Asbury Park Press

Verizon Will Increase Rates For Basic Service

$8-a-month rise possible by '11

Asbury Park Press — Saturday, July 12, 2008

By DAVID P. WILLIS
BUSINESS WRITER

It will soon cost more for many Verizon telephone customers in New Jersey to make local phone calls.

Verizon New Jersey has reached a deal with the state Board of Public Utilities to allow it to raise its rates for basic local telephone calling, its first increase since 1985. The agreement keeps the service under regulators' oversight.

The agreement approved by the BPU on Friday imposes rate caps on local telephone service until 2011, affecting nearly 1 million phone lines, or about a quarter of Verizon's lines in the state.

At the same time, it cuts the number of free directory-assistance calls customers can make from four to two, removes regulatory price controls of extras such as call waiting and three-way calling, and permits increases in installation fees.

Verizon customers have paid, including taxes and fees, $18.45 a month for basic telephone service, which consists of calls to the customer's hometown and nearby towns. It does not include regional toll or long-distance calling.

The deal, which also was backed by the state Rate Counsel, will result in monthly bills, including taxes and fees, that could rise to $21.45 the first year, $24.49 the second year and $26.69 the third year. The first price increase will take affect in mid-August, Verizon spokesman Rich Young said.

The BPU said it will revaluate the rates, and New Jersey's local telephone marketplace, in 2011.

The increase affects people who buy basic local calling from Verizon and might buy other services from other carriers. Customers who buy local calling as part of Verizon telephone calling packages and bundles are not affected by the changes, Young said.

The hike also affects customers who buy only basic local service. But there are no changes to the state's Lifeline program, used by about 100,000 low-income and disadvantaged residents, who receive local service for $1.95 or less. Other services for the disabled, including those blind and deaf, also are not affected.

"The stipulated agreement reached between the board staff, rate counsel and Verizon allows Verizon to compete," BPU President Jeanne M. Fox said. "At the same time, under the agreement, the board retains its ability to protect the working people of New Jersey, as well as our must vulnerable citizens, including the elderly and poor."

In a statement, Verizon New Jersey President Dennis Bone said the BPU's decision is fair to customers and Verizon. Basic telephone rates in New Jersey have been virtually unchanged for more than 20 years, he said.

"Even with the increase, Verizon's basic rates in New Jersey will remain below average," he said.

Verizon had sought to lift regulation for basic telephone service.

State Public Advocate Ronald K. Chen said the agreement keeps needed regulation in place, protecting customers who only use basic telephone service "from the price increases that would inevitably come from deregulation."

It maintains the BPU's regulation of basic rates and service quality, Chen said. "The free market would not have provided ratepayers with these protections," he said in a statement.

The capped rate increases were kept below the rate of inflation, Chen said. "I recognize that in these difficult economic times, any rate increase is hurtful, and I don't want to sugarcoat the increases that are included as part of this settlement," Chen said.

Around the country, the trend has been toward deregulation, said Atif Malik, organizer with New Jersey Citizen Action, a consumer group. "It was a good job to make sure they maintained regulation over these essential services," he said.

Besides residential local calling increases, the agreement also:

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