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NEWS |
PRAISING SENATOR SIBLEY'S DECISION TO TAKE SB 560,
THE TELECOMMUNICATIONS BILL, TO CONFERENCE
May 27, 1999
"We are in full agreement with Senator Sibley's decision to take SB 560, the telecommunications bill, to a conference committee. Significant improvements in the House version of SB 560 are necessary to ensure a smooth transition to competition for residential customers. The majority of residential customers do not have competitive alternatives for local phone service and won't for several years. That's why the trade- off between lowered access charges and price deregulation in SB 560 is a costly one for consumers. Prices should be deregulated only when there are sufficient competitive alternatives.
"It is our hope that the conferees will craft a bill which will protect consumers who do not have competitive choices and at the same time encourage new competitors to enter the Texas market. The Senate bill is stronger on both of these counts, yet falls short in several areas. For example, both the House and Senate bills let Southwestern Bell recoup access charge reductions through price increases on other services. Most of the access charge reductions are triggered by Bell's entry into the long distance market, which will provide the company with a lucrative new revenue source. The long distance business will offset most of the losses from lowered access charges, therefore conferees should limit Bell's ability to increase prices on other services, particularly when there is little or no competition in the residential market.
"Neither bill effectively prevents long distance companies from targeting lowered access charges to provide even better deals for the sought-after business and high volume residential customers. Since the Legislature cannot guarantee lower long distance bills, it should limit the avenues given Bell to raise non-competitive rates by giving the PUC authority over pricing and packaging flexibility, and prices charged for discretionary services, such as Caller ID. The low-use residential customers and rural customers will be most affected by price increases in discretionary services and least likely to receive benefits from access charge reductions.
"While allowing price increases for non-competitive services, the House bill takes the opposite approach on services where there is competition developing. Bell would be able to price competitive services so low that competitors may have difficulty getting a toehold in the Texas market.
"Consumers will be best served by legislation which gives Bell flexibility to compete where there truly is competition and keeps the price ceiling on services and in geographic areas where there are no competitive alternatives."
For more information, contact Janee Briesemeister or Rafael Ayuso at (512) 477-4431.
