US/ND-2: The FCC's and State Commission's Role

The FCC's and State Commission's Role

Marty Tennant (marty@sccoast.net)
Fri, 06 Sep 1996 08:24:43 -0700 

I'd like to provide a little backgound and a few predictions on
the current and future state of universal service.

First of all, the current rate structure in the US has businesses paying 
from 2 to 3 times the rate paid by residential users.  This has been
part of the strategy of Universal Plain Old Telephone Service for as
long as most people can remember.  Business rates subsidize residential.

Now we have a situation where competition is being introduced.  The first
place the new competitors will go is where the easy money is.  This is
the large business user.  In an effort to protect their turf, telephone
companies have been busy preparing for this day by going to their State
Commissions and talking about the need for "rate rebalancing".

In my State of SC, BellSouth sought, and was given, permission to change
rates for residential and business lines as they see fit, as long as the
total charged does not go up.

As a result, I predict home rates will go up and business rates will go
down.  Great for business.  Bad for residence.  Now, add on the cost of
funding the NEW Universal Service regime, and we will see rates go up 
for residence even more.  Has this been discussed anywhere so that the 
average user understands the dynamics of this new law and market?

As residential rates go up, it will create a more attractive market for
competitors to atttack, such as the cable tv companies.  So eventually,
we may see competition work it's magic and help fix the imbalances brought
on by competition itself.

These issues should be understood by all as we consider the role of State 
regulators.  IMO, they have been given an enormously important role in this 
whole process.  State Commissions are where the action is in a post
Telecom Act world.  I would urge all participants to get involved, if
you can, in your State Universal Service proceedings.

Marty Tennant
President
Low Tech Designs, Inc.
Georgetown, SC