Hearing touches on matters of race as well as telephone company’s rates

BY GREG EDWARDS
TIMES-DISPATCH STAFF WRITER Nov 23, 2004

Verizon’s commitment to black Virginians was questioned yesterday as a State Corporation Commission hearing got under way on the phone company’s proposed new regulatory plan.

Raymond H. Boone, editor and publisher of the Richmond Free Press, state Sen. Henry L. Marsh III, D-Richmond, and others criticized Verizon’s minority hiring practices; Boone and Marsh were among those questioning Verizon’s refusal to advertise in the minority-owned Free Press.

A Verizon spokesman later said that the Free Press’ verified circulation is not large enough to justify advertising.

Retired Richmond Circuit Judge James E. Sheffield, who appeared as a private citizen, levied similar allegations at Verizon and asked why the company didn’t have a black lawyer representing it at the hearing. Verizon attorney Jennifer McClellan asked Sheffield if he was unaware that she is an African-American.

As Sheffield left the SCC courtroom, a Verizon executive, a black woman, followed him into the hallway and was overheard telling him that 40 percent of the company’s executives in Richmond are black. «If that’s true,» Sheffield said afterward, «it’s a story that needs to be told.»

The woman declined to talk with a reporter, but Verizon spokesman Harry Mitchell confirmed that her figures were correct regarding the company’s middle and upper level managers in Virginia. Black executives include the company’s construction director for all of Virginia and its customer operations manager for southern Virginia, Mitchell said. Verizon spent $31 million with minority suppliers in Virginia last year, Mitchell added. VERIZON

The state commission also heard opening statements from Verizon and other phone companies participating in the regulatory case.

Verizon, the state’s largest local phone company, said it needs a new state regulatory plan, because the growth of competition from the Internet and wireless and competitive local phone companies in Virginia. The company said it requires more flexibility if it is to compete on a fair basis.

Verizon lawyer Lydia Pulley said the company’s current plan was approved in 1994 when competition was not legal, Verizon served 100 percent of its territory, the Internet was in its infancy and wireless phone companies were few. Competitors, who serve 1 million Virginia phone lines and 30 percent of Verizon’s traditional market, are fighting the proposal because it would put Verizon on an equal regulatory footing with them, Pulley said.

The proposal would allow Verizon to raise its basic residential and business rates to the highest Verizon rate in the state. For example, small businesses in some localities pay a $21.96 basic rate, but it could rise under the plan toward $53.18, the current highest rate. Rate increases would be limited to 10 percent per year, but the ceiling could also rise yearly with inflation.

The proposed plan would also eliminate some service quality requirements for raising rates and some of the reports Verizon must file with the SCC. It would allow, but not require, the company to reduce its access charges on long-distance companies, charges that help subsidize phone service in rural areas where costs are greater.

Long-distance carriers AT&T and MCI said they support Verizon’s proposal but want the access charges, which they pass on to consumers, reduced immediately. They also said that in a competitive market, Verizon should not expect a guarantee that revenues lost from cutting access charges would be replaced by some other source of revenue.

A coalition of competitive phone companies, the state attorney general’s consumer counsel, the SCC staff and others argued that Verizon had not shown that it meets four conditions set out in state law for approval of a new regulatory plan, including that the plan be in the public interest. Competitors said they were concerned that if the plan is approved, Verizon will lower its rates for basic and optional phone services and squeeze them out of business.

SCC staff attorney Robert Gillespie told the commission that it had a positive duty under state law to protect the affordability of local phone service. Under Verizon’s plan, some customers in rural areas may wind up paying more and receiving less service than those in more populated areas, he said.

Other public witnesses said they were also concerned about the impact of the plan on rural consumers and economic development.

Rural residents, including the low-income elderly, and small businesses will be forced to pay more for service that is no better than it ever has been, said Irene Leech, president of the Virginia Citizens Consumer Council. And the plan will increase Verizon’s ability to manipulate the marketplace to hurt competitors, she said.

The hearing continues today. A decision is expected by early January.

Any ideas? Staff writer Greg Edwards can be reached at (804) 649–6390 or gedwards@timesdispatch.com