Phone breaks elude state?

GCI: Federal ruling anti-consumer

Posted: Friday, June 02, 2000

Federal telephone regulators are sending a long-distance message that they're pro-consumer. But in Alaska, the message is breaking up.

Competitors in the long-distance market here are offering vastly different interpretations of Wednesday's ruling by the Federal Communications Commission. Some say the ruling will bring no overall savings to Alaskans and could even hurt phone service to the Bush.

The ruling purports to save consumers money by reducing access charges that local phone operators charge long-distance providers, with a resulting drop in long-distance rates as savings are passed on.

The FCC says Alaskans should share in nationwide consumer benefits resulting from the new rate structure, which includes consolidation of some charges and an end to monthly minimum fees by participating long-distance companies.

``It's extremely complicated,'' said Lisa Sutherland, deputy staff director for the U.S. Senate Appropriations Committee, chaired by Ted Stevens, an Alaska Republican. ``It kind of depends who you talk to whether this is a good thing or a bad thing. We're getting kind of conflicting reports.''

Alaska Lt. Gov. Fran Ulmer, the Knowles administration's point person on telecommunications issues, said a Washington, D.C., law firm retained by the state is working on an analysis of the ruling.

``We have not yet reached a conclusion on what impact it will have,'' Ulmer said. ``There are concerns about how it is tipping the balance between urban and rural users. ... This largely benefits urban ratepayers.''

Although the federal Telecommunications Act of 1996 was supposed to inaugurate an era of deregulation, the industry is still in an awkward transition to a deregulated environment, which complicates the clashing dynamics between different parts of the country, she said.

The FCC announced Wednesday it was reducing access charges paid by long-distance companies by $3.2 billion, the largest decrease ever adopted.

``Major long distance companies have committed to passing through these reductions to consumers,'' according to the FCC news release.

But in Anchorage, officials of General Communication Inc., one of the two top providers of long-distance service in Alaska, said the pro-consumer spin on the new ruling applies only to the Lower 48.

``It's a very bifurcated plan,'' said Dana Tindall, senior vice president for legal and regulatory affairs.

Access rates will not be reduced in Alaska, because local telephone operators were not part of the deal that was struck, Tindall said. That means access charges will be seven times higher in Alaska than in the Lower 48, instead of the 3-to-1 ratio that exists now, she said.

That will be a disincentive for providing service, particularly in rural Alaska communities, Tindall said. In the Bush, ``It's unprofitable now. (With the new ruling), it's major losing-your-shirt.''

Even in Juneau, consumers could expect to see a halt to innovation in telecommunications, Tindall said.

In Juneau, local operator PTI Communications charges 3.4 cents per minute for long-distance access, compared to 1.5 cents charged by the local phone company in San Francisco, for example, she said. Under the FCC ruling, the rate in San Francisco will decline to half a penny, while the Juneau rate will be unchanged, she said.

FCC spokesman Mike Balmoris in Washington said Alaskans will see rate reductions, regardless, as long-distance carriers pass on savings from the lowered access charges elsewhere in the United States. And Alaska will continue to benefit from the universal service fund, Balmoris said.

Alaska Communications Systems of Anchorage, PTI's parent company, had no immediate comment on the impact of the FCC ruling.

``It's just really convoluted,'' said Mary Ann Pease, vice president of external affairs for ACS.

Julie Moore of MCI WorldCom said that while the FCC tried to do right by the consumer, the math doesn't work out over five years. Regional operating companies actually will pull in $1 billion more in revenue than under the existing rate structure, Moore said from Washington, D.C.

Meanwhile, charges on phone bills to support a universal service fund are expected to increase, Tindall said. ``Adding insult to injury,'' that will funnel the dollars of Alaskan consumers to local operating companies in urban areas of the Lower 48, she said. ``We will continue to drift away in the digital divide.''

At AT&T Alascom, though, spokeswoman Barbara Tracy said she didn't understand GCI's position.

``We're very excited about what they've done,'' Tracy said of the FCC ruling, which was reached after negotiation with AT&T and several other providers of long-distance and local service, who formed a coalition.

Tracy and Tindall agree that AT&T's perspective is different because it's a national company.

``Alaska is such a small percentage of their whole deal they don't care how much they're losing in Alaska,'' Tindall said.

Ulmer said the next step might be for Alaska to join forces with other Western states and consumer groups representing rural customers to push for additional rate relief for rural ratepayers.



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