By John Murawski
AT&T, the state's largest telephone company, is renewing a controversial bid to raise prices without regulatory approval.
Consumer advocates worry that giving the company unrestricted freedom to raise rates could hurt lower-income residents who depend on basic phone service.
The company formerly known as BellSouth, with 1.7 million customer lines in the state, currently can increase rates by about 10 percent without seeking state approval.
AT&T contends that governmental price controls of phone services are obsolete and unfair in an era of intensifying competition and ample choice. AT&T's many competitors -- whether land line, wireless or Internet-based -- are not subject to price controls.
"We want to be on the same footing as our competitors," said AT&T spokesman Clifton Metcalf. "Regulation was a surrogate for competition in a monopoly market. As competition grows, there is less need for that pervasive type of regulation."
The state's consumer advocacy agency, known as the Public Staff, is likely to fight AT&T's new request. The N.C. Utilities Commission often adopts the Public Staff's position.
Public Staff's director, Robert Gruber, said AT&T is the phone provider of last resort in much of the state. Other local phone companies in the state -- Verizon and Embarq -- require state approval to change rates. Gruber is concerned that once freed from government controls, AT&T could force customers to subscribe to more expensive services just to keep a dial tone.
"We're pretty skeptical," Gruber said. "They have a lot of freedom to raise rates under the current price plan and we don't understand why they need total unrestricted freedom."
The state utilities commission has said in previous cases that it is obligated to relax its control over phone companies if they can demonstrate there is enough competition to justify it.
BellSouth last year had asked the commission to stop regulating the company's rates. The request was suspended while BellSouth was being acquired by AT&T.
AT&T submitted a new request last month and is asking for expedited approval as soon as August.
The company already has the right to set prices in North Carolina as it pleases for most business phone services and residential service packages that include features such as wireless and Internet accounts. Prices for AT&T's other offerings in wireless, long distance and Internet services are not regulated in any state.
Now AT&T is asking to end price controls for residential and business individual telephone line service, a move that would further dismantle the state's regulatory approach to telephone service.
AT&T's basic home service in Raleigh costs $16.75 a month, not including fees and charges, and is set to increase to $18.75 Sunday under the existing pricing plan. AT&T notified customers of the change in April bills, as required by the utilities commission.
The company also is requesting total control over setting prices for calling features, such as call waiting or three-way calling. Currently the company can increase prices by 20 percent on these services that now cost $5.88 a month for call waiting and $5.95 a month for three-way calling.
Still, AT&T's request is not as sweeping as BellSouth's was last year. AT&T is asking for pricing autonomy only in metropolitan regions with the most intense telecom competition and the greatest consumer options, which would exempt rural areas.
BellSouth had asked last year to be free of state oversight on service quality and customer complaints. But AT&T's request would preserve the utilities commission's role in monitoring the company's quality of service.
The company says it's losing thousands of customers to competing landline providers as well as wireless and Internet phone companies. In the past seven years, the company's customers have decreased 32 percent from a high of 2.5 million access lines.
Some of AT&T's fiercest phone competition is coming from cable television companies. Time Warner Cable, for example, offers a "digital phone" service that's promoted with Internet and TV services on a single bill.
In a bid to keep up, AT&T has countered with an Internet-based TV service in 18 cities. The so-called U-verse programming isn't offered yet in North Carolina, but officials have said they want to begin selling it here this year.
Some of AT&T's competition is coming from AT&T itself. When it acquired BellSouth, AT&T also gained full control of Cingular Wireless. That means BellSouth customers who dropped their home phone service to rely on their Cingular cell phone are now AT&T customers.
For that reason, consumer advocates say that AT&T's growing size and influence could impede competition and limit options.
"The fear is that AT&T would use market power and name recognition to raise prices," said Rob Thompson, policy advocate with N.C. Public Interest Research Group.
