Say “So Long” to Telecom Regulations?

Tom Johnson | March 15, 2011 | Energy & Environment
By the end of the month, New Jersey's telecom and cable companies could be completely deregulated, a prospect that has consumer advocates unhappy and uncertain

For $16.40 a month, residents in most of New Jersey can get basic phone service from Verizon New Jersey with unlimited local calls.

That deal, however, may disappear if a bill pending in the legislature wins approval, as expected, by the end of the month, according to a study jointly released by New Jersey Policy Perspective and Demos, a national nonpartisan group.

The study warned that lower-income customers struggling to make ends meet could see rate increases ranging from 50 percent to 63 percent, a prediction Verizon executives called factually incorrect.

The dispute revolves around a bill (S-2664) expected to be taken up next week by lawmakers, which would essentially scrap any remaining regulatory oversight of New Jersey’s telecommunications and cable TV companies.

Backed by business interests around the state as well as Verizon and cable companies, the measure is touted as eliminating burdensome rules that stifle economic growth in the state. Consumer advocates, however, say it will leave customers with no recourse if they encounter problems with service quality, billing and other issues in their dealings with telecom companies.

The new study said the law, if passed, also could leave rural communities at risk of being stranded without conventional landline telephone service and allow Verizon to sell off its traditional landline service without state regulatory oversight.

“When similar legislation passed in other states, Verizon doubled or tripled rates and sold off lines,” said Deborah Howlett, president of New Jersey Policy Perspective. “New Jersey consumers can’t afford more increases, but that’s what they should expect if the Senate votes for this bill.”

Rich Young, a spokesman for Verizon New Jersey, called the study “short-sighted, shallow and full of holes. It’s not based on reality.”

Proponents argue that the legislation will increase competition and attract more providers into the marketplace. They also say that consumers will still have basic protections, like ensuring that they get their public-access channels.

The bill reflects the rapidly changing nature of the telecom landscape. With the advent of wireless and Internet phone service, Verizon and other old-line Baby Bell phone companies have been seeing a dramatic drop in the number of traditional landline phones, particularly among young people. Proponents of the bill say consumers have many other options if they do not want landline service, sometimes at a cheaper rate than what the old phone companies charge.

Verizon has spent billions of dollars building a new high-speed broadband network, which can deliver phone service, Internet service and programming to homes around the state. The company hopes the new network will eventually replace its old copper landline phone service, a prospect foes say makes it more likely Verizon would sell off the service.

Basic phone service in New Jersey used to be among the cheapest in the nation, offered a few years ago for under $10 a month. But the state Board of Public Utilities (BPU) declared it a competitive service, allowing Verizon to increase the rates.

Even if the law is approved, those needing cheap phone service can obtain it through the state’s Lifeline program, which offers basic phone service to low-income households for as little as $2 per month, according to Young.

Opponents argue beyond the higher costs faced by consumers, they would lose basic consumer protections, such as not being refused service without reason, protections against slamming, having billing errors corrected and receive a credit for outages.