About five years ago,we regaled you with hints and suggestions about how to best shop for landline services.   Here's our new advice...............don't buy landline phone services.   The duh-regulators who sought to inject competition in the phone industry fumbled the ball mightily when it comes to local (landline) phone service.    Prices appear on the verge of skyrocketing in 2011.

THE BAD NEWS

    The bottom line is that the prices went up for a service that should be offered for a few dollars per month.  Direct competition has all but disappeared.  The only real cost-effective options available to you is VoIP service over your Internet (which is the option that I recommend) and using your cell phone as your personal home phone (sub-optimal, but bearable).    And that's not a pretty option for many landline customers.

    In California, landline services have been functionally deregulated and now exceed over $25 per month for most homeowners.  During the 2007-2008 time frame, most California's landline phone service rates had increased by between 70-276%.  From a few years ago, we are looking at 1000% price increases.  Remarkably, many consumers aren’t even aware of these price shocks.

    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.  In mid-2008, 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 a whopping 614%
• Fees for late payments by adding a $5.50 NRC to past due balances

    According to a July 2010 report issued by the California Senate Office of Oversight and Outcomes, the regulators had seriously fumbled the "duh-regulation" of telephone services.  Under the deregulation scheme, AT&T’s basic residential rate climbed 50 percent between 2008 and 2010. (from $10.94 per month up to $16.45 per month).  It also referenced the 2008 report produced by the staff of these same regulators which found that AT&T and Verizon control 65 percent of all residential landline, wireless and broadband connections in the state.

    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 the 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 all but 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, we 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 many 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 them

In other words, cancel your “plain old telephone service” (POTS) and use some of the high-tech alternatives.  The options aren't great but if you have wireless and/or  broadband service already, then you might have pretty decent substitute for POTS.   But if you don't already have those services, then you still end up paying quite a bit more for the rough equivalent of landline service.

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.

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 with NO additional features combined with a prepaid long-distance calling card (good deals at Costco and Sam’s Club) is probably the best alternative that the casual phone user can get in this very uncompetitive, user-unfriendly deregulated telephone world.  Unfortunately, we recently discovered that Costco is no longer offering discounted calling cards.   So the bad news gets worse for the casual user.

If You Want the Security of Phone Service if Power is Out

Many consumers are willing to pay extra because they believe there is real value to having access to phone service in the event that power is interrupted.   The wireline phone system is independently powered and is not dependent upon the electric grid.  Because cell phone systems have been known to fail during large power outages, one can’t assume that cell phones will be fully functional, especially in a large scale power outage.   The key question these consumers must ask is whether it is worth almost $300 per year to have such security.   One alternative to consider is that in almost every neighborhood, someone retains landline service.  In a close knit community, you may want people to chip in and share one landline, in the event of emergencies.  For less than $100, you can also purchase a CB radio that you can use to communicate with emergency services such as fire and police.  Used CB radios are available for less than $50.  The FCC has reserved Channel 9 for contact with emergency services.   They are a very reliable and time-tested means of communicating with others during emergencies.    By no means is this an adequate substitute for landline service, but it may be as close as you can get if you choose to hang-up on AT&T.