The PUC Should Listen to Consumers Before Deregulating Pacific Bell

Former Governor Wilson's appointees to the California Public Utilities Commission made some serious mistakes when they deregulated California's energy industry without adequate safeguards for protecting consumers from unscrupulous power suppliers and inept utility managers. Governor Davis's appointees should avoid making similar mistakes with the state's largest local phone monopoly.

Before the PUC approves Pacific Bell's application for permission to sell long distance phone service in California, the Commission should schedule public hearings so that consumers and business competitors can voice their concerns. That is the best way to ensure that appropriate safeguards are in place to protect consumers from rate hikes, service disruptions and the host of other problems experienced by consumers in states where regulators have already allowed the local phone monopoly into the long distance market. For example:

• Deregulation of Bell Atlantic in New York led almost immediately to misplaced orders, service disruptions and installation delays that ultimately effected close to a quarter of a million consumers. The situation got so bad, so fast, it prompted regulators to impose multi-million fines on the company. Bell Atlantic subsequently merged with GTE to become Verizon, and promptly asked state regulators for a rate increase for local phone service.

• In Texas, PacBell's parent company, SBC, convinced some 1.4 million consumers to switch from competing long distance companies, then turned around and raised its own long distance rates.

Pacific Bell's wholesale rates are three times higher in California than in Texas, and also higher than in any other state where SBC is the incumbent local service provider. California consumers are already suffering from wholesale price gouging by Texas-based energy companies. If the goal of deregulation is really to increase consumer choice in local phone service, regulators should give consumers an opportunity to express their concerns before unleashing another monopoly.