Statement
Statement of Atif Malik, North Jersey Regional Organizer
In the Matter of the NJ Board of Public Utilities Investigation Regarding the Reclassification of Incumbent Local Exchange Carrier (ILEC) Services as Competitive
Docket No. TX07110873
Public Hearing — June 24, 2008
Newark, New Jersey
Good morning Commissioner Butler. Thank you for giving me the opportunity to testify today. My name is Atif Malik and I am the lead Utility Organizer for New Jersey Citizen Action, the state's largest, independent citizen watchdog coalition. We represent over 60,000 family members and more than 110 affiliated labor, faith-based, environmental, women's, senior citizen, tenant, neighborhood and civic organizations. Citizen Action has a long history of advocating for fair and affordable utility rates and services, including gas, electric, telephone and cable services and over the past 6 months, have monitored and publicly participated in the development of this proceeding.
Telecommunications services are vital lifeline services that allow every NJ resident to maintain our independence, to make life supporting contact in an emergency and to stay connected with family, friends, and literally the rest of the world. Changes in price and service quality, particularly for basic local services, the Lifeline assistance and other telephone social service programs, have serious implications for our members, particularly those on low and fixed incomes. Strong regulatory oversight for essential telephone services is necessary to ensure that reliable and affordable telephone service is accessible to all New Jerseyans. Despite the rapid changes in the telecommunication industry, the Board must not be lulled by unsubstantiated assertions that competition in these markets exist to the extent that regulation is no longer necessary.
On February 14, 2008, Citizen Action testified in opposition to Verizon-NJ and EMBARQ's radical deregulation petition and urged the Board to reject it in its entirety. As stated in the Office of Rate Counsel's written testimony, Verizon-NJ failed to provide compelling evidence supporting their bid to reclassify 57 mass-market retail services provided by Incumbent Local Exchange Carriers (ILECs) in New Jersey as competitive, which would result in the deregulation of all landline telephone services in NJ. While the companies claimed that Voice Over Internet Protocol (VoIP) and wireless service are similar products to landline phone service and provide ample competition, we firmly disagreed. These services do not match the price, service reliability and quality of landline phone services and would not serve to discipline the price for basic local telephone service, ( providing unlimited local and incoming calls), which more than 1 million New Jersey residents rely on.
Following the February public hearing, Citizen Action surveyed all 161 New Jersey local telephone service providers listed on the BPU's website to see to what extent competition for these services actually exist. This survey served as the basis for our report, "No Dial Tone," which found that competition in New Jersey's basic local service market is virtually non-existent. There is only one company that currently offers basic local service at the same rate as Verizon-NJ. However the company in size and service area cannot adequately compete with Verizon-NJ and is no proof of a mature competitive market for basic telephone service. If anything, the report reveals that there are significant barriers to entry into this market and suggests elements of market power at work. The reclassification of basic local service, as well as others essential telephone services, as competitive would be wholly premature and lead to skyrocketing rate increases.
Citizen Action supports the Stipulation and Agreement that is being considered today. In particular, we applaud Rate Counsel and Board Staff's efforts to come to a settlement that protects consumers. While no one likes to see an increase in their telephone rates, given that it has been more than 20 years since basic service rates have been increased, the settlement is reasonable and certainly significantly less than the 300% plus price spikes we would have likely seen with radical deregulation. Most importantly for telecommunications consumers, the settlement rejects the companies' assertions that there is sufficient competition to radically deregulate all mass market telephone services and rejects deregulation for the most critical local telephone services - residential basic local service, single-line business service, residential service installation, residential Directory Assistance (DA), Lifeline Assistance and other "social service" plans that they currently provide to certain vulnerable populations.
The continued regulation of these services is vital to ensuring that consumers have access to affordable, quality and reliable telephone services. The settlement also recognizes that the Lifeline Assistance and other "social service" programs should continue at current rates and will ensure that our state's most vulnerable citizens will have the access to affordable services.
Recently the Star-Ledger reported on the increasing service quality problems being experienced by Verizon customers in NJ and around the country. These service quality problems, including consumers going weeks without service, are unacceptable by any reasonable measure and illustrate the good sense of maintaining public oversight over these and other telephone lifeline services.
Thank you very much.
