Alaska regulators consider hike in fees for basic phone service starting in 2006

Posted: Friday, September 17, 2004

ANCHORAGE - Alaska utility regulators are expected to decide in two weeks whether to raise the cost of the state's basic phone service $3 a month by 2007.

The plan under consideration is to assess a $1.50 monthly fee on all local phone lines starting in April. The fee would rise to $3 a month in April 2007.

The added charge could be used to lower long-distance charges while covering the network access fees that long-distance companies pay for intrastate calls carried on a local phone company's lines.

Regulators have until Sept. 28 to take action on the rule change, which was first proposed in 2001.

The state attorney general's office says the charge would be unfair to consumers who don't make a lot of long-distance calls, and has urged regulators to change the proposal to make it more equitable.

Long-distance companies pay network access fees on a per-minute basis. Everyone with a local phone line would pay the fee, regardless of long-distance usage.

"That just isn't a reasonable proposition," said Patrick O'Tierney, chief assistant attorney general for regulatory affairs and public advocacy. "There's no value proposition in it for those subscribers that will be paying the freight."

The Regulatory Commission of Alaska in 2001 began a process to reform the complex system under which fees are assessed.

One reason was to balance a discrepancy between the federally regulated fees for interstate calls and the state-regulated fees for in-state calls. The commission said when Alaska's access charge system was established, prices were set above cost to subsidize other services, and those subsidies are being removed.

Gordon Diamond, a spokesman for AT&T Alascom, one of the state's leading long-distance companies, said the current in-state network access fee is 13.2 cents per minute compared with 1.5 cents per minute for intrastate calls. That's created an "artificial floor" for long-distance prices in Alaska, he said.

"The goal is to bring long-distance rates down," he said.

State regulators also were aiming to address an advantage held by competing telephone technologies, including wireless and voice-over Internet, which don't pay network access charges.

Long-distance companies would be required to pass on their savings to customers "through infrastructure development or reductions to long-distance rates," the proposed rule change says.

O'Tierney said if the costs are going to be shifted to every local user, then long-distance companies should have to cut rates to make up the difference.

He noted that even if lower long-distance rates were required, those consumers who don't make any long-distance phone calls still would be paying more for the same service.

The attorney general's recommendation for a required lowering of in-state long-distance rates "at least would make a considered attempt to provide equity," O'Tierney said.

The regulatory commission has done a poor job of making the public aware of the proposed changes and their potential impact on phone bills, O'Tierney said.

The attorney general's office is recommending that the commission conduct a public outreach and education program to make consumers aware of the proposed changes and seek their input before making any decision.

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