When the California Public Utilities Commission (PUC) deregulated local landline telephone service in 2006, it was predicted that market competition from the internet and cellphones would keep prices low. Since only two companies, Verizon and AT&T, controlled virtually the entire landline market, the competition wasn’t going to be between them.
The next year California median household income peaked at $65,027, and then over the next four years it plummeted 11.9% to $57,287 while the cost of an AT&T landline more than doubled. According to the PUC, AT&T landline phone service went from $10.69 per month to $23. That’s for the flat rate. Measured lines that have a fixed rate for low usage but charge for extra use soared 222%, from $5.70 a month to $18.35.
Other charges also increased for call-waiting (180%), anonymous call rejection tripled and LifeLine rose 28%.
Fewer people continue to use landlines with each passing year. Nationally, 35.8% of households are without landlines, according to the Centers for Disease Control and Prevention, while another 15.9% have a landline but rarely use it. Fifty-eight percent of renters use only cellphones.
Rachelle Chong, a PUC member in 2006 who championed deregulation, predicted that unleashing the power of a competitive marketplace would “discipline prices” and remove the need for any last vestiges of government oversight. But Dane Jasper, chief executive of broadband internet service provider Sonic.net, told the San Francisco Chronicle that he sees perhaps a more predictable outcome.
“AT&T is essentially harvesting,” he said. “They jack up the rate by a pretty egregious amount . . . because if people leave, well, where are they going? AT&T mobile phone service in at least half the cases. So they're happy to have them leave or happy to have them stay.”
–Ken Broder
To Learn More:
AT&T Rates Skyrocket Since Deregulation (by James Temple, San Francisco Chronicle)
Public Utility Deregulation: A Losing Game for Consumers (CalPIRG)
The Long Slow Death of the Landline (by Rob Beschizza, Boing Boing)