Statement of Evelyn Liebman,
Director of Organizing and Advocacy
In the Matter of the Board Investigation Regarding the Reclassification of Incumbent Local Exchange Carrier (ILEC) Services as Competitive
Docket No. TX07110973
Public Hearing — February 14, 2008
Good morning, my name is Evelyn Liebman. I am the Director of Organizing and Advocacy for New Jersey Citizen Action, New Jersey's largest, independent citizen watchdog organization. We represent over 60,000 family members and more than 110 affiliated labor, faith-based, environmental, women's, senior citizen, tenant, neighborhood and civic organizations. We have a long history of advocating for fair and affordable utility rates and services, including gas, electric, telephone and cable services.
Telecommunications services are important to our members and every NJ resident and small business owner who depends of these services in their lives every day. We depend on these services to maintain our independence, to make life supporting contact in an emergency and in general, to stay connected with our family, our friends, the world. Any changes, particularly to the costs of these life sustaining services, have serious implications for our members, as well as all residents and particularly those on low and fixed incomes.
New Jersey Citizen Action opposes this petition and we urge the Board to reject it in its entirety. The lack of a preponderance of credible evidence, and perhaps any real evidence, to support this petition is glaringly apparent and discussed at length in the testimony filed by the Public Advocate's expert witness Susan M. Baldwin. Ms. Baldwin states:
- Verizon has failed to demonstrate that competition exists in order to discipline the rates, terms and conditions of Verizon NJ's and Embarq's mass market and Directory Assistance services.
- Verizon NJ has failed to comply with the requirements that this Board set forth to provide direct costs for the services it seeks competitive classification (and in fact, we could not even identify from Verizon's testimony provided by Mr. Vashington all of the specific services it seeks to reclassify as competitive).
- There is ample evidence to suggest that should the Board grant this petition, prices will increase, particularly given the history of Verizon raising prices upon the competitive classification of a la carte multi-line business services.
- The Public Advocate states that Verizon NJ's high earnings are evidence of its market power.
As also referenced in Ms. Baldwin's testimony, the Board should pay close attention to the Federal Communications unanimous decision just two months ago to deny Verizon's forebearance petition with respect to UNE deregulation in six of its northeastern markets, which includes New Jersey. The FCC commissioners, after a lengthy review, all disagreed with Verizon's assessment of competition in these markets. Evidence presented in that proceeding projected that granting Verizon's forebearance petition would have ultimately cost ratepayers in these targeted markets as much as $2.4 billion a year. And although this Board's review is anything but lengthy or as far as we can surmise as thorough and complete (and problematically brief) we think the NJ Board, like the FCC commissioners in the forebearance petition, disagree with Verizon's assessment that the basic telephone services in New Jersey are sufficiently competitive to warrant deregulation. Certainly the Public Advocate has provided ample, credible evidence to demonstrate that the market is not competitive, and that insufficient proof has been offered to establish the soundness of such a claim.
The dangers of premature deregulation are real – we have certainly seen this in our electricity markets – another lifeline service, where despite the grand projections of ratepayer relief through competitive electricity markets, what consumers have actually seen are prices that are more than 100% higher than they were just four years ago, no choice of providers and a total class of customers who are captive to an unregulated monopoly.
The Public Advocate estimates that this petition could cost ratepayers, including Verizon's 1.3 million residential ratepayers who buy only basic service and small businesses paying single line business rates, more than half a billion dollars a year, or $668 million dollars.
Citizen Action has no reason to doubt these projections. In fact if we look at other states that have taken the path of prematurely deregulating basic phone services, and have as Verizon would have you do here - use customers as lab rats, we find that the actual results can be and are disastrous. Instead of competition producing lower rates, which is what you would expect to see if in fact the market was competitive, here is a sampling of what consumers in these other states really get:
- In Ohio call forwarding for Verizon customers now costs $3 a month, a 300% increase from 75 cents. Call waiting services have increased in cost by 66% a month.
- Cincinnati Bell just raised basic rates for the second year in a row, this year by 7%, the maximum currently allowed under Ohio's 2006 deregulation order. We can only surmise that if given the leeway to raise the rates more, they would.
- In California, which deregulated services in 2006, Verizon basic service customers have seen 114% increases in their Local Directory Assistance Services. Bundled service plans for businesses have gone up between 6.5% to 16.5% and operator handled calls have increased by 43%.
- In California AT&T customers got their fees for returned checks raised by 276%, fees for an unlisted number were raised by 614% and their local directory assistance prices increased by 346%.
Premature deregulation results in price gouging of consumers and we have every reason to believe that Verizon's behavior in New Jersey will mirror their behavior in these other prematurely deregulated states - because, why wouldn't they. And of course the most vulnerable consumers are those who are less tech savvy or don't have the wherewithal or time to shop for better prices let alone understand how to do it. Moreover, we are concerned that because of these types of rate increases that result from a prematurely deregulated market, consumers will be encouraged if not compelled to buy bundled packages of services which are more expensive than they are paying now and that they can't afford and that they don't need. Deregulation should not force people to buy services they don't want. And unsubstantiated assertions of competitive telephone markets should not be used to protect, if not increase the profits of telecommunications giants at the expense of ratepayers.
Now is not the time to deregulate basic telephone services in New Jersey. Competition is not developed enough to protect consumers from higher rates and lessened service quality. Recent mergers among telephone industry giants, a trend that is likely to continue, reduce competitive options. Wireless and Internet telephony are not comparable in price and quality to the basic service that so many consumers still rely on.
In conclusion we urge this Board to reject this petition because to take any other action would be to act contrary to your statutory mission to provide reliable, quality and reasonably priced telephone services. Furthermore, we urge the Board to refrain from its usual behavior of seeking to make the petitioner happy, simply because they've made the request, by crafting a behind the scenes settlement that may give them something, if not everything they've asked for.
Today is Valentine's Day. We urge you to send a valentine to ratepayers today by rejecting this petition and demonstrating that not only on this day, but everyday you take our interests seriously to heart.
Thank you very much.
