Bill would allow rural phone companies to raise rates

by Forrest Valdiviez, Hilton Head Island Packet

Rural South Carolina residents and business owners, including Hargray customers, could see their telephone bills increase this year if a bill to deregulate local phone service gains approval in the state legislature, according to an advocacy group for small businesses.

If passed, the bill would allow several small, rural companies, including Hargray, to raise their rates to statewide average prices, even if their current rates guarantee a profit.

A study released earlier this week by the South Carolina Small Business Chamber of Commerce said 20 rural phone companies could raise rates anywhere from 19 percent to 115 percent if the bill, which has cleared the House, is passed.

The bill requires that two cellular companies be in the same market as the rural company. Hargray has nine wireless companies in its market, which includes Beaufort, Bluffton, Hardeeville, Hampton, Hilton Head Island and Ridgeland.

Hargray officials say they are in favor of the bill, but they claim the numbers are misleading because they assume a statewide business rate of $36.95. The actual figure in rural areas, she said, is $28.70.

A third of rural companies in the state already are at that rate, said Donna Martin, spokeswoman for Hargray.

“There are a lot of groups reacting like that,” Martin said. “I won’t say they’re receiving misinformation, but they’re not receiving full information either.”

Martin said Hargray supported the bill because it would cut the red tape involved in setting prices and service options, as well as level the playing field between Hargray and wireless companies in its market.

The proposed legislation encourages competition, she said, and would give consumers the chance to purchase bundled services at better rates.

Customers who don’t want bundled services still could purchase separate, tariffed services subject to regulatory oversight.

Hargray has not taken a hard look at raising rates because the bill has not passed, she said. But if it does, prices for all services provided would be raised gradually to match state averages.

“It would make an even playing field,” she said, adding that the company has not raised fees unnecessarily since the early 1970s, and most of the phone companies have voluntarily capped business-line prices since the late 1990s.

Martin said a business line now costs $17.20 a month in Bluffton ($24.70 on Hilton Head), and the statewide average cost for such a line was $28.70 in 1997.

Frank Knapp Jr., president of the South Carolina Small Business Chamber of Commerce, said without government regulation, there is no reason to think phone companies will use a gradual approach to rate increases.

“This is not about whether we should believe in an honor system, it’s about regulating monopolies,” he said. Knapp added that there is no real competition between cell phone companies and telephone companies, thus the legislation is a farce.

Bruce Duke, executive director of the state Public Service Commission, which regulates utilities, said the commission would be happy if the bill just “went away.”

“There has to be price control … or they will be free to charge as they wish,” he said.

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