Mar. 5-The Virginia State Corporation Commission has been asked by Embarq Corporation to reject a report that could force major increases in rural telephone rates.
EMBARQ ASKS VIRGINIA STATE CORPORATION COMMISSION TO REJECT A REPORT
THAT COULD FORCE MAJOR INCREASES IN RURAL TELEPHONE RATES
Embarq is fighting to keep Virginia officials from forcing the company to substantially increase the
rates of its Virginia customers due to long distance and wireless companies paying less to use
Embarq’s network. If Embarq were to do as a Commission official suggests, rates for basic local
service would increase by as much as 46% over the next four years. Rates for other services like
Caller ID would increase as much as 75%. Embarq is working hard to prevent that from happening.
How much phone rates increase will depend on the upcoming decision of the Virginia State
Corporation Commission.
Embarq has asked the Commission to reject a hearing examiner's recommendation that could result
in local rate increases in excess of $23 million per year. Embarq made the request recently in
response to a hearing examiner's report about how the Commission should address a Sprint-filed
complaint related to Embarq wholesale rates paid by the bigger telecom companies. The hearing
examiner's report recommends the Commission order Embarq to reduce its wholesale rates for
switched access services by more than $23 million over 3 years. Rates for switched access services are
paid by long distance and wireless companies like Sprint and AT&T for the use of Embarq's local
telephone network to connect their customers to Embarq local customers. The hearing examiner's
report says Embarq can make up more than $23 million in lost revenue by increasing rates for basic
local telephone service and other services like Caller ID. If Embarq were to do so, a customer
purchasing what is currently the lowest priced basic service and Caller ID would pay more than $120
annually within four years. Embarq believes that its customers should not have to shoulder these
increases.
Embarq makes three basic points in its plea for rejection of the hearing examiner's report:
• Historically, rates for switched access services have been set high enough to help cover the costs of
providing basic local telephone service in rural, high-cost areas of the state. If that support is
taken away, local service could become much more expensive and less reliable in rural Virginia.
Contrary to the hearing examiner's report, nothing in state law requires the Commission to reduce
the contribution that switched access rates make to basic local service.
• Forcing a reduction in switched access rates would produce no real benefits for Embarq's local
customers. There is no factual evidence that a reduction in switched access rates will result in
more competition or lower prices as Sprint and AT&T have claimed. The only thing certain about
lowering switched access rates is that rates for basic local and related services will have to be
increased.
• Embarq must, of course, maintain and improve its services and equipment for the benefit of its
customers. Embarq will likely have to increase rates to do so. Embarq's customers should not be
asked to help maintain and improve the equipment and services they use in Virginia and to pay for
a reduction in long distance and wireless company costs that will be of little or no benefit to
Virginia consumers.
The three members of the Commission will now decide which of the hearing examiner's
recommendations to approve, to reject or to modify. The Commissioners' decision will impact
Embarq's Virginia customers in 32 counties and seven cities. The counties and cities served by
Embarq include Albemarle, Appomattox, Bland, Brunswick, Buckingham, Campbell, Carroll,
Cumberland, Fluvanna, Franklin, Goochland, Grayson, Greene, Halifax, Hanover, Henry, Louisa,
Lunenburg, Mecklenburg, Nottoway, Page, Patrick, Pittsylvania, Prince Edward, Rappahannock,
Rockbridge, Scott, Smyth, Tazewell, Warren, Washington and Wythe Counties; and the Cities of
Bristol, Buena Vista, Charlottesville, Franklin, Galax, Lexington, and Martinsville.
