Verizon Threatens Dramatic Cutbacks

Telecom giant wants rate hike in New Jersey

CourierPostOnline — Thursday, March 25, 2004


Verizon New Jersey is threatening to cut spending on telecommunications infrastructure dramatically if the New Jersey Board of Public Utilities rejects its request for a wholesale rate hike next week.

Dennis Bone, president of Verizon New Jersey, denied that an increase in the average monthly rate per line from $12.61 to $19 would trickle down to consumers.

"There is no connection. In other states, where the wholesale rate can run as high as $27, the retail package rates - like $49.95 a month for local and unlimited long distance - remain the same."

The winner in the low-rate war is the competition, such as AT&T and MCI, that pocket the savings, instead of the consumers, he said.

Michael Schweder, president of AT&T New Jersey, Verizon's largest competitor, disagrees.

"You can't compare Wyoming, where rates are sky high, to New Jersey, the most densely populated state in the nation," Schweder said.

"The BPU in July 2002 reduced Verizon's wholesale rate to other companies in exchange for allowing it to compete in the long-distance market. It was a trade-off designed to promote competition and lower consumer prices. Clearly, it has worked and some 700,000 of Verizon's customers have switched elsewhere. At the same time, three times that number have become Verizon long-distance customers. If line rates are raised, AT&T will have no choice but to pass the cost onto the consumer or consider pulling out of more rural parts of the state where wholesale rates are higher," he said.

As for reducing investment on infrastructure, which could have serious impact on the state's ability to attract and retain high-tech industry, Schweder said it was an "idle threat."

"If you don't invest, you can't compete. Telecom companies in today's market have no choice," he said.

Verizon New Jersey receives the lowest line rate of all 30 states in which the company operates. The actual cost of operating a single line here is $30 a month, Bone said.

Steve Bonime of New Jersey Citizen Action, the state's largest consumer watchdog coalition, will present Gov. James E. McGreevey with 4,000 postcards today at the State House asking him to hold the line on local phone rates. Another 2,000 consumers, he said, have passed on the same message by phone.

"Verizon wants to stay in long distance, while raising the wholesale rates to make local service competition impossible. We say BPU got it right the first time. They should simply not accept the call from Verizon," he said.

BPU is expected to rule April 2. The Third Circuit Court of Appeals this month ruled, however, that local providers, such as Verizon New Jersey, could not be forced to lease their lines at low rates set by state regulators. AT&T expects to petition the Federal Communication Commission to appeal that decision to the U.S. Supreme Court.

Meanwhile, Alvin Stansbury, a new business owner on the Camden Waterfront, says utility increases are a major concern.

"We can't live without phones and we rely on government to foster competition and keep the service affordable," said Stansbury, of RC Bistro, on Market Street in the first floor of the Victor Building.

"I need a good competitive package for long distance to talk to my vendors and reliable local service for my fax machine, takeout orders and catering customers. Price matters a lot, especially for new businesses," he said.


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