Advocate calls for rate caps

The state's consumer advocate told Assembly Speaker Barbara Buckley, D-Las Vegas, Monday that regulators could balance the needs of senior citizens wanting affordable phone service with the needs of former monopoly telephone companies to freely compete against unregulated telecommunications companies.

"I think rate caps are a good idea," Eric Witkoski, chief of the attorney general's Bureau of Consumer Protection and state consumer advocate, said during the first hearing on a bill that would eliminate price regulation of basic residential phone service.

"If competition is here, a rate cap should not be a problem," Witkoski said.

Embarq Corp. and AT&T, however, should have flexibility in setting prices for their products for services, he said.

Buckley said during the hearing that she wanted to protect her typical constituent -- an elderly woman who is 70, living on fixed income, doesn't want a government subsidy for phone service, doesn't have a cell phone or doesn't use the Internet.

"It seems to me that the market has changed a lot," Buckley said

In response to her concerns, Witkoski also suggested that the Public Utilities Commission be directed to monitor the land-line telephone industry each year and determine that local telephone markets remain competitive.

Witkoski noted the trend toward consolidation, mentioning SBC Communications, formerly known as Southwestern Bell, acquiring Pacific Bell, BellSouth and AT&T, from which the company took its new name.

"There is a trend toward consolidation," Witkoski said. "Any time, you go to a competitive market you want to make sure you have a lot of competitors."

The Assembly Commerce and Labor Committee Monday also heard from executives and lobbyists for Embarq, the regulated land-line phone company serving Las Vegas, and AT&T, the regulated phone service for Northern Nevada and Pahrump.

Kristin McMillan, vice president and general manager of Embarq's Southern Nevada operations, acknowledged that telephone prices could increase in a deregulated market. But, he said, "It's more likely, based on what's happening in the market today, that they should come down.

"If you're talking about basic residential service, there are some competitors that provide that service at a price lower than ours. There are some providing these services at prices higher than ours," McMillan said.

"Embarq and AT&T have lost far more customers than they have added over recent years," McMillan said. Cell phone companies are emerging as one of their biggest competitors, she said. In 2000, the Federal Communications Commission counted 800,000 cell phone subscribers in Nevada, but the total last year was 1.9 million, or 72 percent of the population, McMillan said.

Cell phones do not provide the kind of reliability that land-line services offer, Witkoski said.

Committee Chairman John Oscegura, D-Las Vegas, rejected that argument.

"It seems to me that wireless communications work as well (as land-line services)," Oscegura said.

McMillan also mentioned Cox Communications, the local cable television company that has started offering land-line phone service but is not regulated. Other competitors are companies such as Vonage that sell phone service using the Internet, and competitors who rely on Embarq's lines to reach customers.

"The bill will not totally deregulate us," McMillan said. "Embarq and AT&T will remain the provider of last resort for telephone services."

The chairman suggested giving the next session of the Legislature in 2009 oversight to see if competition is working well in the land-land telephone business. "That is something we will certainly take under consideration," Oscegura said.