Md. cuts rate Verizon may charge competitors

Daily Record, The (Baltimore), Jul 2, 2003 by Bobby White

In hopes of cultivating more competition in Maryland's telephone market, the state's top regulatory agency this week cut the rental rate Verizon Communications Inc. charges smaller providers for access to its phone lines.

After nearly three years of bickering, the Maryland Public Service Commission reduced the rate 6 percent, taking it from $12 to $11.26.

"For the residential customer, hopefully these rates are going to be enough to encourage competition," said Kevin Mosier, an economist with the PSC.

It is unclear how much -- or even whether -- the rate cut will spur residential competition. There already is a pitched battle among telecoms for business consumers. Residential customers are less desirable to telecoms because they are more geographically dispersed and tend to use their phones less than businesses, among other reasons.

For its part, Verizon, which initially sought a 75 percent rental rate hike before agreeing to the $12 price, claims the reduction actually will hinder competition and hurt Maryland consumers.

William Roberts, Verizon's Maryland president, blasted the decision in a statement. He said Maryland consumers already enjoy more choices and lower prices than they did before major telecom reform was passed in 1996, benefits that are not a result of government regulations.

"The real reason consumers have more affordable choices is the huge growth of wireless phones, e-mail and instant messaging, which are saving consumers hundreds of dollars a year," he said. "These choices keep local phone rates down for everyone, not just because states regulate those rates, but also because companies that want to raise rates now risk losing customers to more affordable alternatives."

In a 148-page decision, the PSC outlined the long battle that ensued with the 1996 Telecommunications Act, which broke up the AT&T monopoly. The underlying premise of the measure was that competition would result in a number of ways, including the leasing of existing telephone lines or the creation of new networks. Leasing became the favorite option for smaller firms because they could not afford new networks.

There had been broad pricing standards pertaining to the various network elements a competitor could lease. The reform law requires each state to maintain rental rates.

Verizon's competitors operate about 8 percent of the company's phone lines, Mosier said.