The Middletown Press (Middletown, CT)
Frontier and competitors battle over wireline rules
If you still have oldstyle, home telephone service with copper wires in Connecticut, congratulations!
You’re one of about 220,000 customers of that historic, “Plain, Old Telephone Service” of Southern New England Telephone Co., operating these days under the Frontier Communications brand name. That’s down from more than 2 million at the peak in 1994, according to the state Office of Consumer Counsel.
That service by Frontier — which bought the SNET franchise from AT&T in 2015 — is still regulated by the state for price. Part of the state’s review includes a guarantee that Frontier will repair outages within 24 hours.
Frontier says the time has come to end that regulation, with more than 30 companies in the state providing unregulated phone service, wireless and wireline combined.
And Frontier wants the state to exit, or partly exit, the chore of overseeing a more complicated chunk of the market, in which those dozens of competing companies use SNET’s wires and switches to route their calls.
“Connecticut is in danger of being left behind. It is imperative for Connecticut consumers, as well as its traditional voice providers, that state statutes be updated to reflect the changing competitive landscape for voice services,” Allison M. Ellis, a Frontier senior vice president, said in written testimony to a legislative committee last month.
She added, “Frontier alone is subject to the outdated regulatory regime, which negatively impacts its ability to compete fully and fairly in Connecticut.”
Hold on, Frontier’s competitors and the state’s utility consumer watchdog say. The multistate phone company, with its corporate headquarters in Norwalk and Connecticut base in the historic SNET building in New Haven, is trying to pull a fast one, they say.
On Tuesday, the energy committee is scheduled to decide whether to grant that deregulation request from Frontier, sending it to the full House and Senate for possible votes — or kill it. Dry as it seems, this remaining vestige of telephone regulation is a hot potato that could be worth millions of dollars to customers, Frontier or its competitors.
And it speaks to whether Connecticut is, or is not, finally in 2019 a truly open market for phone service, no longer in need of state regulation.
“This bill is merely Frontier’s annual attempt in deregulating itself at the expense of its ever-dwindling universe of customers and this bill essentially grants the ILECs the right to walk away from retail landline service,” state Consumer Counsel Elin Swanson Katz said in written testimony to the General Assembly’s energy and technology committee, which handles most utility regulation issues.
Pardon the acronym. Katz was referring to “incumbent local exchange carriers,” or ILECs, such as SNET, which were, way back in time, the monopoly providers. Most ILEC service in the United States were part of the Bell System, which the federal government broke up in 1984 into a handful of “Baby Bells,” which, in turn, consolidated into AT&T and Verizon, basically — along with smaller, regional companies such as SNET.
Katz and the Frontier competitors, including Altice, which owns the Cablevision franchise, have a strong point.
Frontier, like the Millstone nuclear power station in its recent benefits-grab, is attempting to play both sides of the market — freedom when the company wants to raise prices for basic phone service, and protection when it wants to act like a monopoly.
Here’s the kicker: Under state rules, Frontier must repair outages of basic, wireline phone service within 24 hours. Freeing itself would mean that rule would in essence go away, even though it’s not explicit in the bill, because it is through the pricing rules that the repair rule is enforced.
On the wholesale side, Frontier still controls wires and switches that its competitors need to “rent” as they route their calls. Regulation of these deals stems from the days when the ILECs controlled the whole phone system, and in the ‘90s, reforms were written to allow competitors in.
That hasn’t changed on the wholesale side. “The outcome of this action would inevitably be to reduce competition and increase prices for consumers,” Altice said in its testimony.
And it’s not like the federal government is doing its job regulating utilities these days, as we all know.
And it’s not like Frontier is saying, hey, legislature, we don’t need to be regulated anymore. On the contrary, the company paid the state a settlement of $545,000 in 2012, negotiated with Katz’s office, and has often paid out $5,000 a month for missing the repair targets since then — most recently in January, for November service.
Frontier says that’s the point; it’s being held to a higher standard than its competitors.
“Most states have significantly reduced or eliminated oversight of wireline telecommunications and SB 847 would modernize Connecticut statutes on voice services, many written decades ago when phone service was a monopoly,” the company said in a written statement to me Monday. “Frontier alone is subject to the outdated regulatory regime that is in place today, which negatively impacts its ability to compete in Connecticut.”
Perhaps so, but as Tom Swan, director of the Connecticut Citizen Action Group, said in his testimony, “Frontier bought its way into the state understanding our regulatory framework . ... There is no benefit for consumers from this bill, which would disproportionately impact older residents of Connecticut.”
Katz went into detail in her testimony about how poorly Frontier is doing, with its stock price depressed, facing high debt for copper wireline phone systems that are outdated. But, she and Swan pointed out, that’s not the customers’ problem — and we’ve got plenty of utility cost headaches already.
There’s an easy way out of this. Frontier has a right to bring a rate case to the state Public Utilities Regulatory Authority, or PURA — as well it should.
Lawmakers need not overreact to what amounts to a rate dispute just because one franchise, SNET, great and historic as it may be, is in trouble.
There’s plenty of time for deregulation is price regulation fails. We may end up not wanting guaranteed basic phone service, but we’re not there yet.