California's Telco Deregulation Fiasco: Finding Alternative Phone Service in a Competitive Wasteland
THE BAD NEWS
Your telephone rates have increased by between 70-276%.....in just the past year. From a few years ago, we are looking at 1000% price increases. Remarkably, many consumers aren't even aware of these price shocks. And when they find out, they feel helpless to do anything about them.
For the second time in a decade, California regulators have used the state's consumers as lab rats. The first experiment - electric deregulation - was a flaming debacle. The second experiment - telephone deregulation - is turning out to be an expensive bust. And the bust is hitting at exactly the wrong time for the state's consumers.
The results have been sobering. Just last month, AT&T raised prices for several stand-alone features: Anonymous call rejection now costs $5 from $1.90; caller ID rose to $9.99 from $6.17. Some local toll calls - calls that aren't considered long-distance but don't qualify as local - jumped by more than 200%. In 2007, California's AT&T consumers were assaulted by the following phone rate hikes:
- Select Custom Calling services by over 50%
- Local Directory Assistance by 346%
- Fees for returned check by 276%
- Local Toll rates by over 70% for some categories
- Fees for having an unlisted number by 614%
- Fees for late payments by adding a $5.50 NRC to past due balances
When the state Public Utilities Commission (CPUC) made the ill-advised, ideologically-fueled decision in 2005 to abandon oversight of the telecommunications industry, the CPUC vowed to be vigilant to "ensure that the market continues to serve consumers well." Just the opposite has happened. This Commission has thrown the state's consumers to rapacious wolves and it's already proving to be a blood bath. The telecom companies have already set their sights on those consumers who have the least amount of choice or ability to assert their rights. The greed of these companies appears to have no bounds.
Consumer advocates say the elderly and low-income families are hardest hit by the creep in fees. It is the less-savvy consumers who don't have the wherewithal or time to shop for phone services who are footing the bill for this regulatory misstep. What's worse is that AT&T is reaping record profits on the backs of these ripped-off consumers; AT&T announced that it had doubled its profits in the first quarter of 2007 over last year, earning an amazing $2.85 billion.
Why has the CPUC given AT&T carte blanche to raise rates not mandated by the government---rates that go in the company's pockets? Because the CPUC claims there is so much competition that people are free to change carriers. But with the spate of recent phone company mergers that followed the deregulation order, customer choices have disappeared. San Diegans who want local land-line phone service are limited to AT&T and/or a local cable company. That's it. A competitive market for local phone service is but a pipedream in the pipes that the regulators are apparently smoking.
THE GOOD NEWS
OK, I lied. There's no really good news. Until the regulators do their job of protecting California consumers rather than coddling the big phone companies, there aren't a lot of good alternatives out there. However, there are ways in which the motivated consumer can counterattack the decline of phone alternatives. Some of the options are as follows:
Hang up the phone on AT&T: In other words, cancel your "plain old telephone service" (POTS) and use some of the high-tech alternatives. I gave up my AT&T local service in 2005 and went with two alternatives: wireless and Internet. My cell phone serves as a pretty decent substitute for POTS except when I'm in my house, where coverage is spotty. But since I have high-speed Internet access, I use an Internet-based phone provider. Vonage, Packet 8 and other VoIP providers are fine alternatives. Skype's prices can't be beat and the quality is better than cell phones - although not by too much. Between the two, I don't miss AT&T's POTS at all.
Audit your phone bill: The odds are pretty high that you are being saddled with phone services from AT&T that you don't use, don't need and didn't even know about. "Phone Protect", "Wire Pro" and "Call Screen" are largely useless services each of which will add $5 or more each month. These three useless services could add $165 a year to a customers' phone bill. Similarly, the non-published numbers used to be worth a few cents per month. But with the do-not-call lists and unpaid searches on the Internet, just let the company publish your listing rather than forking out an additional $1.53 per month. AT&T's "Message Center" costs $108 a year! For half that price, you can buy a decent phone answering machine. Bottom line: If you really need and use all of the extra phone services, think about one of the bundled plans. But think long and hard because so many of the extra services peddled by AT&T are underutilized and, certainly, overpriced.
No Broadband?: Ugh. That reduces your options quite a bit. Cell phones (prepaid, perhaps). If you use local phone service a lot, perhaps a bundled plan offered by a competing local phone company, such as TalkAmerica or ZTel. Go to ABTolls for the latest information.
But I Just Want POTS: None of the above alternatives serves the casual user who makes 10-20 short calls a week, a handful of long-distance calls, and doesn't need a bundled plan. For those users, AT&T's basic measured rate service ($5.70 per month) or flat rate service ($10.95) with NO additional features combined with a prepaid long-distance calling card (good deals at Costco and Sam's Club) are probably the best alternative that the casual phone user can get in this very uncompetitive, user-unfriendly deregulated telephone world.
Oh, and one other thing you can do. Next time you bump into one of your state elected representatives. Give them a piece of your mind....and your phone bill. And tell them to fix the problem, pronto. Or they might just get cut off too!