Since deregulation, landline costs skyrocket

The monthly cost of measured AT&T phone service has soared more than 260% since 2008. A group of customers is complaining to the PUC.

When California's telephone market was deregulated in 2006, consumers were told that increased competition would improve service and reduce prices.

It hasn't worked out like that.

Carlsbad resident Steve Linke has received so-called measured service from AT&T for five years. That means he pays a flat rate each month for a limited number of local calls on his landline phone.

"It's for peace of mind," Linke, 45, explained to me. "If there's an earthquake or some other major emergency, it's nice to know that we'd still have a landline to call out on when the cell towers go out."

When Linke first signed up for measured service, the rate was $5.83 a month — a relative bargain for knowing that you won't be cut off from the world when the whip comes down.

By the beginning of 2012, AT&T's monthly rate had nearly tripled to $15.37. At the beginning of this year, it rose 19% more to $18.25.

And as of Jan. 1, the rate will climb an additional 16% to $21.25.

That means the monthly cost of measured service has soared more than 260% since Linke first signed up with AT&T in 2008. Not exactly what state regulators had promised.

Meanwhile, quality of service declined substantially earlier this year when AT&T slashed the number of minutes available under its measured plan 25%, to 168 a month from 225, and raised the price of extra service to 6 cents from 4 cents a minute.

Again, not what officials said would happen.

Linke is one of at least 30 AT&T landline customers joining a complaint to be filed Friday with the California Public Utilities Commission. The Utility Reform Network, a San Francisco consumer advocacy group, said it's lodging the complaint on behalf of all AT&T customers.

A draft of the complaint alleges that AT&T's rates for measured and flat-rate service far surpass "just and reasonable levels" and are the highest of all phone companies'.

"AT&T's rates should be reduced to just and reasonable levels and should be capped at those levels" until regulators can review the company's pricing, the draft says.

AT&T declined to comment on the draft complaint.

Natalie Billingsley, a senior official at the PUC's consumer-protection arm, the Division of Ratepayer Advocates, didn't mince words when I asked about the effect of phone deregulation.

"It has substantively been a failure," she said. "All we have seen since deregulation is a constant increase in prices."

That's not just for measured plans like the one Linke has. There have been double- and triple-digit rate hikes for nearly all phone services, from call waiting to call forwarding, even though those services are automated and cost phone companies almost nothing.

A 2010 report by the state Senate's Office of Oversight and Outcomes found that, thanks to deregulation, the cost of an unlisted phone number in California had skyrocketed more than 600%.

"The market is not sufficiently competitive to restrain these price increases," Billingsley said. "Otherwise, we wouldn't see them."

Lane Kasselman, an AT&T spokesman, said monthly rates for the company's measured service have climbed because the number of people with a landline has sharply declined.

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