Circling the Wagons

US West likes to highlight the diversity of its huge fourteen-state territory with TV advertising that periodically features cowboys chatting on pay phones and pickup trucks rambling through the Sonoran desert. Now the phone company's opponents have picked up on the Western theme: They've formed a regional posse to hunt down any and all rate hikes sought by US West.

"We have to credit our friends at US West for spurring this on," says Chuck Malick, legislative director for the Colorado Public Interest Research Group (CoPIRG). "They've been aggressively campaigning throughout their territory to raise residential rates."

The US West Territory Consumer Watch includes CoPIRG, the Colorado chapter of the American Association of Retired Persons, and citizen groups in Arizona, Oregon, Washington and Minnesota. What brought these groups together is US West's ongoing push to raise the cost of phone service. The company has made it clear that it wants to hike residential rates in most of the states it serves. In Colorado, US West has asked the Public Utilities Commission to approve a 20 percent increase in residential phone charges.

The members of the consumer coalition will track all regulatory and legislative action affecting US West in their home states and alert one another and the public about the phone company's tactics. They're also asking US West and other companies providing local phone service to sign a pledge to offer consumers lower rates, more competition and reliable service.

By working together, the consumer groups believe they can more effectively challenge a multi-billion-dollar corporation that lavishes funds on lobbying and public relations.

Malick says Citizen Action, a national group based in Washington, D.C., that has several chapters around the country, first suggested that the consumer groups in the region band together to take on US West. "It sounded like a good idea to us," he says.

In several states, the coalition already has unofficial allies: the utility-commission staffs, which often recommend that rate hikes be rejected. In Colorado, the staff of the PUC has recommended that the proposed rate hike be denied. The commissioners are expected to rule on the request later this winter. If Colorado denies US West its rate hike, it will join Washington, Arizona and Iowa in rejecting the phone company's requests.

US West insists that it loses money on residential service, which it claims is subsidized by the higher rates business customers pay. In Colorado, the basic charge for a home phone line is $14.95 per month, while businesses pay $37.39 per line. US West did not return Westword's calls, but the company has said it needs more money from residential customers to offset the cost of maintaining its telephone network.

Consumer advocates reject the company's claim that it doesn't make money off residential service, and they scoff at the idea that businesses are subsidizing home telephone lines. "Business rates are higher because they're making an obscene profit on those," says Malick. "They're also making a profit on residential rates."

Those involved in the new coalition say they need to work together because US West has a regional strategy in place. "They make the same argument in every state," says David West, executive director of Citizen Action's Washington State chapter. "This is a company with one of the worst service records of the Baby Bells, and they've asked for residential rate hikes in state after state. We want to have as many groups in the region as possible involved. We're concentrating on where US West has most of their market and most of their customers."

The coalition has even created a World Wide Web site containing information on the company and a way of lodging complaints about US West service (http:// West says several hundred people have already visited the Web site and left messages about US West service problems. Thousands of people requesting new telephone service have had to wait weeks for lines in many of the states US West serves. In Colorado, state regulators have fined US West more than $5 million for its failure to provide prompt service.

The antagonism between consumer advocates and the telephone monopoly is part of the ongoing drama of radical change in the telecommunications industry. The passage of the federal Telecommunications Act earlier this year opened up the telephone industry to competition for the first time. Just as long-distance services were deregulated in the 1980s, the new law requires regional telephone companies such as US West to allow competitors access to its lines. For a fee, companies like MCI will be able to reserve space on US West's vast network and begin offering local telephone service.

Not surprisingly, US West has been trying to fend off this new competition. The Colorado PUC is charged with setting an access fee for competitors who want to use US West's system, and lawyers for both sides have spent months squaring off in hearings at the PUC's Logan Street headquarters. The PUC ordered US West to allow its rivals access to its network at "wholesale" rates of $13.60 a month for residential service and $31.41 a month for business lines. US West says that's too low and is appealing the decision.

The groups involved in the consumer coalition believe that without public scrutiny, US West will try to sabotage meaningful competition.

"This Consumer Watch is driven by our mutual concern over US West's deliberate, state-by-state effort to withhold the benefits of competition from consumers," says Fred Wilhoft of the Colorado AARP. "By sharing information and giving the public a voice, we can ensure that our state officials make decisions which benefit local phone customers."

Wilhoft says the AARP, a powerful senior-citizens' group with thousands of members in states served by US West, became involved because many seniors live on fixed incomes. "Some of our people might have to give up things like medicine to keep their phone service," he says. "Telephone service is vital to older Americans to reach doctors and maintain social contacts." Wilhoft says seniors already have a hard time paying their phone bills.

And those bills are, in effect, tied to US West's business rates. Since business customers pay more than twice as much per line as residential users, they are being targeted by US West's new competitors. US West will have to slash its business rates to compete. However, competition for residential customers is still years away, and Malick says the company is trying to raise residential rates to make up for expected losses on the business side.

"US West has been a monopoly for 100 years," he says. "They've always been guaranteed a profit. They want to raise residential rates, because residential customers won't have anywhere else to go for a few years."

So far, US West seems to be losing the fight for higher rates. Washington state regulators were so angered by the company's request to almost double residential rates that last April they ordered US West to slash the cost of local residential service to $10.50 per month. US West executives described themselves as "stunned" by that decision, and the company now seems likely to take its campaign for higher rates into the political arena.

Citizen Action's David West says the phone company has indicated it will go to the Washington state legislature next year to try to gut the authority of the state's Utilities and Transportation Commission. In most states, including Washington and Colorado, the utilities commission is given the power to set all rates for public services like power and telecommunications. The intent is to prevent monopolies from exploiting the public, but powerful utilities have tried to persuade state legislators to reduce the power of the agencies charged with setting their rates.

"Now US West is going into the legislature and wants to take away the commissioners' ability to set rates," says West, adding that the company is one of the largest contributors to Washington state election campaigns. "What they can't win at the regulatory level, they'll try to get at the political level."

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Stuart Steers
Contact: Stuart Steers