Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 29, 1995 TAG: 9511290063
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: MEGAN SCHNABEL STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
"We don't need Congress to tell Virginia to open the telephone market to competition," said Jean Ann Fox, president of the Virginia Citizens Consumer Council, speaking at the group's annual conference.
Long distance service within Virginia has been deregulated for a decade, she said, and a new law taking effect Jan. 1 will open the local telephone market to similar competition.
Under the regulatory plan now in effect in Virginia, the State Corporation Commission may re-examine profit levels and order rate reductions.
The federal legislation, which is in congressional conference committee, would bar the SCC from examining rates and profits.
Costs for providing local telephone service have been falling 7 percent a year, Fox said, but consumers wouldn't benefit from these reductions if state regulators are kept from examining the carriers' profits, she said.
If the federal legislation passed, Fox said, consumers would be overcharged for local telephone service by at least $5 per month, according to the Consumer Federation of America.
Rep. Rick Boucher, D-Abingdon, a member of the conference committee and longtime supporter of telecommunications law changes that would open telephone, cable television and other services to competition on all levels, says the federal legislation would not prohibit state regulation of phone rates.
The federal bill, Boucher said, is based on a Virginia model that regulates rates through a price cap rather than by basing them on a specified return on a company's investment. Virginia's price cap system, which would be extended to the rest of the country through the legislation, forces companies to be more efficient and careful in their investments, he said.
The bill also would encourage competition for local phone service by forcing local phone companies to make their switching equipment available to cable television companies and others that want to offer local phone service, Boucher said.
Marc Wetherhorn, director of Virginia Citizen Action, a grass-roots group with more than 50,000 members, said his organization fears the federal legislation would contribute to media monopolies.
"The proposals in this legislation to allow buyouts, mergers and joint ventures, if not narrowed, would allow an unacceptable level of media concentration," Wetherhorn said.
Boucher said he shared concerns about larger companies buying existing smaller ones to get into the telephone or cable television business rather than offering competition to an existing company, but he said the chances are good the legislation will be rewritten to deal with those concerns.
The pressure to keep provisions in the legislation that would allow buyouts and mergers is coming from small cable television companies who want to be bought by large telephone companies, he said.
Boucher said that consumer groups from across the country have raised objections to the telecommunications legislation. The groups are allied with long-distance companies such as Sprint, MCI and AT&T, who, Boucher said, want a bill more favorable to them, one that would allow them to compete for local phone service but keep others out of the long-distance business.
Staff writer Greg Edwards contributed to this story.
by CNB