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Nathan Newman

Nathan Newman

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Phone Deregulation Hitting Low-Income Families Across Country, but Advocates Stall Bill in New Jersey

Posted: 04/21/11 03:20 PM ET

Even as broadband has rolled out for many customers around the country, lower-income families still dependent on traditional phone service have faced the quiet threat of "deregulation" bills pushed around the country to raise landline rates and cut consumer protections.

While media hype is often focused on broadband, there are still millions of Americans, especially the elderly, who depend solely on a landline phone for their connections to the outside world. And deregulation bills pushed around the country in recent years have meant skyrocketing phone rates on lower-income households least able to afford the cost increases.

Deregulation Moving in the States: Just yesterday, the Florida House approved HB 1231, which would repeal a state law limiting rate hikes and revoke most of the Public Service Commission's remaining power over the telecommunications sector, which has been scaled back over the years. It passed by 110 to 4.

Florida looks likely to join Kansas, where the Governor this past week said he would sign a bill passed by the legislature there to enact a similar deregulation anti-consumer boondoggle in that state, joining the dozens of other states that have enacted this particular corporate giveaway in the last couple of years

"This bill exists to help a company make more profits. Very simple," said Rep. Forrest Knox, (R-Altoona) who serves as vice-chairman of the Kansas House Energy & Utilities Committee in an interview with the Wichita Eagle. "And I don't think we're in that business. We're in the business of universal telephone service in this country."

New Jersey Consumer Groups Block Verizon Legislative Steamroller: One spot of good news is New Jersey where a deregulation bill has apparently stalled for the session.

Back in January, a bill to almost completely eliminate rate regulations and consumer protections sailed through the state Assembly and was poised to sail through the state Senate until a range of groups ranging from AARP to Citizen Action to the Communication Workers of America mobilized against the bill.

Last month, the state Senate voted to delay consideration of the bill while lawmakers rewrite the language (see Loosened Phone Controls Hits Snag - WSJ.com):

Earlier this year, the bill sailed through the state Assembly with bipartisan support. But it stalled Monday in the state Senate after a lobbying campaign blossomed. The AARP warned its members the bill would cause rates to go up and hurt customer service. "This will be a big change," AARP spokesman Douglas Johnston said.

AARP and other grassroots groups continued to generate massive numbers of letters and phone calls into the legislature in opposition to the bill. On Tuesday, on a conference call with 17,000 AARP members, Gov. Chris Christie expressed "grave concerns" that the bill would hike phone bills for seniors and said he would oppose the bill in its current form. That apparently dooms the bill for this session, since Sen. Raymond Lesniak (D-Union), a prime sponsor of the bill, said he "wouldn't move it without the governor's support, because it would be an exercise in futility. Been here, done that."

Report Details Harm from Deregulation Across Country: This was a campaign I was personally involved in through co-writing a report on behalf of the policy groups, Demos and New Jersey Policy Perspective.  The report, How To Raise The Phone Bill Of The Average New Jersey Family: What S 2664 Will Do To NJ Consumers, detailed how deregulation has hurt consumers in states around the country:

  • One national survey found that out of 20 states surveyed with deregulation in place, 17 of those states had seen rate increases up to 100 percent.

  • A review of four years of deregulation by the California State Senate found large increases in rates and increases of several hundred percent for some services.

  • Higher phone rate increases would follow the pattern of cable deregulation where lower prices did not result from deregulation.

  • One critical loss from phone deregulation in other states has been not just higher rates but also the loss of an effective regulator who can enforce consumer rights.

As big a threat to consumers is the history of Verizon (the main landline phone company in New Jersey) selling off its landline assets to undercapitalized companies which then went bankrupt.   Shareholders, creditors and ratepayers have condemned Verizon for the financial manipulations behind these deals as "Enron-style" skullduggery.  Customers in some states have suffered outages, poor customer service, and billing problems, which, in many cases, were not restored to pre-merger levels.

Challenging Deregulation Ideology: Telephone deregulation, like banking and electricity regulation, has been driven by ideology, not any evidence that they improve service or benefit consumers.   In fact, taking New Jersey as an example, we have a state with some of the lowest phone rates, yet also a state that ranks as essentially as the top state for delivering high-speed broadband to its residents. 

While no doubt the decisive reason for the legislative leaders tabling the bill and hopefully rewriting it significantly were the tens of thousands of phone calls coming in from AARP members and other groups protesting the likely rate increases, it was nice to see editorial writers in the state rejecting the deregulation myth and attacking the bill, using a lot of the data from the report. A few typical headlines:

While New Jersey counts as a victory against mindless deregulation at the expense of low-income families, it is a small victory (and potentially short-term one) in the context of so many states moving bad policy around the country. Even as we transition to broadband and new technologies, we do need more public attention to protecting those still dependent on traditional technology like landline phones.

 

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