FOR IMMEDIATE RELEASE Docket #:
R.05-04-005
Media Contact: Terrie Prosper, 415.703.1366,
news@cpuc.ca.gov
PUC ADOPTS MAJOR TELECOMMUNICATIONS
PRICING REFORMS; BASIC RESIDENTIAL PHONE PRICES
SAN FRANCISCO, August 24, 2006 - The California Public Utilities Commission
(PUC) today announced that it will allow the state's four largest wireline
phone companies - AT&T (formerly SBC/Pacific Bell), Verizon, SureWest, and
Frontier - to price their services more like their voice market competitors.
While freezing basic residential prices until Jan. 1, 2009, the PUC's decision
gives these landline telephone companies great flexibility in how they charge
for voice communications services, products, bundles, and promotions.
"Regulation needs to recognize there is a competitive voice communications
marketplace," stated PUC President Michael R. Peevey. "The changes we order
today will enhance competition by allowing new services to be provided sooner
and eliminating unnecessary government regulation."
The decision stems from the PUC's Uniform Regulatory Framework (URF)
proceeding, the first major examination of California telephone regulation in
18 years. Until today, the PUC imposed many regulatory reporting requirements
and conducted extensive reviews of landline telephone prices. The PUC, however,
did not impose these rules on many competitors that have entered into the voice
communications market in recent years. These voice competitors include cable
companies, Voice over Internet Protocol providers, and mobile and fixed
wireless companies.
The 264-page PUC decision conducted an extensive review of market conditions
and related federal and state statutes. The PUC found that market competition
now adequately checks landline phone companies' pricing power. The PUC also
noted that California statutes encourage it: (1) to rely on open and
competitive markets unless the elimination of regulation would result in rates
being set above "just and reasonable" levels; and (2) to use technologically
and competitively neutral measures in order to encourage the development of new
technologies.
Although
the Commission recognized that market competition sufficiently checks landline
phone companies' pricing power, the Commission decision maintains current basic
residential rates for phone service at current levels until Jan. 1, 2009. These
rates are linked to social policy programs, which are currently under
Commission review.
"We are not going to leave low income consumers out in the cold," assured
Commissioner Rachelle Chong, the assigned Commissioner to the URF proceeding.
"Basic residential rates are tied to important public policy programs, such as
LifeLine. We have frozen basic residential prices for more than two years to
perform a comprehensive review of their relationship with these programs." The PUC decision eliminates required state approvals of price
changes for all other business and residential rates and services. While
landline and competitive local exchange carriers will be required to provide
30-day notice to customers of any proposed price increase, a price increase
will go into effect the day after it is filed with the PUC.
"Today, the Commission forbears from regulation of the
competitive phone market," commented PUC Commissioner John Bohn. "Our authority
remains, however, and we stand ready to step in should we see market abuses or
other anticompetitive behavior."
The PUC amended its reporting requirements for telephone companies so that they
conform to national standards. The decision replaced its state-specific
accounting practices with ones used by the Federal Communications Commission.
Other issues regarding reporting and monitoring reports were deferred to the
second phase of the URF proceeding.
The URF decision was approved unanimously by the Commission.
The proposal the Commission voted on is available on the PUC's website at
http://www.cpuc.ca.gov/PUBLISHED/AGENDA_DECISION/59132.htm.
For more information on the PUC, please visit
www.cpuc.ca.gov. ###
FROZEN UNTIL JANUARY 2009
