Groups worry about soaring phone rates

by Frank Norton,  Charleston Post & Courier

Thousands of rural South Carolina residents and business owners could see their telephone bills soar this year if a bill to deregulate local phone service gains approval in the state Legislature, according to consumer and business interest groups.

The proposed bill, which would allow BellSouth Corp. and other telephone companies to raise rates on bundled services like call- waiting and Internet access without state approval, would also eliminate key consumer protections, the groups said.

A study released Monday by the South Carolina Small Business Chamber of Commerce said 20 rural phone companies, including three serving the Charleston area, could raise rates anywhere from 19 percent to 115 percent if the bill, which cleared a Senate subcommittee last week, is passed. The bill would do that by making it easier for rural phone companies to declare themselves non-monopolistic and, thus, free of some of the price constraints that they now live under.

BellSouth and other local-service providers support the proposal, saying it would cut red-tape in setting prices and service options. “Consumers want choices and comparative shopping and that is what this bill will give them,” said John Bowen of the South Carolina Telephone Coalition, which represents small telephone companies around the state.

Marcia Purday, a spokeswoman with BellSouth in Columbia, agreed, saying the proposed legislation encourages competition and would ultimately give consumers more choices and better pricing. “There’s a lot of competition out there and that lets consumers regulate the market through the choices they make,” Purday said. “That’s been the American way for a long time.” Groups such as the South Carolina Small Busi- ness Chamber of Commerce, the state Department of Consumer Affairs and the AARP, a national advocacy group for retirees, oppose the proposal, calling it “special-interest legislation” at the expense of residents and small businesses.

“The sad thing is that these incumbent companies are monopolies and have already been given rates that guarantee them a profit,” said Frank Knapp Jr., president of the South Carolina Small Business Chamber of Commerce.

“The further rate increases would amount to pure profit for these companies and small-business owners would have to pay for it,” he said. In some markets, such as parts of rural Bluffton, rates could increase as much as 115 percent, while parts of the Lowcountry could see increases as high as 44 percent, according to the chamber’s figures.

Apart from allowing higher rates, the bill would remove state regulators’ ability to hear complaints of anti-competitive behavior.

State and nongovernmental watchdog groups say the removal of anti-monopoly protections would allow a company like BellSouth, which holds the majority of the state’s local-calling market, to gain a stranglehold by temporarily dropping rates below cost and pricing out competition. “We’re seeing South Carolina stick its toe out further than any other state in the country in terms of deregulating the largest phone company in the state and giving rural incumbent companies new freedoms to raise prices,” said Gene Regan, a spokesman for AT&T in Atlanta.

AT&T, which has competed for small businesses in South Carolina for years, recently began offering local phone services to residents as well, chiefly in BellSouth territories like Charleston, Columbia and Greenville. Regan said competition for local service already is inadequate.

“The bill would let big companies set predatory prices where competition is trying to enter,” Regan said.

CompSouth, an umbrella group of 17 competing phone companies, including AT&T, has spoken out against the proposed legislation.

“This bill takes away (state) authority over pricing complaints. That can’t be good for consumers,” the group said.

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