DATELINE 12-15-06: Today, UCAN's Executive Director, Michael Shames was quoted in the San Diego Union Tribune. According to Michael, a city-approved AT&T "surcharge" is nothing more than a tax. Even worse, it is a double tax on many San Diego residents.

Monthly surcharge tied to wire-burial program

By Michael Kinsman
UNION-TRIBUNE STAFF WRITER
December 15, 2006

AT&T has been granted the right to add a monthly surcharge to most San Diego customers' phone bills to help pay for the $125 million cost of putting its phone lines in the city underground.

The state Public Utilities Commission voted unanimously yesterday to allow AT&T to charge 77 cents per month during 2007. The surcharge also would apply to customers of phone companies that lease lines from AT&T, but lifeline customers would be excluded.
AT&T would increase the surcharge to $1.51 per month in 2008. In 2009, the phone company would be able to incorporate an estimated charge of 90 cents per month for the work into its regular fare structure.

AT&T spokesman Gordon Diamond would not say how many customers AT&T has in the city; he said that number is confidential competitive information.

PUC documents indicate that AT&T might handle as many as 657,000 phone lines in the region.

In 2002, the city established a program requiring all utility companies with overhead lines to put them underground. The estimated cost of burying utility and phone lines is $2.7 billion, with about one-third of that work expected to be done by 2020, said Nathan Bruner, manager of the city's underground program.

While the PUC decision is effective immediately, AT&T executives said they didn't know how soon in the new year that the surcharge would be added to monthly bills.

“This is remarkable,” said Michael Shames, executive director of Utility Consumers' Action Network, a nonprofit watchdog that opposed the AT&T surcharge. “The City of San Diego is using the PUC as a cover for a tax increase that it has imposed on its own residents.”

The surcharge came out of an 2005 agreement the city struck with AT&T (then known as SBC) to allow the telephone company to seek PUC approval for the surcharge.

Other utilities took different routes. San Diego Gas & Electric agreed to pay a higher franchise fee of about $34 million a year through 2020 to pay to bury its utility lines. The two cable companies that serve the city – Cox Communications and Time Warner Cable – are paying the cost of the burying work on their own.

Cox is spending between $3 million and $5 million to bury cable lines for its 170,000 customers in the city, said spokeswoman Ceanne Guerra. “We are absorbing the cost because to us, it's seen as a cost of doing business,” she said.

Marc Farrar, a spokesman for Time Warner, said his company has spent about $700,000 over the past three years on burying projects and will continue financing the improvements until burying work is done for all 200,000 subscribers in the city.

Shames protested the AT&T surcharge, saying many residents of San Diego who have already paid for burying utility lines are being forced to subsidize residents of older neighborhoods built before lines were systematically buried in the early 1980s.

“Other cities do this, and they call it a utility tax,” Shames said. “Here, it is being passed off as a surcharge.”

He said that residents of Tierrasanta, for instance, paid for burying utility and phone lines when they bought their homes. Now, they will be asked to subsidize residents of older neighborhoods, such as Point Loma, La Jolla, Mission Beach and North Park, where homes were built long before burying lines started.

“Some residents of San Diego are paying for undergrounding twice,” Shames said. “That's not right.”

In granting the surcharge, the PUC allowed AT&T to charge a flat rate to consumers, rather than calculating the monthly charges based on phone use. In order to charge based on usage, AT&T would have had to seek confidential phone records on individual users from other carriers who lease its lines, Diamond said.

The PUC authorization also included a mechanism to review revenues generated by the surcharge and costs incurred to make certain that consumers are not being charged excessively. The next year's surcharge could be adjusted if revenue and cost figures are not aligned, the PUC said.