BALTIMORE -- Informal talks are under way between Maryland telephone regulators and Chesapeake and Potomac Telephone Co. on the possibility of adopting a new method of regulating service in the state that would keep rates in check while deregulating other services.
Vermont adopted the "social contract" plan earlier this year. Under those rules, rates for basic service are frozen until 1989. In return, the telephone company is free to raise or lower the cost of supplemental services such as Touch-Tone dialing, call waiting and call forwarding.
The social contract is one of the latest developments in efforts to regulate telephone companies following the court-ordered breakup of the American Telephone and Telegraph Co. in 1983.
Since then rate structures have changed drastically. For example, residential and business customers must pay separate fees for services such as directory assistance that had been covered by one monthly charge.
The social contract proposal was recently made by C&P when it began talks with the Maryland Public Service Commission about possible cuts in phone rates because of changes in the tax laws, according to the Baltimore Evening Sun.
J.T. Everett, a spokesman for C&P, said the talks about regulatory reform are informal and the social contract plan is just one option.
Supporters of the social contract say it is a way of encouraging development by phone companies while protecting rate payers.
"The plan solves the regulator's dilemma of protecting the monopoly rate payer from overpaying at the same time that modern technology is deployed to meet the needs of more sophisticated residential and business customers," said V. Louise McCarren, chairman of the Vermont Public Service Board, in a paper written about the social contract.
But some people who represent Maryland consumers are wary of the plan.
"It raises a lot of potential dangers," said People's Counsel John M. Glynn, the state official who represents consumer interests before the PSC. While customers may be satisfied with stable basic rates, he said, problems can arise when the period of stable rates ends.
Maryland Citizen Action Coalition, a consumer group active on regulatory issues, finds the social contract proposal "intriguing," said Janelle A. Cousino. A big issue for the coalition in past years has been "lifeline" rates to ensure that people with lower incomes are able to maintain basic service.