C&P Telephone Co. has turned up the heat in a three-year-old campaign for looser regulation in Washington, saying that unless the city government quickly considers its plan for deregulating pricing, it will request its first rate increase since 1986.
The $43.4 million rise C&P says is necessary would push prices for flat-rate area-wide service to $22.94 a month from $14.94, according to the company.
Requests for rate increases are frequently denied or marked down. But in this instance, the company is arguing in public that the D.C. Public Service Commission, which regulates C&P, will now be to blame for any increase that does occur as a result of not acting on its deregulation proposal.
The commission is already formally considering C&P's deregulation plan, but the company maintains that the proposal is languishing there and that it has waited long enough.
C&P is seeking a deal that phone companies in nearly 40 states have already won in some form. The shifts elsewhere followed heavy lobbying by phone companies and fit into a philosophical move toward deregulation that swept across the United States in the 1980s.
In most states, the new system offers a freeze on rates for basic monthly services in return for deregulation of profits and prices on services the companies believe to be subject to competition, such as Yellow Pages, switchboard services, pay phones and equipment leasing.
C&P said it would consider freezing basic rates until the year 2000 in return for pricing freedom in fields like these. It also wants the commission to commit to act within 30 days of when the company files for changes in regulated services, saying that at present it takes an average of seven months to get an item through the commission.
Phone companies traditionally are regulated as monopolies, with profits capped at a fixed percentage of their investment in the local phone system. Proponents say this keeps them from abusing monopoly status; critics say it encourages them to invest in unneeded equipment, so as to increase their profits.
C&P said it is unfairly burdened with heavy reporting and price controls while its competitors introduce and price new services at will.
"We're really asking for some freedom here to meet a changing technological world," said C&P President Delano Lewis. Its sister companies in Maryland and Virginia already have the freedom it seeks.
C&P said that its rate of return has been below the authorized ceiling of 15.1 percent since 1986, and in 1991 it is likely to slip to 5.7 percent because of increased competition, rising costs and the recession.
If the current system of regulation continues, Lewis said, "then there are going to be rate increases... . We would prefer not to do that." C&P said it must seek the rate rise, however, because the commission has ordered it to submit documentation for its current cost structure. Public Service Commission members could not be reached for comment.
Many consumer groups say the new system unfairly allows phone companies to subsidize rates they charge on competitive services through prices ordinary people pay. Phone companies say that accounting safeguards and price freezes make that no danger.
Critics also suggest that phone companies overplay the impact of competition. "C&P over the past two or three years has not been able to show us that that competition is affecting the way it does business," said Luis Wilmot, associate people's counsel for the District.
Kathleen F. O'Reilly, a lawyer who represents consumer groups on phone issues, contends that price freezes are not really a good deal. She argues that costs in the phone industry are declining as new technology comes into use and that prices therefore should decline, not hold steady.
Lewis, however, said costs continue to rise, noting that C&P spends heavily on wages and salaries, which are union-negotiated.