Advocates Want Consumers to Be Part of Conversation About Verizon Rates

Division of Rate Counsel calls private negotiation ‘offense to public’s interest and legal rights’

Stefanie Brand, director of the New Jersey Division of Rate Counsel
Consumer advocates are urging the state to scrap a proposed deal that would reclassify Verizon New Jersey’s basic telephone service and instead schedule extensive public comment on the issue.

Critics say the draft stipulation agreed to by the staff of the New Jersey Board of Public Utilities and the telecom company earlier this month would boost costs for seniors, the disabled, and low-income residents.

If adopted, the agreement would give Verizon something it has sought since 2007 –the reclassification of basic phone service as competitive, so prices can rise and fall according to what the market is willing to pay. Basic phone service is currently offered at a discount. The company argues in the proposal that reclassification would not raise rates because consumers have so many other choices in where they obtain phone service.

What irks critics of the deal is that they only learned about the stipulation less than two weeks ago and had no part in the private negotiations between the BPU staff and Verizon. The five BPU commissioners could approve the agreement as early as tomorrow at the agency’s regularly scheduled monthly meeting.

In a filing made by the New Jersey Division of Rate Counsel, it urged the BPU to hold off adopting the settlement and instead reopen the matter in a traditional fact-finding process usually used in such cases. Rate counsel also argued that the agreement could lead to a decline in service quality within five years.

“The manner in which this stipulation has been reached is also an offense to the public’s interest and legal rights,’’ said Rate Counsel Director Stefanie Brand in the filing.

Verizon is not eliminating basic telephone service if the deal is approved, the company said.

“Competitive classification of the services only affords Verizon the flexibility to price its services, according to the competitive environment it operates across New Jersey, a communications environment that is one of the most competitive in the nation,’’ said Lee Gierczynski, a spokesman for the company.

“That robust competition is what keeps prices in check and services in line with customer expectations,’’ he said. “If we fail to offer the products and services New Jersey consumers want at a fair price, we stand to lose their business.’’

[related]That reasoning did not fly with Brand. In her filing, she cited a 2012 report, which found that in 17 of the 20 states with deregulated telephone service, consumers saw rate increases.’’

“The history in New Jersey and the experience in other states tell us that as a company deregulates, rates go up, not down,’’ Brand said.

Verizon’s traditional copper line telephone service is no longer the cash cow it once was as many consumers switch to wireless and Internet phone service.

New Jersey has one of the cheapest basic residential phone service in the nation. Under the proposed stipulation, rates would rise by a little more than $6 a month over a five-year period and then no longer be regulated by the state.

“Verizon is free to raise basic service rates without limitation,’’ according to Ev Liebman, associate director of AARP in New Jersey.

In its own filing, Verizon said the proposed stipulation “represents the next logical and incremental step in the evolution of the communications market in New Jersey.”