And get to eat it, too
    by Al Paschall

     I swore off the sweets after Thanksgiving, and after Christmas and after New Year’s.  I have too many bulges where there shouldn’t be but I don’t quit.  It happened last week.  A couple of pals took me out to lunch and I tried to stick with the salad but then the dessert tray came around.
     This was a dessert tray in one of these Italian restaurants where you could smell the chef baking the stuff from the minute you walked in the door.
     Canollis, cheese cake and my personal favorite: carrot cake.  It was only a tiny piece, I told myself.  Tiny, that is, if you were trying to feed 4 or 5 small towns.  I knew that slice was at least an hour on the treadmill but when I saw it and smelled it I figured I could have my cake and eat it too.
     Sure enough I paid for it and cursed the treadmill’s belt every time it turned. That’s why I can’t have lunch with anybody from the Pennsylvania Public Utility Commission.  These people don’t want a slice off the tray they want the whole cake and we’ll all have to eat it too, like it or not.  The chefs at the state’s utility oversight agency are cooking up a plan to burn phone service all over Pennsylvania in a couple of weeks and coming in the door this recipe stinks.
     Technology has made it possible for anybody with a little money to create a half-baked phone company. You don’t need any wires, poles or cables just throw some relatively cheap switches in a warehouse and you’re in business. The bureaucratic rules say that Verizon, formerly Bell Atlantic and GTE, has to sell these small companies service at wholesale rates.  Then they re-sell it anywhere they want to throw in a switch.  It must be lucrative because there are hundreds of these marketing companies all over the state.
     Called competitive local exchange carriers even Verizon has rented space in its own buildings in Pennsylvania for over 1,700 of these competitive switches. Largely they can’t be bothered with residential customers, they only want to pick what they like.  They go after the best on the menu, only offering their services and putting the switches in big business regions of the state.  The 30 bucks or so a month that most people pay for local residential phone service are the crumbs left on the table and they can’t be bothered with them.  While these companies cry in public that there isn’t any real competition in local phone service, its because they don’t want to compete for marginal, high maintenance customers.  That’s a stale deal that Pennsylvania consumers have got to find tough to swallow.
     Last year Verizon turned table on the competition and moved to open all markets by adding long distance to its menu of customer services.  Now the phone marketing companies are whining to the PUC that they are in no shape to compete.   Not much doubt about that claim.  They’ve had their cake and eaten it too for the last 20 years.  While they were getting fat and happy with slick marketing techniques aimed at only premium customers the government agencies and Wall Street were forcing Verizon to become lean and mean. Now that smiles, handshakes and six cents a minute for long distance calls won’t keep them in business they are hoping that Pennsylvania’s government will protect them.  The state agency that is supposed to govern utility rates to protect consumers is actually considering the competition’s expensive plan to break Verizon into two separate companies that do the same thing that one company does today.
     Two Verizons in Pennsylvania under the PUC’s plan is like having the cake on one plate and the frosting on another.  You can put them together yourself but it will take time, it will be messy and in this formula it’ll cost you 20% more.
     The first bite will cost consumers a billion dollars.  After that it’s about $300 million a year, every year, forever.  That’s around $70 a year for every one of our phone lines.  Basically every one with a phone in Pennsylvania will be subsidizing a bunch of telemarketing shops that can’t compete in the real world.  Meanwhile Verizon and its shareholders are off the hook.  They can offer whatever services they want and not be forced to upgrade any wires, cables or even fix telephone poles if they don’t want to, and it is likely after this hit that Wall Street won’t let them.  And why would Verizon management bother?  In premium markets it’s only a service to competitors and in rural markets it’s only an expensive way to get marginal customers.
     With rapidly changing technology offering consumers the largest menu of telecommunications services ever available it is inevitable that Verizon will be in the long distance business soon in Pennsylvania.  In New York where everybody in the telephone business can sell whatever services they want consumer costs are dropping and competition is forcing the whole industry to offer better customer service.
     If the government of Pennsylvania ultimately favors having consumers subsidize artificial competition our local phone bills will probably go up about 20% a year.  The phone marketing companies will get their cake and eat   it too at our expense all governed by a giant telecommunications bureaucracy that will only keep getting bigger.   The hope is that someday the whole system doesn’t choke on this multi-billion dollar over regulated recipe for disaster.

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