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Regulators urged to halt phone deregulation Consumer activists warn that residents may be charged up to three times more for basic service

Consumer activists and a smattering of labor and political interests urged state regulators Tuesday to delay further deregulation of the state's telephone industry that they warn could cause some consumers to pay up to three times more for the most basic phone service.

But for most consumers in the Buffalo Niagara region, who currently buy a basic local phone package that includes unlimited local calling, the proposed rate cap for basic service would be only slightly different from what they now pay.

And as competition intensifies, it is far from certain that rates for basic phone service would rise as high as the $24.95 per month cap that the state Public Service Commission is proposing to take effect within three years.

"That doesn't mean they would. If they wanted to price it lower, they could," said PSC spokesman David Flanagan.

Consumers purchasing the most basic local phone service package -- simply a dial tone and additional charges for each phone call -- now pay slightly less than $9 a month. Western New Yorkers currently pay $22.61 a month for basic phone service with unlimited local calling, said Cliff Lee, a Verizon spokesman.

"There's nothing that says that's what the price is going to be, and the market isn't saying that's what the price is going to be," Lee said.

The PSC staff proposal, which the commission could take action on today, would allow rates for basic service to rise by as much as $5 a year over a three-year period until it reaches the $24.95 ceiling.

William Ferris, a lobbyist for AARP in Albany, said raising the minimum cost of phone service would hurt the poorest consumers. "It could be a barrier for people to get basic telephone service -- and that's a problem," he said.

The proposed increase in the maximum cost of basic phone service is part of the commission's ongoing review of regulations in the telecommunications industry, which has been transformed in recent years by growing competition from cable companies and wireless providers.

"New York is probably one of the most competitive markets in the country," Lee said.

A PSC staff report that outlined the proposed changes last fall noted that Verizon has lost nearly 3 million access lines, or 25 percent of its customer base in New York, over the last five years as consumers have switched to other phone service providers.

"The trend in the market is toward selling bundles of service," including long-distance, wireless, Internet access and even television service, Lee said. For instance, Verizon offers a bundle of unlimited local and long-distance service in the Buffalo Niagara region for $34.95.

"There's really a lot of choices out there for consumers," he said. "The concept is that the market should be dictating prices and service quality, and we're seeing that."

But consumer advocates say the reduced regulation of the telecommunications industry has led to a decline in the number of households with access to land-line service to 91.3 percent of households last year from 96.1 percent in 2000, according to the Public Utility Law Project (PULP).

In addition, the PSC has done little to ensure the poorest get access to basic phone service, said Ben Wiles, an attorney for PULP.

In 2000, 700,000 people in the state were taking advantage of a federal "lifeline" service that gave discounts on phone rates to the poor. That number is now less than 400,000 people, according to PULP.

"The basic customer is being ignored," Wiles said.

State Assemblyman Richard Brodsky, D-Westchester, and state Sen. Thomas Morahan, R-Rockland, critics of the proposed increase, have introduced legislation that would halt deregulation until a comprehensive study can be completed.

The Associated Press contributed to this story.


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