CUB calls for cut in phone rates

CUB calls for cut in phone rates

By By Joe Baker

By Joe Baker

Senior Editor

Illinois’ Citizens Utility Board (CUB) is calling on the Illinois Commerce Commission to cut Ameritech’s rates by 30 percent or at least $966 million.

Such a reduction would affect all Ameritech customers across the state. CUB experts filed more than 300 pages of testimony which demonstrated how a controversial “alternative regulation” plan, which the ICC approved in 1994, has allowed Ameritech’s profits to skyrocket while the service quality has sharply declined.

The testimony was filed jointly by CUB, the state attorney general, the Cook County State’s Attorney, and the city of Chicago.

In addition to a large rate reduction, the consumer advocates are urging the ICC to adopt 10 new standards for service and to impose tough penalties when Ameritech does not meet the standards. CUB also wants Ameritech to pay direct credits and waive installation fees for customers who experience service problems.

“Ameritech’s profits have skyrocketed to a level that can only be described as obscene,” said Martin Cohen, CUB executive director. “The company can afford to give consumers a big rate reduction, improve service and still make a reasonable level of profits.”

Under the proposal, the basic monthly line charge would be slashed by $1.30, and the price for most local calls would be cut from about a nickel per call to three cents a call during peak times. Calls in off-peak hours would be reduced even further.

Ameritech, however, wants to boost the basic line charge for residential users by $2 a month, a total revenue increase of $85 million. The fee would jump between 22 percent and 78 percent under Ameritech’s plan, depending on where you live.

CUB says Ameritech has understated its revenues by $188 million and overstated its expenses by $501 million, in what CUB says is an effort to hide the true level of its earnings and ward off any rate cuts.

CUB said Ameritech had a 43 percent return on equity in 1999. That translates to earnings of $870 million in Illinois alone. Figures reported by Ameritech show excess revenues of $276 million last year. Cohen said that’s money the company wants to pocket. When added to another $690 million in excess revenues, discovered by CUB’s studies, Ameritech owes its customers a $966 million rate cut, he said.

Under the proposed service standards, customers who have phone outages or delays in installation would get $20 credit for every day they are without service. Credits for outages would start after the customer has no service for 24 hours. In the case of installation delays, credits would begin on the first day after the missed installation date. Installation fees would be waived in that case, and Ameritech would be required to furnish the customer with a cell phone to use while they wait for service.

Customers would get credits of $50 each time Ameritech failed to keep a scheduled repair or installation date. The credit would not apply if Ameritech gives the customer 24 hours notice or if the missed appointment is the customer’s fault.

The ICC is to complete its review of Ameritech’s rates in July.

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