MILWAUKEE — Customers of smaller telephone companies could have higher phone bills after Wisconsin regulators approved a fee increase of about $2 a month for each phone line SBC Communications Inc. rents to competing telephone companies.

SBC had sought an increase in the line rental fees to $21, but the Wisconsin Public Service Commission on Tuesday approved an increase from $10 to $12 a month.

The 1996 Telecommunications Act forces SBC to lease out its lines and equipment to competing phone companies in exchange for the right to offer long-distance service. The act was aimed at fostering competition in the telecommunications industry.

Wholesale lease rates are determined by a federal formula.

SBC leases 600,000 lines to other phone companies in Wisconsin, according to the PSC.

San Antonio-based SBC said the average statewide rate of $12.24 would not cover the cost of its investment to build and maintain Wisconsin’s telephone network.

SBC considers the low rates in Wisconsin as a form of government-mandated subsidies to its competitors, said Jeff Bentoff, an SBC spokesman.

«We think this is bad for consumers,» Bentoff said. «It will not encourage new investment in the state of Wisconsin.»

Charlie Higley, executive director of the Madison-based Citizens’ Utility Board, said consumers will pay the price when competing phone companies pass along the increase.

Commission chairwoman Burnie Bridge said the commission balanced SBC’s needs with those of competing companies and consumers in its decision.

She said increased phone competition has brought more choices and lower prices for telephone service and regulators want those trends to continue.

SBC has also been granted rate increases in several other states, including California, Michigan, Illinois and Indiana. The new wholesale rate of about $12.24 in Wisconsin compares with $11.70 to $12.20 in Michigan, and $13.53 in Illinois, according to the Wisconsin commission.