THE guarantee of landline telephone service at almost any
address, a legal right many Americans may not even know they have, is quietly
being legislated away in our US state capitals.
AT&T and Verizon, the dominant telephone companies, want
to end their 99-year-old universal service obligation known as "provider
of last resort". They say universal landline service is a costly and
unfair anachronism that is no longer justified because of a competitive market
for voice services.
The new rules AT&T and Verizon drafted would enhance
profits by letting them serve only the customers they want. Their focus, and
that of smaller phone companies that have the same universal service
obligation, is on well-populated areas where people can afford profitable
packages that combine telephone, internet and cable television.
Sprint, T-Mobile and the cellphone divisions of AT&T and
Verizon are not subject to universal service and can serve only those areas
they find profitable.
Unless the new rules are written very carefully, millions of
people, urban and rural, will lose basic telephone service or be forced to pay
much more for calls.
Florida, North Carolina, Texas and Wisconsin already have
repealed universal service obligations. No one has been cut off yet, but once
almost every state has ended universal service I am sure we will see parts of
the landline system shut down.
Years of subtle incremental legal changes have brought the
telephone companies within sight of ending universal service, which began in
1913 when AT&T president Thomas Vail promised "one system, one policy,
universal service" in return for keeping Ma Bell's monopoly.
AT&T wants universal service obligations to end wherever
two or more voice services are available, said Joel Lubin, AT&T's public
policy vice-president.
Verizon promotes a similar approach.
Intense lobbying
State capitals are seeing intense lobbying to end universal
service obligations but with little public awareness due to the dwindling ranks
of statehouse reporters.
The Utility Rate Network, a consumer advocate group,
identified 120 AT&T lobbyists in Sacramento, one per California lawmaker.
Mary Pat Regan, president of AT&T Kentucky, told me she has 36 lobbyists in
that state working on the company's bill to end universal landline service.
People whose landline service ends would have three options.
First would be a cellphone, a reasonable substitute in many
areas. But cellphones do not work in Appalachian valleys and many rural
expanses. Cellphones cost at least $25 for limited minutes, while lifeline
services - which the companies offer to low-income people - start at $2 and,
with unlimited local calls, at about $10.
Second would be internet calling. That requires broadband
internet service. Verizon charges $49.99, plus additional charges by
unregulated calling companies like Vonage, whose rates start at $25.99. On top
of this $75 expense would be taxes and the cost of buying and maintaining a computer,
a device alien to many older and poor Americans.
Third would be satellite service. Thomas Hazlett, a George
Mason University economist who studies rural phone costs, tells me satellite
service is "the way to go for service in outlying areas".
Maybe, but it requires a computer, costs at least $29.95 and
tens of thousands of users have complained about unauthorised charges and
connection problems.
Market forces?
AT&T and Verizon also want to end state authority to
resolve customer complaints, saying the market will punish bad behaviour. Tell
that to Stefanie Brand.
Brand is New Jersey's ratepayer advocate whose experience
trying to get another kind of service - FiOS - demonstrates what happens when
market forces are left to punish behaviour, she said.
Residents of her apartment building wanted to get wired for
the fibre-optic service (FiOS) in 2008. Residents said: "We want to see
your plans before you start drilling holes," and Verizon said: "We
will drill where we want or else, so we're walking," and they did, Brand
told me.
Verizon confirmed that because of the disagreement Brand's
building is not wired. And there's nothing Brand can do about it. Verizon
reminded me the state Board of Public Utilities no longer has authority to resolve
complaints over FiOS.
Market forces cannot discipline this kind of one-sided
power.
Verizon says that New Jersey requires it to wire only 70
cities. What will happen to the elderly and disadvantaged with no place to
appeal for help when telephone service is degraded, denied or cut off?
Without universal landline service, many poor and rural
people will lose connectedness to family and work, while businesses serving
them will lose sales and their servicing costs will rise.
Taxpayers will take a hit when the sick, disabled and
elderly cannot summon help immediately because they lack phone service. Hours
of delay after, say, a stroke can turn a modest hospital bill into a huge
expense for Medicare, Medicaid or the Veterans Administration.
Some people without phones will die unnecessarily.
New technology means telephone services will change, just as
internal combustion engines replaced the horse and cart with automobiles. We
don't want regulations requiring the equivalent of a buggy whip in every car
trunk.
However, we also should not lose sight of the benefits of
guaranteed access to affordable basic telephone service. The law should not
force people to buy costly services they do not need.
Nor should we forget that customers paid for the landline
telephone system, including many billions of dollars in rate increases over the
past two decades that helped AT&T and Verizon develop their cellular
systems.
If we lose universal service, I doubt we will ever get it
back. Let's get a balanced policy rather than quietly rewriting laws to benefit
one industry.
- Reuters
*David Cay JohnstonThe author is a Reuters columnist. The
opinions expressed are his own.)
