Lighter Rules for Bell win Regulators' OK

by Bob Vandewater

The Daily Oklahoman - December 1, 1999

The state Corporation Commission on Tuesday voted 3-0 to approve a plan under which Southwestern Bell could gain lighter regulation in Oklahoma while encouraging local phone service competition and providing benefits to consumers and schools.

The plan is supported by the state attorney general and Gov. Frank Keating.

It calls for the telephone company to pay $30 million into an education fund and undertake an estimated $140 million rollout of additional high-speed data transmission technology. Bell also would make an estimated $60 million worth of phone network upgrades to provide more and faster services in many cities.

To encourage prospective competitors to jump into the local phone service arena, Bell also agreed to discount rates the company would charge to competitors to let them use parts of its system.

In return, Bell could get a looser form of regulation.

Work on Bell's network upgrades and technology deployment is expected to begin in about 30 days, based on the need for the commission to issue a written order approving the agreement, probably within a few days, and for an appeal period to lapse.

But other provisions, including the discounts for prospective local service competitors and education funding, ultimately must await the Legislature's review of commission alternative regulation rules that were the basis for the agreement. That review period won't officially begin until the legislative session starts in February.

Nevertheless, commission Chairman Bob Anthony said Tuesday, "Oklahoma's telephone customers have just achieved a victory over monopoly (local phone) service and now can look forward to choosing among phone companies that will compete for their business.

"We have approved a balanced settlement with consumer protections, rate caps and, most of all, the strongest incentives in the region to bring real competition and choice to Oklahoma consumers."

The settlement cited by Anthony came in a case in which Bell applied for permission to come under an alternative lighter form of regulation pursuant to new rules approved by the commission in October. The rules took effect on an emergency basis when the governor signed them weeks ago.

Past regulation of Bell's rates and finances in this state focused on profits. Under the new rules, intended to spur local service competition and investment, Bell sought a form of regulation that focused on whether rates and prices are reasonable.

The alternative regulation, if not rejected by the Legislature, also would cap Bell's basic local service rates in Oklahoma for five years.

However, Sen. Cal Hobson, D-Lexington, said he believes the approved agreement, with its $30 million for Oklahoma schools, lets Bell off with too small a financial commitment for education.

Hobson noted that the commission's alternative regulation rules still must pass the Legislature's review before becoming permanent. He also said he is concerned Bell might be generating "excess earnings" and said, "I know lawmakers are going to be interested in taking a close look at Bell's rate structure to make sure that consumers are getting a fair deal."

Reviewing Bell's rate structure historically has been the responsibility of the corporation commission. But the 1997 law created by the Legislature barred the commission from launching a traditional Bell rate case before February 2001.

With Tuesday's action, Hobson said, "The commissioners seemed intent on giving the telephone company what it wanted instead of trying to determine whether the proposed changes were actually in the best interest of the consumers and the state."

But Terry Bailey, president of Bell's Oklahoma division, said, "This transition plan is not about Southwestern Bell. It's about Oklahoma's long-term competitiveness... and providing incentives for other telecommunications companies to compete."

Bailey also said Bell is not generating any excess revenue and "every rate we charge is approved by the commission."

Corporation Commissioner Denise Bode said, "I think this is a darn good plan and I'm... proud to have voted for it.... What we've done is ask Bell to invest in competition... so rates are very likely to come down, so there's really no downside for consumers."

Other provisions of the agreement also call for Bell for five years to stop charging customers an "Oklahoma Universal Service Fund" charge that amounts to 9 cents per phone line per month and to cooperate with state officials to try to simplify phone bills.

State Chamber President Richard Rush denounced Hobson's tactics to try to get Bell to provide more money for education.

"It's a frightening scenario when government can target an individual company and politicize the regulatory process in exchange for cash to fund state programs," Rush said. "Not only is this totally unethical, it's bad public policy. ... It will drive potential businesses and probably existing businesses away from our state," he said.

Anthony said, "I predict the Legislature collectively will support and give approval to the rules" so Oklahoma phone customers will be able to get the full benefits from the agreement approved Tuesday.

© 1999 The Daily Oklahoman

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