House gives final approval to phone rate legislation

Wednesday, May 4, 2005

JEFFERSON CITY, Mo. -- The House gave final approval to legislation Tuesday that supporters say should lead to more competition for customers' phone business, but critics fear will result in higher bills.

The bill makes it easier and faster for a local dialing area to be declared competitive, freeing telephone companies in those areas from many regulations and price restrictions. The House passed the bill 155-3, sending it to Gov. Matt Blunt. The Senate passed the bill 29-3 a day earlier.

The state has about 700 phone exchanges, and so far only a handful have been declared competitive. With the legislation, the Public Service Commission estimated, about 130 business and 100 residential areas would become competitive.

Sponsoring Sen. David Klindt said he believes there are appropriate safeguards in the bill for consumers, such as requiring the commission to review areas declared competitive every two years or when rates rise.

But some, including the Office of Public Counsel, which represents consumer interests, have expressed concern that the bill doesn't leave the commission enough leeway to determine if competition truly exists.

Show Me Competition, which represents smaller companies that provide local phone service, said the bill will hurt consumers and lead to higher local phone rates.

"If you don't have PSC protections and you don't have real competition, what's to hold prices down? Nothing," Steve Veile, the group's executive director, said. "The large incumbent phone companies have been fighting to squash these companies. This bill is just another effort to do so."

The concern is that rates will fall for big businesses while residential and small business customers will see higher bills, said Sen. Joan Bray, D-St. Louis.

Under the legislation, a local telephone exchange would be declared competitive if there were two companies providing service other than the established company. Wireless phone companies could count for one of those companies, as could a nontraditional provider like a cable company.

However, companies that don't have their own lines and equipment but simply resell service, such as phone service over the Internet, would not automatically count.

Yet if a major company such as SBC Communications Inc. wanted an area declared competitive because of a rival Internet service, for example, it could ask the Public Service Commission. State regulators then would consider the evidence under a more subjective standard, and have 60 days to decide.

The bill also allows companies in competitive areas to offer tailored packages of local and long-distance service to business customers.

Phone rate bill is SB237.

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