The Legislature Is Trying To Raise Your Phone Bill

Richard Brodsky, Senior Fellow at Demos

 
In an unprecedented attack on the economic health of New Jersey
families, the Legislature is advancing a bill that will likely raise rates by as
much as 50 percent for New Jersey families who have a land-line
telephone. 
 
They’re doing it by calling the bill “deregulation” and similar legislation has
raised rates substantially in 17 of the 20 states that have tried it.  Last year,
after deregulation legislation was passed in Illinois, AT&T increased
landline rates up to 63 percent in that state.  And in California after similar
legislation was passed, rates went up 50 percent.    New Jersey families
can’t afford these rate hikes. 
 
The current regulatory framework in New Jersey has created one of the
most affordable and reliable networks in the nation, offering lower phone
rates while also delivering cutting-edge broadband services that are
ranked better than any other state in the nation. Families and retirees who
can’t afford a costly cell phone or cable/phone combo service plan, or are
unfamiliar with cell phones are still able to afford a landline in their homes.
They can keep in touch with family and friends, and if they have an
emergency, they are able to call the fire department or the police.
 
But all that could change if S2664 is passed. Verizon could stop providing
service if there are “at least two providers offering voice services to
residential customers,” including wherever there is a “commercial mobile
service.” In plain English, that means that if you live in an area with a cell
signal (even if it doesn’t work in your house) and the local cable provider
offers phone service, Verizon could simply drop basic, low-cost phone
service.
 
Most state residents dependent on Verizon’s landline phone services do
not have an economically-affordable alternative. Even where two viable
competitors exist, many analysts don’t find that competition delivers
effective price competition to protect consumers. Such “duopoly” markets
lead to what analysts identify as “price leadership,” where alternative
providers simply follow the price actions of the dominant telephone
companies.
 
If that weren’t enough for our legislators to oppose this bill, additional
crucial consumer protections would be eliminated under this legislation.
You could be refused service without reason. If the phone provider ceases
to operate in New Jersey, your phone service could simply be dropped.
The company could change the terms of your service agreement without
your consent.  And you will no longer have the right to credits if there is a
service outage in your area.
 
Consumers aren’t the only ones at risk. This legislation threatens important
infrastructure dollars for the state. States that adopted similar legislation at
least had an oversight board in place to ensure new providers invest in
infrastructure, extend broadband access, and maintain quality service.
Without this oversight, New Jersey could lose out on hundreds of millions
of dollars in capital investment. 
 
It’s no surprise that the sponsors of one of the most sweeping anti-
consumer telecommunications and cable TV initiatives anywhere in the
country have spent millions to pass the legislation while avoiding the lens
of public scrutiny.  Senators who vote for this legislation would hurt working
and middle-income families while jeopardizing New Jersey’s infrastructure
for decades to come.  I hope that our Senators will come around and make
major amendments to this legislation to maintain important safeguards for
consumer, keep phone service affordable and the state of New Jersey.
 
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Richard Brodsky is a Senior Fellow at Demos and a former state
assemblyman in New York State, where he was Chairman of the
Committee on Corporations, Authorities, and Commissions from 2002 until
2010. From that position, among other accomplishments, he led significant
investigations and authored the Cable Television Reform Act, and
legislation to limit surcharges. For his work, Richard has received the
Rockefeller College of Public Affairs Distinguished Public Service Award,
the Martin Luther King, Jr. Award, the United Federation of Teachers
Friend of Education Award, the International Association of Firefighters
Achievement Award, the New York State Audubon Society William B. Hoyt
Environmental Award, and the Adirondack Council Conservationist of the
Year Award along with many others. Richard is a graduate of Brandeis
University and Harvard Law School.