Written by Janine Migden-Ostrander Ohio Consumers’ Counsel
October 29, 2009
Legislation being considered by the Ohio General Assembly will likely raise telephone rates and will significantly reduce consumer protections. Ohioans across the state deserve fair, competitive and reasonably priced telephone service. For this reason, the Office of the Ohio Consumers’ Counsel (OCC) opposes Senate Bill 162 and House Bill 276, legislation backed by the telephone industry that would deregulate local telephone service and have significant negative consequences for Ohioans across the state.
The proposed legislation harms consumers by allowing rate increases, weakening consumer protections, reducing low-income customer benefits, lowering service quality standards and failing to expand broadband access in rural areas of Ohio.
The proposed legislation:
• Allows rate increases. Telephone companies will be able to raise their monthly rates for basic telephone service by $1.25 every year. Also, non-Lifeline customers will likely face an additional surcharge to pay for part of the Lifeline discount. In some areas of the state, there is no alternative to landline telephone service, and only one provider offers this service. Some Ohioans could face telephone rate increases of up to 20-40 percent over the next few years, with no alternative
• Weakens consumer protections. The current Minimum Telephone Service Standards – a set of rules and consumer protections – would be replaced with weaker laws, leaving customers with fewer rights to address grievances. The Public Utilities Commission of Ohio (PUCO) would lose its authority to order automatic monetary credits for customers when telephone companies do not comply with certain standards. The legislation adversely affects current consumer protections on such important matters as disconnection, reconnection and security deposits.
• Reduces low-income consumer benefits. Currently, hundreds of thousands of low-income Ohioans benefit from discounts on basic landline service through the Lifeline program. The proposed legislation limits the eligibility of Ohioans who can benefit from the Lifeline discounts, eliminates their protection from rate increases and severely reduces the program’s educational marketing efforts. Many eligible consumers will not be informed about the availability of a significant discount off the price of their basic local telephone service.
• Lowers service quality standards. For example, the time companies have to restore an out-of-service telephone line increases from 24 to 72 hours. While current rules require telephone companies to provide automatic credits for outages of 72 hours or longer, the legislation takes away the PUCO’s authority to order those credits if this standard is not met. Customers will need to file a formal complaint, including coming to Columbus for a hearing. Being without service for many days puts consumers, especially seniors and those needing emergency services, at risk and serves as a disincentive for companies to expeditiously restore service. This could lead to deterioration in service quality. Phone companies may cut jobs because they will be less compelled to repair service promptly.
• Fails to provide broadband access to all Ohioans. Expanding consumers’ access to broadband is important for economic development and job creation. Access provides customers with opportunities, including the ability to receive telephone and Internet service over a high-speed connection. Access to broadband provides competition in places where currently none exists. Some of Ohio’s economically depressed areas suffer because of their inability to access high-speed Internet through broadband services.
• Fails to protect consumers who have bundled telecommunications services. Customers who receive a package of telecommunication services do not receive minimal safeguards. For example, there is no time requirement for telephone companies to install bundles, restore outages or reconnect a customer who has been disconnected for non-payment. There also is no limit on the deposit a company could charge to begin telephone services. The only protection for customers is the forbidding of “unfair or deceptive” practices.
The OCC urges consumers to contact their legislators immediately and let them know the importance of keeping basic telephone rates affordable and maintaining consumer protections for telephone services.