The PUC Gets Its Wires Crossed : Effort to deregulate phone service business has become one big snarl

California’s push to deregulate the telecommunications business is a mess, and the state lags far behind the rest of the nation in fostering phone service competition. The culprit is the Public Utilities Commission. After a year’s delay, the state commission has opened the local long-distance, or toll call, market to competition, but its bumbling modus operandi will cost consumers plenty.

Since New Year’s Day, Californians no longer have had to use Pacific Bell or GTE to make toll calls between points that are more than 12 miles apart--16 in some areas--but within local calling regions. (Calls between Los Angeles and Riverside or between Anaheim and Santa Monica, for example, are toll calls.) However, to use another carrier such as AT&T; or MCI it is necessary to punch in a cumbersome five-digit access code before dialing, and callers must memorize toll call boundaries to know when to use the codes. Long-distance carriers are crying foul because the PUC did not instead require Pac Bell and GTE to provide a simple one-digit dial access.

To add to the confusion, the cost of basic monthly service has gone up as toll calls, no matter the carrier, have become cheaper. The PUC granted Pac Bell and GTE increases in basic service rates to make up for revenue lost along with their monopolies on toll calls. The basic rate for Pac Bell residential customers has risen to $11.25 from $8.35, and for GTE residential users the cost has gone up to $17.25 from $11.21.

Consumer groups maintain that the higher basic monthly rates will especially hurt the poor, the elderly and the 20% to 30% of phone customers who do not make toll calls every month. The PUC admits that more than half of residential customers will end up paying more. When January phone bills start arriving, Californians will see--and pay for--the PUC’s bungling. This is an inauspicious start for the PUC effort to promote competition and better value in phone service. Now the commission wants telephone and cable companies to figure out how to deregulate local phone service. Will the PUC botch that too?