PacBell Makes Quid Pro Quo Offer to PUC

SAN FRANCISCO — Pacific Bell told state utility regulators Monday that it will freeze the price of basic phone service for three years--if they agree to eliminate pricing rules that consumer groups say have helped hold down rate increases in recent years.

The proposal was made as part of a broader plan for opening local telephone markets to competition. Pacific Bell offered the plan after three months of negotiations with representatives of cable companies, consumer groups and other interested parties failed to resolve their many differences over when and how to introduce greater competition.

In December, the California Public Utilities Commission had urged the parties to sit down to work out such an agreement by March 31. Few observers were surprised that the talks failed to coalesce.

Critics immediately derided Pacific Bell’s proposal as a step backward.

“Pacific is trying to portray itself as the great friend of consumers, but it’s not,” said Regina Costa, telecommunications analyst at Toward Utility Rate Normalization, a San Francisco consumer group. It “is asking to be unleashed.”

Others saw the proposal as a delaying tactic by a company bent on retaining its local phone monopoly as long as possible.

“It’s a proposal to delay bringing the benefits of local competition to customers in California,” said Stephen Bowen, an outside attorney for the MCI long-distance company.

Pacific Bell suggested that local competition be introduced next January. But would-be competitors, including cable companies and long-distance carriers, noted that the PUC has vowed to have interim rules in place by June that would allow a semblance of competition soon after.

Pacific Bell proposed the rate freeze in exchange for eliminating a complicated set of price regulations the company said would be outmoded in a competitive environment. In addition, it offered to ensure that customers who changed phone companies could take their phone numbers with them and that competitors would have access to PacBell’s networks at reasonable rates.

Members of the 11-member coalition opposing Pacific Bell and including long-distance and cable companies and consumer groups plan today to propose a timetable for opening the market to true competition. Some of the group’s ideas--on universal service and rules for local competition--have previously been proposed to the PUC.

Meanwhile, Gov. Pete Wilson on Monday named banker Henry M. Duque to fill one of the two vacancies on the five-member commission. Duque, a Republican, has been a vice president and senior marketing officer in San Francisco for Trust Services of America Inc., a subsidiary of California Federal Bank. He succeeds Norman Shumway, who retired from the PUC in February.