Originally created 04/27/97

States' utility commissions gaining new life

WHEN THE FEDERAL courts and state legislatures busted up telephone monopolies in favor of free competition, the end of state-set utility rates appeared to be at hand.

Hardly. State utility commissions, far from withering away as useless, are still making far-reaching decisions on how much your dial tone will cost - decisions worth billions to the winners.

The issue of the moment: How much can one phone company charge another to use its lines and switches to complete calls? And do these access charges - estimated nationally at $20 billion a year - stay in the utilities' pockets, or go for public-interest purposes?

BY NOW, ANYONE with a television has probably seen MCI's "overcharge" commercials, the general public's first exposure to a turf fight that has raged within the industry for years.

MCI and its long-distance cousins claim companies that provide local calling, such as BellSouth, are gouging them six- or seven-fold for putting through their calls. Naturally, that gets passed along on your long-distance bill.

The Bell regional carriers reply that access charges are a needed subsidy that lets them hold down basic monthly bills and continue to serve remote areas where customers are harder to reach.

In Georgia, for instance, BellSouth has told the state Public Service Commission that a typical phone line costs the utility $2.39 a month more than it brings in - until extras, such as access charges, are added.

THE LONG-DISTANCE industry, however, questions these figures - which highlights why phone deregulation is a headache for Georgia's PSC.

Objective facts about costs to provide a dial tone are difficult to come by. David Baker, one of Georgia's five PSC commissioners, likens the industry's adjustment to a fast-food stand that has always served hamburgers the same way, and now is being asked what it would cost for just the burger and the bun.

"Nobody had to look at, `What is the cost of the local loop? What's the cost of the switch? What's the cost of the line to your house?"' Baker said. "Heretofore, it was just one big sandwich."

All sides agree that Georgia enjoys relatively low access charges - 3.5 cents per minute, ever since a July 1 order by the PSC last year. But BellSouth's competitors claim that price could go lower - and soon, they'll get a chance to make that case.

Within days, the Federal Communications Commission will release its long-awaited guidelines on access charges - telling how to carry out the Clinton administration mandate to set aside part of the access charges for wiring schools to the Internet.

Whatever the FCC decides, states will be left to carry out the details - meaning months, possibly years, of further PSC wrangling.

The access charge debate is especially timely in Georgia because of a newly signed state law that will force the PSC to, once again, examine an industry everyone thought was "deregulated" years ago.

Lawmakers decided anybody should be able to call any other phone within a 22-mile radius without paying a long-distance toll. The bill by Reps. Hanson Carter, D-Nashville, and Jay Shaw, D-Lakeland, was meant to bring rural Georgia into parity with metro Atlanta, the nation's largest free calling circle.

PHONE COMPANIES, of course, stand to lose millions if the charges are removed. The worry is particularly acute for tiny, non-Bell companies, which live and die on the money they make charging other phone companies to complete nearby long-distance calls.

Because of that long-distance income, small carriers have been able to maintain below-cost rates as low as $6 a month. If the new law forces them to forfeit long-distance income, that $6 bill could double - sort of taking the "free" out of "toll-free calling."

Georgia's PSC, dominated by free-market Republicans, will confront a huge test of their ideological will.

Baker, the PSC's telephone committee chairman, says market competition means prices based the costs to provide the service - a sentiment that seems to mean, "No access charges."

In the same breath, he adds, "The objective of the (federal) Telecommunications Act is not to screw rural customers and that is something I am not going to allow to happen."

Figuring out that balance is why states still pay people to do Baker's job - and why, for the foreseeable future, they'll always have to.


  • The announcement that U.S. Rep. Saxby Chambliss, R-Ga., will seek re-election instead of running for governor appears to clear the Republican field for Attorney General Michael Bowers. But another name making the rounds is that of U.S. Rep. Charles Norwood, R-Ga. The Augusta two-termer has a proven fund-raising punch, and when asked about the prospect this week commented, "I'd love to run a statewide race." (He added, however, that 1998 seemed a little soon.) GOP leaders are discouraging an intra-party blood-bath with Bowers their strongest hope in 25 years of taking the Governor's Mansion.
  • U.S. SEN. PAUL
  • Coverdell, R-Ga., is looking at a free re-election ride next year, and that may bode ill for Democrats down the ticket. Coverdell barely squeaked past Democrat Wyche Fowler in the nation's closest Senate race of 1992, which would suggest vulnerability. Democrats, however, are up against that age-old problem - you can't beat somebody with nobody. Party leaders thought Cobb County millionaire Michael Coles could trump Coverdell's early fund-raising edge by spending his own fortune. But when Coles pulled out of the race last week, Democrats were left holding a very empty bag.

    The writer is Morris News Service Atlanta Bureau chief


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