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Press Release |
Contact: Janee Briesemeister or |
AUSTIN, TX - Consumers Union today warned that a House committee substitute for a bill touted as lowering long distance rates contains millions of dollars in increased prices and surcharges for residential consumers while being unable to guarantee its promise of lower long distance rates.
Under CSSB 560, lower long distance rates are not guaranteed or even required, said Janee Briesemeister, senior policy analyst with the Southwest Regional Office of Consumers Union.
"Nothing in the bill prevents long distance companies from targeting lowered access charges to provide even better deals for the sought-after business and high-volume residential customers, while low-use customers pay the same or even higher rates," Briesemeister said.
As voted out of the Senate Business and Technology Subcommittee, SB 560 required access charge reductions to be passed through to consumers, proportional to all customer types, including those residential customers on basic rate schedules. Pass throughs would have been verified by the PUC. While the bill finally passed by the Senate weakened that requirement, the House proposal is worse.
The current version of the bill by Rep. Leticia Van de Putte, D-San Antonio, prevents the PUC from looking at how, or even if, savings on access charges are passed along to consumers.
Also, the bill places no limit on price increases for services with no competitive alternatives. Services such as directory assistance, Caller ID, call return, late payment charges, billing installment charges, "data services" and all business services are completely price deregulated.
Supporters of the bill say that basic service prices are capped. That's true, except the bottom line of every monthly phone bill will be higher, due to an increase in the Texas Universal Service surcharge and price increases in other services.
"Why should residential customers who are modest spenders see their monthly bills going up, up, up?" Briesemeister asked. "While many of these services are nonessential, they are also noncompetitive. This bill pretends there are competitors out there to keep a check on price increases, but every consumer knows that's not true."
Other charges, such as late payment fees and installment billing fees are typically set by statute or by regulators. While it can be argued that a consumer can drop Caller ID if the price gets too high, a late payment charge is a different story. "Most consumers are late paying their bills once in a while," she said. "Bell could charge a $25 or even $50 late fee and it would be perfectly legal.
Briesemeister noted several factors point to higher monthly bills if this bill passes:
· Southwestern Bell Telephone (SWBT) has already sought to increase the price ceiling for optional services by up to 10 percent per year. More than half of Bell's customers buy Caller ID and as many as 80 percent use call waiting. SWBT has also asked the PUC to let it charge a 5% late fee on customer bills.
· In California, SBC's subsidiary PacTel recently sought to increase the price ceiling for optional services, such as directory assistance (up to $1.10 per use); busy line verification ($3.00) and emergency interrupt ($5.00).
· AT&T has already done this-increasing the price of individual services in order to promote its bundles. Some consumers will win with the bundles, but most, who buy only basic service and usually one additional service will see their monthly phone bills increase under this strategy.
"These discretionary services are highly profitable for SWBT. If there were really competition in the residential market there would be no push by Bell to increase the price of these services," Briesemeister said.
In addition to the price deregulation of most telecommunications services, the bill will increase the Texas Universal Service Fund surcharge, by expanding the purposes of the fund. It would now include subsidies to certain phone companies providing data service to schools, libraries and hospitals, and to reimburse companies penny for penny when they reduce intraLATA (short haul) long distance rates.
