Verizon tries 75% rate hike

Many residential phone bills would rise at least $9.80 a month if state regulators approve a rate increase requested by Verizon Communications.

The telecommunications company, which operates 850,000 lines in Snohomish County, Camano Island and other areas of the state, says it needs higher rates to continue making a profit.

The proposed increase is 75 percent higher than Verizon charges now for its basic residential service. The basic service for businesses also would rise nearly $10 monthly.

Verizon submitted details of the previously announced proposal to the Washington Utilities and Transportation Commission on Friday to help recover what the company calls a $239.5 million shortage.

“The current outdated pricing scheme for regulated services no longer works in today’s competitive environment,” said Steve Banta, president of Verizon’s Northwest region. “People have changed the way they communicate over the years to instant messaging, e-mail, voice calls over the Internet and wireless services. “As a result, Verizon’s revenues are no longer covering our expenses.”

The latest proposal is separate from an interim rate increase Verizon asked for in March. If approved, that would raise basic residential phone service by 27 percent, or $3.54, a month. That would disappear if the bigger increase is eventually approved.

Simon ffitch, public counsel with the state Attorney General’s Office, said the request for an increase came as a shock. His office, along with AARP and a business advocacy group, already is opposing the smaller interim rate increase.

“There are some big question marks out there,” ffitch said, adding that one of the questions will be determining what is a reasonable return for Verizon.

Kevin Laverty, a spokesman at Verizon’s regional office in Everett, said Verizon is authorized to make a 9.76 percent return on its investment. The company is asking for that to be adjusted to 12 percent.

Because state regulators cut in half the fees Verizon could charge long-distance carriers for use of the company’s in-state network and other factors, the company has lost money on its basic telephone service since at least last year, Laverty said.

Lauren Moughon, advocacy director for AARP of Washington, said some elderly would be hit hard by such a large increase.

“There is no way a multibillion-dollar corporation needs to double rates,” Moughon said. “For the last 22 years, they have been just fine, then all of a sudden they raise rates this much.”

Marilyn Matthews of Marysville, a member of The Herald’s Reader Network, said via e-mail that she, too, is worried about the elderly if the increase is approved.

“I am (worried) about seniors on a fixed income, people who live paycheck to paycheck and all those who struggle to make ends meet,” Matthews said.

Verizon pointed out in its rate filing that qualified low-income households would continue to pay a flat $8 per month for basic telephone service, before taxes and other fees.

Gary Cooper and his employees at Inter-Island Fire-Safe Co. in Oak Harbor sent letters to the utilities commission about a month ago expressing opposition to the proposed rate increase.

“It’s really getting tough on me as a small business man,” Cooper said. “With gas prices so high, and insurance costs and building taxes, it’s really hard for us.”

Cooper said it has been hard to raise his company’s service prices because of the slow economy.

Everett and Seattle are starting to see a turnaround, but the Oak Harbor area isn’t recovering as fast, he said, adding that for every bill that goes up, “it gets me closer to saying ‘is it really worth it?’”

About half of the network members who responded to a request for comments on the proposal said if the rate increase is approved, they will consider dropping their home phone and using wireless phones exclusively.

“An increase isn’t out of order, but a (75 percent) increase is,” said Jason Cross of Everett. “I would definitely think about switching all my service over to my cellphone.”

Marilyn Meehan, a spokeswoman for the utilities commission, said as of Friday, the commission had received 382 comments opposing the Verizon increases. No one submitted comments in support, she said.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.

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