Phone Choices Targeted

by Bob Vandewater

The Daily Oklahoman - October 21, 1999

Phone customers in Oklahoma may be able to choose their local phone service, much like they choose long-distance companies under rules approved Wednesday by state regulators.

In addition, Southwestern Bell, the state's biggest local phone service provider, could choose to be regulated differently in Oklahoma.

The governor must sign the rule changes before they become effective.

Competition among local phone service providers has been allowed since 1996 if companies met certain conditions, but competition hasn't really taken off. The new rules aim to spur competition.

They were adopted by a 3-0 vote of the state Corporation Commission after a lengthy process involving input from existing local phone companies, prospective competitors, consumer representatives and government officials.

"I think Oklahomans want customer choice and competition, not monopoly service," commission Chairman Bob Anthony said. "Today's telecommunications rule-making is Oklahoma's greatest step yet in achieving choice and competition in this area."

Terry Bailey, president of Southwestern Bell's Oklahoma division, called Wednesday's commission document "a workable alternative regulation rule." He said, "Obviously, Southwestern Bell did not prevail on every issue, but we believe it is an acceptable rule."

The commission in 1996 created new rules that were supposed to open local phone service markets across Oklahoma to competition, with choices and price reductions similar to what consumers now experience in long-distance markets.

But local service competition has been slow to develop and some major prospective competitors, like AT&T and MCI, citing const concerns and other factors, have yet to enter the local service arena in Oklahoma.

However, commission officials hope the new rules will encourage actions by Southwestern Bell and others that will help encourage competition.

The commission approved the rules on an emergency basis, which means they will take effect as soon as Gov. Frank Keating signs them. A permanent version of the new rules also was approved and will be sent to the legislature for consideration during its next session, which begins in February. Without permanent rules, the emergency version would expire after a certain period.

Traditionally, rates for Oklahoma's largest phone utilities, Southwestern Bell and GTE, have been figured after commission consideration of things like the company's earnings and return on its "rate base," or investment to serve customers.

But officials with those utilities have said they believe customers generally are less concerned with how much profit their phone company earns than with whether rates and prices for services are reasonable and competitive.

The new rules allow any of Oklahoma's existing local exchange phone companies with 75,000 or more access lines--only Southwestern Bell and GTE--to propose a new regulatory plan of seek alternate regulation under the "Oklahoma Plan."

That latter plan, specified in the rules, would classify local phone services in separate categories for different treatment, encourage steps to promote competition and provide consumer protections.

Under the Oklahoma Plan, for example, rates for a qualifying company's basic local residential and business and a variety of local operator services that are considered non-competitive by the commission would be capped for five years to allow time for competition to grow.

Rates for emerging competitive and optional tariffed services, like Call Waiting, Call Forwarding and others, would be given pricing flexibility so they could go up by up to 5 percent during a 12-month period of by more if they are found to be competitive.

Larry Lago, commissioner Anthony's aide, said, "The biggest change (in the rules) is we're moving from earnings regulation to pricing regulation" for a qualifying local phone company, while still providing customer protections.

But to qualify for the Oklahoma Plan, Bell would have to win commission approval for a transition plan detailing things the company would commit to do.  Those could include making phone network improvements and creating incentives for opening the local telephone market to active competition.

Commissioner Denise Bode said, "Oklahoma is the fist state that has done this (type of rule change to spur competition and alternative regulation) at the agency level and done it right."

Commissioner Ed Apple said, "We are going to have to launch this rocket and if there are any problems with it we will tweak it on its way."

© 1999 The Daily Oklahoman

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