Bigger PacBell Could Be Big Headache for Consumers

Decision ignores problems with SBC and Verizon phone service quality

For Immediate Release From The Utility Reform Network

The California Public Utilities Commission finally bowed to unrelenting pressure from telephone giant SBC/Pacific Bell and agreed to forward the company’s bid to enter California’s lucrative long distance market to the FCC, but stopped short of authorizing PacBell’s long distance bid itself. Despite its concerns about PacBell’s failure to satisfy state requirements for entering the long distance market, the Commission’s action brings PacBell closer to that goal.

TURN today warned consumers that PacBell’s premature entry into long distance service could result in the creation of a powerful monopoly with the ability to raise rates at will. “Competition can’t work when one company dominates the entire state,” said Regina Costa, telecommunications director for TURN.

“If there are any gains to customers in the form of reduced rates they will be temporary at best,” Costa predicted. “Once PacBell has dominated the California market, they’ll have no incentive to keep bills low and few regulation preventing unjustified rate hikes.”

The CPUC’s decision recognizes that despite substantial compliance with the less stringent federal telecom act, PacBell’s entry into the long distance market is not in the public interest as required by state law.

Costa said that in passing today’s decision, the Commission ignored:

  • The requirement that the company’s entry into the business not harm competition. “Forcing smaller long distance companies to compete with the state’s dominant local carrier is like sending a little leaguer to play against Barry Bonds,” Costa said.
  • The vulnerability of the decision to legal challenges.
  • Anti-competitive practices by PacBell in the past, including its attempts to dominate DSL service, which the Commission itself has criticized the company for.

Costa warned customers to brace themselves for a barrage of marketing from PacBell, “which is notorious for its aggressive and misleading sales tactics. ” The decision permits the phone giant to market its long-distance service to it local customers. Costa said tips for consumers who don’t want to hear PacBell’s pitch every time they call their local phone company would be posted on TURN’s website.