Asbury Park Press

Verizon Deal Would Drive Up Basic Phone Prices

Asbury Park Press — Wednesday, May 13, 2015

Written by
David P. Willis

State regulators are considering a deal with Verizon Communications that opponents fear will raise basic telephone prices for thousands of customers, including senior citizens and disabled residents.

On May 6, Verizon and staff of the state Board of Public Utilities signed a proposed settlement that would deregulate pricing for basic residential telephone service, single-line business service, residential service connection charges and directory-assistance service. It must be approved by the BPU.

It imposes rate caps on basic residential service rates, which are the among the lowest in the country, for the next five years with the limits lifted afterward. Under the proposal, the basic rate for phone service, $16.45 a month, would rise $1 each year for the next four years and $2 in the fifth year, representing a 36.5 percent increase over the five-year period.

"We know that these services are necessities for all New Jerseyans, but particularly those age 65 and over," said Evelyn Liebman, associate director for AARP New Jersey.

Lifeline service, a program that offers deep discounts or even free telephone service, for the poor, is not affected by the changes. Prices for other Verizon services, such as long-distance calls and Verizon FiOS, are already unregulated and can always change.

Vote soon?

Opponents fear the BPU could act to approve the settlement as early as next week, and have called on the board set it to the side and schedule public hearings.

"This proposed settlement will affect the lives of hundreds of thousands of residents. At a minimum there should be a public hearing with the proposed settlement on the table," said state Sen. Bob Smith, D-Middlesex. "This is looking like the Exxon natural resources damages settlement where everything is in the dark, nobody has a chance to make any input and we have to live with the consequences." He was referring to the controversial $225 million settlement between the state and ExxonMobil for environmental cleanups, when the state had been seeking $8.9 billion.

The BPU had no comment on the proposal.

Dena Mottola Jaborska, director of organizing and strategic program development at New Jersey Citizen Action, a consumer group, expressed concern that "consumers will be really hard hit."

"With deregulation, we can expect high rate hikes and declining service and quality," she said.

Verizon spokesman Lee Gierczynski said basic telephone service will remain affordable. The company's rates generally have not kept up with inflation, he said, adding basic telephone service would cost $20.09 per month now if adjusted for inflation.

'Robust competition'

There is "robust competition" for those services in New Jersey, Gierczynski said.

For instance, wireless carriers in New Jersey currently serve 91 percent of Lifeline customers compared with 9 percent served by companies such as Verizon, Gierczynski said. He cited it as evidence of competition even in the low-income market for telephone service.

"That very robust competition is what keeps prices in check and services in line with customer expectations," Gierczynski said. "If we fail to offer the products and services New Jersey consumers want at a fair price, we stand to lose their business."

The proposal comes nearly four years after the BPU ordered an inquiry into whether the Verizon's basic residential and business services were competitive. Hearings, including those with public comment, were held in 2012.

Stefanie Brand, director of the state Division of Rate Counsel, which represents ratepayers in cases before the BPU, said her office didn't know about the BPU staff's settlement proposal until it was emailed to her office last week after hours.

"We are obviously very concerned that this was negotiated without the involvement of our office," Brand said. The division will ask the BPU to reject the settlement and reopen the case.

Opponents also expressed concern over a settlement provision that could eliminate service quality standards for residential and business single-line basic service after three years.

"We have a lot of areas, especially the southern part of the state, where municipalities are complaining about the quality of service of their phone lines," said Piscataway Mayor Brian Wahler, who is also president of the New Jersey League of Municipalities.

But Gierczynski said the move redirects the requirements to state law rather than regulations. He said many of the metrics are "are obsolete and mean nothing in the competitive marketplace Verizon New Jersey" operates in today.

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