Ameritech deregulation plan is bad news for consumers

Ameritech deregulation plan is bad news for consumers

By Martin R. Cohen

Ameritech deregulation plan is bad news for consumers

It’s springtime in Springfield, which means the halls of the state capitol are swarming with utility lobbyists. This year, the buzz is particularly loud because the Legislature is scheduled to rewrite all the laws regulating the Illinois telephone industry.

Ameritech, the local phone company monopoly that provides service to most Illinois residential customers, wants to be largely deregulated—a move that will lead to higher rates and worse service, at a time when just the opposite is needed.

If Ameritech’s bill becomes law, the Illinois Commerce Commission (ICC), the state agency that oversees the phone company’s service and prices, will be stripped of its power to reduce rates, just in time to prevent a $957 million, 30 percent rate cut the Citizens Utility Board is fighting for.

Ameritech’s profits, which already are at a level unheard of in the local phone business, will be unlimited. And no investigation of any phone charges will be allowed unless 400,000 Ameritech customers sign petitions asking for it.

The bill also eliminates the statutory goal of providing phone service to “all Illinois citizens at just, reasonable and affordable rates.” And under the proposed new law, any phone company could legally discriminate against groups of customers “in response to competition in the telecommunications marketplace.”

Of course, if Ameritech’s bill becomes law, there probably won’t be much competition at all. Instead, we’ll have a deregulated monopoly for a long time to come.

A tough battle is shaping up. SBC, the phone giant that bought Ameritech, has a reputation for refusing to compromise and for using its political muscle to get what it wants. And Ameritech is the largest corporator contribute to political campaigns in Illinois.

Although the company’s clout in Springfield is unrivaled, lawmakers may stand up to Ameritech this time. Too many Illinois citizens have waited weeks or months for phone service to be installed. Too many have waited in vain for repairs to be completed. Too many have watched their bills climb higher and higher without being able to even understand what the charges are for.

How can these problems be solved? CUB has proposed a comprehensive package of legislative reforms, dubbed the Telecommunications Consumer Protection Law of 2001, that would take us in the right direction. The proposal, being sponsored by Sen. Kirk Dillard and Rep. Karen May, has three components:

Lower rates: Although the cost of providing phone service has plummeted, consumers have not seen corresponding rate cuts. CUB’s proposal would ensure that phone monopolies, like Ameritech, share some of their exorbitant profits with customers.

Added consumer protections: Phone rates are confusing, and phone company marketing is too often less than truthful. CUB’s proposal is designed to give consumers the tools they need to be smart shoppers for telecommunications services and to hold phone companies accountable for their actions. The bill would require all phone companies to advise consumers of the least expensive plan for their household, and it would require the prices, terms and conditions of phone service to be fully disclosed to customers in plain language.

Better service: The quality of phone service has plummeted, even though phone company profits are soaring. Current standards and penalties for poor service have proven insufficient to encourage the investments needed to maintain high-quality service. CUB’s consumer protection package would adopt new service standards that apply to all companies offering local phone service. It would provide for credits to customers who suffer poor service, installation delays or missed appointments by phone company technicians. And it would increase the ICC’s ability to levy fines and penalties.

Unfortunately, we’re a long way from having real customer choice for local phone service. For most residential customers, Ameritech is the only game in town—and it is likely to remain that way for several years. In the absence of effective competition, consumers need effective regulation to keep the local monopolies honest. But if Ameritech gets its way, phone users will be stuck with the worst of both worlds—a deregulated monopoly. That’s something Illinois cannot afford.

Martin Cohen is executivedirector of the Citizens Utility Board (CUB).

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