Plan would allow for raising of basic residential, business bills toward highest in state

BY GREG EDWARDS

A new state regulatory plan sought by Verizon could mean higher local telephone rates for some of its residential and business customers.

The plan was filed with the State Corporation Commission late Friday. If approved, it would cover Verizon Virginia (the former Bell Atlantic) and Verizon South (the former GTE). Verizon has asked for its approval by Oct. 1.

The plan, devised to help Verizon compete with rivals, would allow the company to raise its basic residential and business rates to the highest Verizon rate in the state.

Currently, the lowest rate paid by Verizon residential customers is $10.12 in rural areas such as Clover, Haysi or Narrows. Under the proposed plan, those rates could rise to a statewide ceiling rate of $15.45, which is now paid by some former GTE customers.

For businesses, the lowest rate for a single phone line, $21.96, is found in some parts of the former GTE territory. Under the plan, business rates could climb to a maximum of $53.18, which some Verizon customers in the old Bell Atlantic territory pay.

The Verizon plan would allow the rates to be adjusted annually for inflation. It also would limit annual increases toward the statewide ceiling to 10 percent annually.

Verizon wants regulatory changes so that it can compete with long-distance, cable-television and new phone companies that have been cutting into Verizon’s local phone business.

Much of what Verizon is seeking was sought through legislation in this year’s General Assembly. The bill failed as introduced, but the legislature passed a one-paragraph policy statement backing telephone competition.

When it introduced the legislation, Verizon argued that a subsidy should be eliminated that has kept phone rates in rural areas below the company’s costs of providing service. Last month, an SCC hearing examiner suggested that the lawmakers’ policy statement would require an end to the subsidy.

Under its plan, Verizon could reduce the subsidy — which long-distance companies and their customers pay in the form of charges for access to the local-phone network — while increasing other rates to make up the lost revenue.

Mark Keffer, AT&T’s Virginia president, was not familiar enough with the Verizon plan to comment on its overall soundness, but he said that if it allows Verizon to address the access-charge issue, it is «a step in the right direction.»

William Irby, head of the SCC’s communications division, said he was encouraged that Verizon filed a plan with the commission rather than seek changes through legislation. «At least they have it in the right ballpark this time.»

Having the plan before the commission will give the public a chance to comment on it and will make it subject to due process and all the SCC’s public-interest tests, Irby noted.

Verizon contends that its plan complies with the new state competition policy and with a 1993 law that allows phone companies to propose alternative forms of regulation.

«Sweeping industry changes» have created the need for a new regulatory plan, Verizon said in its SCC filing.

In the document, Verizon’s state President Robert W. Woltz Jr. cited the increased competition from new local carriers, including long-distance carriers such as AT&T and MCI that have invaded local markets. In Virginia’s major urban areas, competitive carriers serve up to 45 percent of the phone lines, including up to 40 percent of residential lines, Verizon said.

Wireless and broadband telecommunications services, such as cable-modem and DSL, also have emerged as strong competitors, Verizon said. With wireless companies offering buckets of any-distance minutes, increasing numbers of customers are using wireless phones in place of wireline connections, the company said.

Verizon reported that more than 40 percent of the wireline customers in its service territory buy bundles of local and long-distance service from Verizon or its competitors and no longer buy service at rates set by regulators. Competitors, including cable-television companies, are offering phone service over the Internet and in some cases totally bypass the local phone network, Verizon noted.

The company said the plan will enable it to raise prices of its basic services closer to its costs but ensures prices will remain affordable. By reducing subsidies, the plan will stimulate competition, and by reducing the regulatory burdens on Verizon, it will help the company maintain good service, Verizon said.

If the plan didn’t give Verizon greater competitive flexibility, the company wouldn’t have gone to the trouble of proposing it, Woltz said yesterday. «We have some high hopes of it having a positive impact.»