Asbury Park Press

Top Utilities Regulator Sees Signs Phone Companies Competing

Asbury Park Press — Tuesday, May 6, 2003

By DAVID P. WILLIS
BUSINESS WRITER

TRENTON — The state's top utilities regulator told a state Assembly committee yesterday that there are signs that competition is taking hold in New Jersey's telecommunications market.

State Board of Public Utilities President Jeanne M. Fox credited state regulations that lowered the wholesale prices Verizon can charge competitors to lease its telephone network as the catalyst for competition.

Verizon New Jersey has been highly critical of those prices, blaming them in part for the company's recent business problems.

Fox gave legislators a rundown on the state of telecommunications competition in New Jersey since last July, when major long-distance and local telephone companies started competing for each others' customers: Verizon has more than 700,000 long-distance customers in New Jersey, compared with nearly 290,000 at the end of October, Fox said. Meanwhile, more than 550,000 Verizon New Jersey local telephone lines have been switched by customers to competitors such as AT&T Corp. Only 40,000 lines, were in the hands of competitors about a year ago.

"We are in the early stages of competition for not only local telephone service but also for all telecommunications services in New Jersey," Fox told the state Assembly's telecommunications and utilities committee.

The committee said the purpose of the hearing was to gather information. "I would like to get as much testimony as possible to find out where we are and if there is anything that needs to be done," said state Asssemblyman Wilfredo Caraballo, D-Essex, the committee chairman.

Fox said the wholesale network prices set by the BPU made the competition possible.

Last July, the BPU reduced the charge to lease Verizon's entire network -- everything from the switch to route the call to the telephone line to a home -- to $12.62, a more than 40 percent reduction. The same day AT&T said it would offer local telephone service to customers in its home state.

"During the short time that they (AT&T) have been providing local service using (Verizon's network), the company has been successful in attracting local customers," Fox said. "As is evident in New Jersey, access to Verizon's network has provided the only feasible way for competitors to enter the market on a wide-scale basis in the near term."

Verizon New Jersey President Dennis Bone has criticized the BPU's reduction of the wholesale prices. The entire-network charge of $12.62 per month is below Verizon's cost of about $19 to build and maintain the facilities, Bone told the committee. The company is appealing the BPU's rates in federal court.

Meanwhile, competitors are going after high-end customers, he said. "We are effectively paying our competitors . . . to take our very best customers."

The company is losing 55,000 lines per month, he said. And the company loses revenue to the tune of an average of $27 per line when a retail customer switches to a competitor that uses Verizon's network.

Bone acknowledged that other aspects of competition are also eating into the company's customer base, such as more people switching to wireless telephones or canceling a second line for the Internet and ordering high-speed cable modem service instead.

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