When it comes to throwing darts at industry, has there ever been a bigger target than the telephone company? The image of an arrogant, bloated monopoly is legendary.
So it’s easy to sneer at Verizon Communications’ bid for an eye-popping rate increase of 75 percent, a request that includes a smaller, interim hike. The latter would raise residential rates for a local phone line from $13 to $16.54 per month. The permanent rate request would bring the monthly charge to $22.80.
Staggering as that last number is, it must be considered in the context of a rapidly and dramatically changing telecommunications world. Wireless technologies and broadband Internet connections are giving consumers exciting new choices in phone service. Thousands are taking advantage, and that number will no doubt grow exponentially.
That means that fewer people are hooking into the traditional local telephone network, opting instead to use just a wireless phone or the Internet. Verizon figures it’s losing around 2,000 customers a month. In other words, fewer customers are paying into a network that must continue to be maintained – and that will require investment to keep up with the latest innovations and service expectations. It’s not a model for business success.
And while we’re not shedding tears for one of the world’s telecommunications giants, we recognize that if Verizon can’t earn a reasonable profit on local phone service, at some point it will be forced to compromise on service, or even sell its local phone service operations here. That would mean the loss of one of Snohomish County’s most generous corporate citizens.
The company’s interim request for a $3.54 monthly hike in residential service seeks to restore money it lost when the state Utilities and Transportation Commission last year lowered the amount long-distance companies had to pay for access to local networks.
The company’s case for the interim rate hike is valid, and the UTC, which regulates phone rates, should approve it. The larger, permanent request won’t be heard until next year. We’re more skeptical about that case, but the reality of changing market forces can’t be ignored. The commission should seek to strike a fair balance between allowing Verizon to make a reasonable profit and protecting consumers from an overwhelming rate shock.
Local phone service is the most reliable means of communication available. When the electricity goes out, it’s likely your wired telephone will still work because the network has backup power. And when you call 911 from your landline, emergency workers can quickly pinpoint your location.
Reliability costs money, and consumers understand that. There’s room in these rate cases for a fair solution.
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