Agency Challenges Ruling Allowing Rate Hike for Basic Telephone Service

BPU asked to reconsider decision that will increase cost of landline phones now used mostly by seniors and low-income residents

Stefanie Brand, director of the New Jersey Division of Rate Counsel
The state Division of Rate Counsel is challenging a decision by regulators to reclassify basic telephone services offered by Verizon New Jersey, arguing that it could increase rates for consumers.

In a filing with a state appeals court, the DRC is seeking to remand the issue back to the New Jersey Board of Public Utilities, which approved Verizon’s bid to reclassify basic telephone service in May, saying there are plenty of competitive alternatives.

In addition to the court filing, the DRC also asked the BPU to investigate Verizon’s efforts to replace its traditional copper-based landline service with a newer fiber optic network, a step that has infuriated some customers.

Both issues reflect the rapidly changing nature of the telecommunications sector, where consumers are increasingly deciding to give up their traditional phone lines, either replacing them with wireless or switching to Internet-based or cable telephone service. Among Verizon customers, three in 10 households in New Jersey no longer rely on the traditional phone lines in favor of wireless service.

But hundreds of thousands of low-income and seniors still rely on the traditional basic phone service, which is much cheaper than wireless and the services offered through Verizon’s new fiber optic network.

For residential customers, basic telephone costs $8.95 per month, among the lowest rates in the country.

Acknowledging that the stipulation approved by the BPU caps rates, Rate Counsel Director Stefanie Brand said it is still a significant increase of 36 percent for consumers.

“After five years, all bets are off,’’ she said.

The Division of Rate Counsel also is concerned about the quality of service provided by Verizon to customers. After five years, the state would no longer regulate service quality, according to Brand.

In a statement, Verizon defended the reclassification of certain basic telephone services.

“It’s a decision that was four years in the making,’’ said Lee Gierczynski, a spokesman for Verizon. “The board did not deregulate the services, it simply recognized that the services are competitive.’’

Giercynski said there are various consumer protections and benefits in the BPU decision, dealing with rates for low-income and senior customers, as well as repair priority for those with a serious disease or physical disability.

[related]In addition to challenging the BPU decision to reclassify basic telephone services, Brand also asked the agency to look into Verizon’s plan to replace its old copper-based infrastructure with its new fiber optic network.

The request, in part, stemmed from complaints by a customer who was warned that service would be disrupted unless they switched to the fiber optic system.

Brand conceded the transition from the traditional copper-based land service to the fiber optic network is inevitable, but said, “It needs to be done on an orderly basis.’’

Giernczyski said the company is not charging for the service, but simply improving the way the service is delivered.

“Upgrading customers from the aging copper network to fiber facilities will significantly improve reliability of phone service, and it’s a process that is occurring in many communities in the country,’’ he said.

But Brand argued that in a lot of areas in New Jersey, particularly rural counties, fiber optic service is still not available to consumers.