Utility Project Urges PSC to Investigate Low Phone Subscribership and to Audit Phone Companies

For years the New York Public Service Commission (PSC) has trod a deregulation path in the assumption that telecom competition renders most regulation of telecom utility services unnecessary.   The Utility Project issued a Report in May 2014, It’s All Interconnected: Oversight and Action is Required to Protect Verizon New York Telephone Customers and Expand Broadband Services, questioning that premise, and raising issues regarding the need for the PSC to audit financial statements of Verizon New York, and particularly, cost and expense allocations between wireline and wireless services, and intra holding company transactions.  The report points out the lack of actual competition, the sagging telephone subscribership, the poor customer service, and the disapppointingly slow rollout of affordable high speed broadband service.  It also tracks the evolution of the Commission’s deregulatory policies, and the granting of Verizon rate increases based on unaudited reports and financial statements.

Soon after the New York legislature refused to adopt more phone deregulation amendments urged by the PSC, which were embedded in the proposed 2014-15 state budget bill, the PSC promised to undertake a new review of the telecom utilities in the state. For backgound, see BUDGET PROPOSAL TO ALLOW PSC TO DEREGULATE BASIC PHONE SERVICE, ELIMINATE REVIEW OF PHONE COMPANY MERGERS, REDUCE LANDLORD LIABILITY FOR SHARED METERS, AND REDUCE REVIEW OF CABLE TV OPPOSED.

The PSC opened a public case file on the investigation, which is now PSC Case 14-C-0370.  There is no notice or order regarding the procedure for the case.  Before the Utility Project’s filing today, only two comments, pointing out problems and disparities in the regulatory and financial support regime for 911 emergency services, have been filed.

In its comments filed October 31, 2014, the Utility Project urged the New York Department of Public Service Staff (DPS) and the PSC to consider its report.  It asks

  • -DPS staff to audit  reports and financial statements of major providers to ascertain whether they are accurate, and whether appropriate cost allocation principles among holding company affiliates, such as Verizon New York and Verizon Wireless, are being followed with respect to capital investment, expenses and revenues.
  •  DPS Staff to investigate causes and remedies for New York’s low household telephone penetration rate, including reform of billing and collection practices which may be sacrificing phone service when bills for other bundled service are not paid,
  • That action be taken to address the low participation rate in the telephone Lifeline program designed to make services more affordable to low-income customers.
  • That all VOIP cable telephone providers be deemed to be telephone corporations subject to commission regulation of telephone service and required to offer Lifeline service rates to low-income customers.

The Utility Project comments state that the PSC’s failure to treat telephone service provided on alternate platforms equally creates unlevel playing fields and may inhibit universal service when providers of equivalent services on alternative technological platforms are allowed to disregard longstanding statutes and rules designed to promote subscribership, continuous service, service quality, and reasonable rates, terms and conditions for all services provided over telephone lines, including broadband.  The PSC was also urged to consider resuming jurisdiction over wireless service to address non-rate terms and conditions of service and to protect customers from abuses.

Finally, the Utility Project urges that PSC proposals to further deregulate telecommunications services should not be considered or adopted. Even if one accepts the questionable proposition that competition is a substitute for regulation, there is no evidence that the industry is actually providing affordable telephone and broadband service now to all New Yorkers from numerous providers.  In many areas there are only one or two providers of broadband service. There is no basis to reduce statutorily required scrutiny of these utility services.  The trend of mergers and industry consolidation is eliminating, not growing, potential competition.   The Commission has embarked on a long overdue reexamination of the telecom industry, and is to be commended for undertaking it. It remains to be seen how the public will be involved in the process.

Gerald A. Norlander

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