Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 8, 1993 TAG: 9307080075
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: GREG SCHNEIDER STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
"The telephone business as all of us once knew it has changed immensely. . . . We must take bold steps to keep pace with that change," said Hugh Stallard, president and chief executive officer of C&P.
What that means is that the phone company wants to compete in newfangled areas such as fiber optics and interactive television and doesn't want the State Corporation Commission limiting how much it can charge those new customers.
So Stallard on Wednesday announced a "three-pronged proposal," only one prong of which relates directly to C&P's regulation by the SCC. The other prongs, including the toll-free calls, are designed to show that C&P has noble corporate intent:
The first proposal is to freeze basic residential phone rates through the year 2000. This means C&P won't inflate the average customer's phone bill to cover risky new ventures.
"Our share owners, and not our customers, would bear the investment risks we must take as technology and competition reshape our marketplace," Stallard said.
After the freeze runs out, the company would raise basic phone bills by no more than half yearly inflation rates. This is a dramatic departure from current practice, in which the SCC sets the company's profits based on how much it spends to provide the services. (The other statewide utility monopoly - Virginia Power - is similarly regulated.)
The next proposal would expand local calling areas all around the state. In the Roanoke Valley, for example, Salem residents could call Blacksburg free because they are in adjoining phone networks. But they would have to pay 75 cents more a month in basic rates because of the larger service area.
Roanoke residents still would have to pay a toll to Blacksburg but would get to make free calls to Bedford County's Stone Mountain area without seeing a basic rate increase. Bedford and Roanoke residents could call each other at reduced rates. All this has to be approved by the SCC, and the public will get a chance to comment, but C&P envisions making the change in 1994.
The other prong involves using fiber-optic phone lines to connect public schools to state colleges and universities so they can have interactive, televised class sessions. A professor at the College of William and Mary, for instance, could lecture simultaneously to high schools in Salem and Craig County, and call on students who raised their hands with questions.
C&P says it will pay to install the system, then pay $1 million a year for seven years to help schools buy equipment to use it. This program will run regardless of how the SCC rules on regulating profits, Stallard said.
The first such network is being installed in Lee County, in far Southwest Virginia. In September, C&P will link two high schools in the county with Mountain Empire Community College in Big Stone Gap.
"We think our children deserve a world-class school system," Stallard said. "Our dream is to ultimately extend this world-class network to all Virginians."
Others believe the company dreams only of higher profits. "Any time the ribbon and wrapping paper is this fancy, you've got to be real suspicious what's in the box," said Jean Ann Fox of the Virginia Citizens' Consumer Council.
The consumer watchdog group has vehemently opposed C&P's efforts to shed traditional state regulation. The latest proposals are "window dressing," she said, "sweeteners" designed to cloak true motives of greed.
The rate freeze is no bargain, Fox said, because the phone company already charges too much. Computerization has slashed the cost of providing phone service, and customers should have seen bills go down instead of stay the same, she said.
Offering to expand local calling areas without dramatic rate increases just shows that "there must be an awful lot of excess revenue flowing into this company," she said.
And the offer to put interactive TV in schools all over the state?
"Our view is that elected representatives should make decisions about social engineering," she said. This plan is "a blatant bribe. They're saying, `We'll do a couple of things that sound really good, and in return we want you to allow us to do business as a monopoly in this state without limiting our profits.' . . . This is just awful, and it looks lovely, doesn't it?"
by CNB