The Florida Legislature has left Gov. Jeb Bush with a difficult decision, yet a clear choice, on a bill that would increase the cost of phone service for most Floridians. The bill pretends to be financially neutral for consumers. Its supporters say it would reduce in-state long-distance rates by the same amount that local phone bills increase. They say it would open local phone service to competition and protect consumers by requiring rate increases to be approved by the Public Service Commission.
The governor, of course, knows how things really work in state government. For starters, the promised reduction of long-distance rates is just that. . .a promise. Floridians, including the governor, should ask themselves this: Do they really trust the phone companies to live up to their promises? Only the naive would answer with an unequivocal yes.
The bill supposedly balances reduced long-distance rates with increased local phone rates. But the long-distance companies could cut their rates for a short period of time and then raise them again. Meanwhile, the local phone companies would get their rate increase and keep it, even if long-distance rates rise.
Let's assume everybody keeps their promises. Even then, the average phone customer would likely lose money on the deal. That's because local rates would increase only on the phones of residents and small businesses. Rates for the big players, with multiple phone lines, would stay the same. That means a home phone with Verizon could cost $5 more a month over the next five years, and with BellSouth, $3 more a month. Yet many phone customers could see little or no relief on their long-distance bill.
The competition argument requires a naive suspension of disbelief to be accepted. Verizon argues that by allowing it to raise rates (and therefore revenues), other companies will want to compete for that money, thereby benefitting the customer. Let's get real. No phone company fights for a new law whose goal it is to help its competitors. Whatever competition exists today for local phone service has been aggressively resisted by the established companies.
Finally, there is the argument that consumers ultimately will be protected by the PSC. Who are they trying to kid? The PSC isn't even a paper tiger. When it comes to protecting consumers, the PSC is Winnie the Pooh. The PSC answers to the Legislature, and the agency was included in the bill only to give lawmakers a scapegoat so they could vote for it. When the PSC rolls over for the phone companies, legislators can say: "See, we didn't raise your rates; the PSC did."
If Gov. Bush allows the bill to become law, he should explain to Floridians how a phone rate increase is different from a tax increase. He should explain why he believes the promise of lower long-distance rates and renewed competition for local phone service. He should explain how he can defend a process in which the consumer always seems to end up the loser.
He has another choice: Veto the bill.