CTC customers rally against raising rates

CTC customers rally against raising rates

August 22nd, 2012 by Mike O'Neal in Local Regional News

The message given was clear during a Public Service Commission hearing held in the Chickamauga Civic Center last week: residents want the commissioners to put any rate increase request on a "do not call" list.

An overflow crowd consisting of elected officials, business owners and residents expressed their support of the local Chickamauga Telephone Company and questioned why a company that does no business within CTC's service area could force a double-digit rate hike.

Megan Spooner, who has both cell and landline telephone service, said a rate increase would lead her to cut the landline.

"If enough people are equally affected, it could put Chickamauga Telephone out of business," she said. "I see this as an attack on our community."

At question is a request made by AT&T and the Cable Television Association of Georgia that the local company impose double-digit rate hikes for landline telephone service. AT&T and CTAG likewise have asked that two small, independent telephone companies, Ringgold Telephone and Public Service Telephone Company in Reynolds, Ga., also raise rates.

Money, lots of money, is driving the issue.

All companies that provide telephone service in Georgia are required to pay 1.4 percent of their income into a Universal Service Fund. For more than 50 years, that pool of money has subsidized local, usually rural, telephone companies that are required to provide landline service to anyone that requests it.

As a provider of last resort CTC must charge all customers the same rate for the same services, regardless of how much it costs the company to string telephone wire to a particular location.

The rate charged residents in a 100-unit apartment complex is the same as that charged a farmer whose single telephone is miles from the next nearest customer and the Universal Service Fund exists so all customers have equal access to the same services.

AT&T does not deny that companies serving rural areas, such as CTC, deserve a subsidy. It is how much the local companies are receiving that is being questioned.

"Many rural communities like the CTC area are served but Chickamauga is one of only three companies in Georgia that drew more than $1 million (from the Universal Service Fund) last year," said Pat Wingo, AT&T's assistant vice president of regulatory affairs.

Wingo said AT&T's position is that CTC's subsidy that is paid by every customer in the state, not just within the CTC service area, could be reduced by as much as $700,000 if its rates more closely matched those offered by similar companies, particularly for businesses.

"One thing that stands out is that you (AT&T) won't make Chickamauga raise rates," said County Coordinator David Ashburn. "But if you take the subsidy away the rates will be raised to make up the difference."

Ashburn said that because many of the county's departments are based in Chickamauga the county could see its monthly telephone bill increase by more than $1,000 if the requested rate hike is allowed.

Proposed increases would range from 42 percent to 100 percent. The basic rate for a typical residential customer would increase by at least $5 per month, from $13.30 to $18.83. The typical business customer would see the basic monthly fee, currently $20.40, double to $40.80 each month.

While added features would not increase for residential customers, the typical business owner would see the cost of calling feature packages jump from $11.95 each month to $16 a month for the same package.

"Perhaps it isn't that CTC rates are too low, perhaps their (AT&T's) rates are too high," said Melody Day, superintendent of Chickamauga City Schools.

Day said school systems statewide are already facing astronomical increases in state employee insurance costs and have experienced precipitous drops in state funding for several years.

"Nothing is left to pay for an increase in our commercial telephone service," she said.

Mark McDonald, CTC's general manager, said AT&T's recommended cut in subsidies are a serious threat to the local company that contributes more than $45,000 annually to the Universal Service Fund.

Like Wingo, McDonald said the rate hearing was about fairness.

"Wireless and broadband providers use our network (for calls that involve a landline at one end) but pay nothing into the Universal Service Fund," McDonald said. "This rate increase request is not right. We should be able to collect from AT&T for their use of our network."

State lawmakers passed a law in 2010 to provide more oversight to the subsidies and the PSC reviews any company request that is greater than $1 million.

The following year, the three companies subject to last week's rate hearings each asked for more than the threshold amount. At that time, PSC Chair Stan Wise expressed concern that granting those three companies' requests might lead the state's 14 other small, regulated phone companies to follow suit.

At last week's meeting Wise said the commission was not recommending that CTC raise it rates, but that the Universal Service Fund not be used to make up the difference between its current revenues and expenditures.

"If the rate increase comes, it'll be at the request from Chickamauga," Wise said. "We will look at the rate of subsidy - it is other people's money being used in your area. If you can't live within your rates, you'll have to find a way to do your business."

State Sen. Jeff Mullis (R-Chickamauga) said competitive telephone rates are essential to attract business, that the local company's success is vital to keeping "small town Georgia, small town America" viable and that raising rates - as proposed - is too great a burden for those on fixed income to bear.

"A rate increase of this percentage is preposterous," he said. "My constituents are against this increase."

McDonald and others agreed that without subsidies, rates must rise. Rising rates could lead to customers cancelling services which, in turn, could lead to more rate hikes and more requests for Universal Service Fund subsidies.

The Georgia Public Service Commission will decide by Oct. 16 whether to cap subsidies to the local telephone company. If CTC then asks for a rate increase, a process would commence that could last until April 2013.