by Kyle Stock, Charleston Post & Courier
June 2, 2004
By more than a 2-1 margin, the state Senate passed a bill Tuesday that would deregulate rate-setting for telephone service providers and limit the state’s ability to field consumer phone complaints.
The approval came over the objections of business-interest groups and the South Carolina Consumer Affairs Department.
If upheld by the House and Gov. Mark Sanford, the bill would allow phone companies to skip seeking state approval when changing rates on phone service “bundles” — when two or more options show up on one bill, such as a local phone line coupled with another service like call-waiting or Internet access. The legislation would also preclude the Public Service Commission from handling antitrust allegations made by competing phone companies or fielding complaints from customers who buy their services in bundles.
“We wanted to protect a healthy, competitive telephone environment, but we didn’t have the juice to get it done,” said Frank Knapp, president of the South Carolina Small Business Chamber of Commerce. “We were outmanned and outmoneyed.”
The bill passed on its third vote 28-12 after months of steady lobbying by BellSouth Corp. and other longstanding local phone companies. The House passed a similar version of the bill on a voice vote Feb. 19 but will have to approve the slightly amended draft in the next few days for it to become law. It will then go to Sanford for his signature.
Lawmakers who supported the legislation said it will lead to cheaper rates and wash uncompetitive companies out of the market.
Consumer interest groups, including state Consumer Advocate Elliott Elam and AARP, a national advocacy group for retirees, lobbied against the bill for months, saying it sets an unhealthy precedent in deregulating the telecommunications industry. They fear the bill would lead to fewer choices for consumers and eventually let Baby Bell companies like BellSouth “re-monopolize” the phone market.
BellSouth’s competitors also fought the bill every step of the way.
“It’s nothing but special-interest legislation,” said Garry Sharp, executive director of CompSouth, a coalition of competitive local exchange carriers, including MCI and AT&T. “(It) takes South Carolina customers and local phone competition out on a limb where no other states have been willing to go.”
BellSouth argued the bill would cut out a lot of unnecessary red tape and allow it to change prices more quickly without tipping off its competition. Currently, it takes a telephone company about two weeks to get an OK from the PSC to change rates.
“I’m not sure how giving us some better price flexibility so we can better compete with provi-ders is a bad thing for consumers,” said Ted Creech, BellSouth’sCharleston-area regional director. “Obviously, competitors who would not be in favor of this bill don’t want more competition.”
Companies that lease lines from BellSouth — outfits that until recently offered only long-distance service — said the bill is an effort to run them out of the market. They expect BellSouth, which still holds the majority of the state’s local-calling market, to lower its prices below profitable levels to drive competitors out of business and then hike rates.
“All I know is that (deregulation is) premature and it’s bad public policy for the Legislature to step into the shoes of the commission,” said Jack Pringle, a Columbia attorney who works for CompSouth. “It certainly is going to be a hindrance to companies that are doing business here and those that seek to do business here.”
The bill also relaxes rate regulations in rural areas where cellular service is widely available, a part of the measure that the Small Business Chamber of Commerce objects to most. The chamber said a lot of businesses in rural areas that don’t want to go cellular will face huge rate hikes because, under the legislation, those areas would be deemed competitive, meaning the end of rate approval by the PSC.
The “silver lining,” according to the chamber, is that a last-minute amendment would cap rate hikes at twice the local residential per-line rate — currently about $14.35 a month.
Should the bill become law, consumer complaints would be heard by the PSC but the commission will no longer be able to issue corrective orders.