House approves AT&T deregulation, opponents say phone rates will increase

TOPEKA — In a move that will almost certainly raise the price of stand-alone phone service, the House of Representatives today approved a bill to remove the last price caps on AT&T, the state’s dominant phone company.

Senate Bill 72 will take the brakes off AT&T ability to hike rates on single-line residential and four-line small-business service.

At present, urban residential customers pay $16.50 a month for ordinary local service, not including taxes and fees. Rural customers pay $15.50.

Packages in which AT&T bundles basic service with Internet access, television, or services such as caller ID, call waiting and conference calling, are already deregulated. But increases in the price of basic home and business service are limited by the Consumer Price Index.

SB 72 changes that and will let the company charge what the market will bear.

The House approved the measure on a voice vote, following a lengthy debate over prices and rural access to phone service.

Supporters acknowledged that prices will probably go up, but argued that Kansas’ already high phone rates and competition in the marketplace will help to keep rates from skyrocketing.

“At what point do we have the right to say ‘My phone bill can’t go up,” said Rep. Scott Schwab, R-Olathe. “I don’t remember seeing that in the first 10 amendments to the Constitution.”

Rep. Nile Dillmore, D-Wichita, said people need to stop thinking of telecommunications as a public utility and accept that it’s now a competitive service that, for most Kansans, encompasses a variety of options including landline, Internet and wireless.

“You have lots and lots and lots of choices about how you’re going to communicate,” he said.

While he acknowledged that those choices are more limited in rural communities, he said: “I don’t think it’s the state of Kansas’ job to make sure you have every choice for coffee, milk, tea or telephones that I do.”

Opposition to the bill was led by Rep. Forrest Knox, R-Altoona and vice-chairman of the House Energy and Utilities Committee. Knox said he was concerned that AT&T would abandon hard-to-serve areas a few miles outside cities and raise prices everywhere else, particularly those in areas where AT&T is the only choice for reliable voice service.

“This bill exists to help a company make more profits. Very simple,” he said. “And I don’t think we’re in that business. We’re in the business of universal telephone service in this country.”

He noted that an AT&T expert who testified to his committee acknowledged that prices for stand-alone service would likely rise closer to the cheaper bundle prices. In Wichita, the least expensive bundle, which includes call waiting and caller ID, is about $23.

“This bill will turn AT&T loose,” he said. “Nobody has indicated prices will go down. Everybody has indicated that prices will go up, including AT&T.”

Eagle research published Sunday found that in former Southwestern Bell states that deregulated under AT&T, prices for basic service rose 14 to 86 percent in two to four years.

Rep. Mike Burgess, a member of the Utilities Committee, said he doesn’t think Kansas rate increases will be large because the state is already “in the ballpark” compared to the what customers in the other states pay now.

Knox offered a floor amendment that would have kept basic service tied to the Consumer Price Index. And he was supported in that by Utilities Committee Chairman Carl Holmes, R-Liberal.

“This bill is about raising rates for wireline customers,” Holmes said. “This amendment is needed to protect that residential consumer in your district who just wants POTS (plain old telephone service).”

That amendment, and several others that sought changes to shield rural customers in particular, were defeated on voice votes.

After a final roll call vote, the bill will go back to the Senate, where it has already passed, for a vote on whether to accept amendments added by the House committee before the bill came to the floor.