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Witnesses: Hikes not called for

The phone rate increases sought by Verizon, Sprint and BellSouth won't benefit most residential customers and aren't necessary to spur competition in the market for local phone services, according to testimony filed Friday by the Office of Public Counsel.

The state's consumer advocate on utility issues offered the Florida Public Service Commission its arguments for rejecting the proposed increases in local basic rates of 30 to 90 percent over two years.

Under legislation written by the phone industry and signed into law by Gov. Jeb Bush in May, the state's major local phone providers have applied to increase rates for residential and single-line business customers in exchange for corresponding cuts in the access fees they charge long-distance carriers for instate calls.

After that, the companies will be able to increase their basic rates by up to 20 percent a year without PSC approval and without further cuts in long-distance access fees.

In the testimony, Bion Ostrander, a utilities consultant from Topeka, Kan., said his analysis showed the average customer for all three companies would end up paying a higher phone bill, even if reductions in instate long-distance rates equal the sharp increases proposed in local rates.

Ostrander, a former official with the Kansas commission that regulates utilities, also pointed out that the phone companies have provided no information about how steep the instate cuts would be or how long they would last.

Local phone companies "conclude that residential local customers will be better off _ yet there is no meaningful documentation or calculations to support this conclusion," Ostrander said. "Therefore, the (companies') petitions should be denied."

In separate testimony, David Gabel, an economist at Queens College of the City University of New York, questioned the local phone companies' claims that rate hikes are needed to bring more companies into Florida's market for local phone services, expanding competition.

While larger profit margins can attract more competitors into a market, increasing local basic rates aren't necessary to achieve this goal, Gabel said.

Comparing Florida to Illinois, Gabel said Illinois has similar residential phone rates but attracts more competition because the established phone companies aren't permitted to charge the rivals so much for access to their local networks.

_ Louis Hau can be reached at or (813) 226-3404