom line and enable it to invest in other businesses."
So what, exactly, is House Bill 1563? A consumer-threatening boon to big business, or a necessary change to keep up with the times?
Depends on who you believe.
"Like a lot of things up here," said Heilig, who supported the bill in the House Committee on Corporations, Insurance and Banking, "it's a turf battle."