Telecommunications Testimony Before the
Pennsylvania House of Representatives,
Committee On Consumer Affairs

Subject:  House Bill 1669

Pittsburgh, Pennsylvania - August 27, 2003

My name is Lauren Townsend.  I am the Director of Citizens for Consumer Justice, Pennsylvania�s largest multi-issue consumer organization.

I appreciate your allowing me to speak today about the important issue of telecommunications, Chapter 30 and House Bill 1669. 

The telecommunications industry provides some of the most important services in the state in regard to economic development, education, health care and social services, culture and the arts, recreation - possibly every area of society. However the state of the telecommunications industry in Pennsylvania is in need of vast improvement, from areas as simple as providing reliable, affordable and quality telephone service to providing an up-to-date statewide high-speed Internet network.

If you are like most Pennsylvanian�s, you depend on having reliable, affordable, quality telephone service. Our telephones are our lifelines. Our most vulnerable populations, like the sick and elderly who can�t easily leave their homes, are especially dependent on their telephones as their link to the outside world. And as the world seems more and more threatening, the reliability of our telecommunications systems become ever more imperative.

But here in Pennsylvania the dependability of local telephone service is at issue. If you�ve had problems with your telephone service and trouble getting it resolved, it comes as no surprise. You may even have been a victim of deliberate corporate policies. For instance, there is a internal company program at Verizon known as �Stop the Trucks� in which dispatchers are encouraged to not send trucks out for residential and small business service calls. By discouraging consumers from requesting service, Verizon lowers its operating costs and increases its profit. While Verizon PA, the largest local telephone service provider in the state, has been able to reap unprecedented profits from Pennsylvania customers through deregulation, consumers have suffered increasingly worse service, resulting from the closing of facilities and workforce reductions. 

How did we get in this mess? In 1993 the Pennsylvania General Assembly enacted Chapter 30 of the Public Utility Code. Under Chapter 30, incumbent local telephone service providers already doing business in the state were allowed to earn unlimited profits, with the understanding that consumers were supposed to get something back in return. One return was to allow  competitor local telephone service providers to enter the market that would ostensibly lead to lower prices. Another return was to be that the increased profit would be reinvested in the  building of a high-speed digital broadband network through out our Commonwealth. This high-speed broadband network was to be  deployed in rural and urban areas alike, and was to position Pennsylvania ahead of the country as a leader of advanced telecommunications systems. Ideally the outcome would be job creation in the telecommunications sector and other industries that could take advantage of this high-speed Internet access. Instead, the ability to earn unlimited profits led to increasing attention to the bottom line. In order to earn more profit, cost cuts such as the elimination of jobs and the closing of telephone service facilities were put in place. The result for consumers has been declining service. Also, as many know, we haven�t seen the deployment of broadband service in many areas of the state. 

This begs the question, where did the money go? While much of the financial facts are not publicly released, it�s not rocket science to realize that if the promised broadband hasn�t been delivered, and if Pennsylvania facilities have closed and the workforce reduced, the profits must be leaving Pennsylvania and not being used to benefit customers.  Instead, increased profits from hard-working Pennsylvanians have been used to finance investments in other parts of the country and the world many of which have been written off as losses by Verizon PA. Also, despite the company�s ability to earn increased revenue, Verizon PA is now trying to renege on its deal to deploy a truly state of the art Broadband Network (45 megabits per second). 

The Public Utilities Commission recently instructed Verizon PA to recalculate its wholesale rates for its unbundled network elements (UNE rates). This is the price that Verizon PA charges competitors to lease portions of their network so that consumers can have a choice among local telephone service providers. Some claim that the company�s rates are too high and that they make competition unprofitable in all but the most populated areas of the state. Verizon, on the other hand, claims that it is selling access to its network at a loss and wants the PUC to increase the rates it charges to its competitors. We believe that It is imperative for an independent source to determine the exact costs of the network elements so that the PUC can structure fair UNE rates.

Earlier this spring, numerous House Members endorsed our Telephone Customers� Bill of Rights that lists problems with telecommunications services in the  Commonwealth and resolutions that we want the General Assembly to pass in the form  of legislation.   We are pleased that many of the items we outlined in this important of rights are housed within House Bill 1669. (Read the Telephone Customers� Bill of Rights.) 

I am pleased to testify here today in support of the mission of House Bill 1669, as   Consumer Advocate Sonny Popowsky told you recently,  House Bill 1669 would extend   the life of Pennsylvania�s landmark Chapter 30 legislation, but would do so in a way that provides important additional protections for consumers and improves the ability of underserved communities to obtain needed broadband deployment: 

1. Greater protection for basic telephone services against substantial rate increases;
2. expansion of the federally funded Lifeline program to provide basic service  discounts to low-income consumers;
3. improvements in telephone service quality;

ADDITION:  CCJ and our coalition partners would like to see:

• Penalties for failing to dispatch trucks in a timely fashion for installation and out-of service repairs of not less than a month's service to customers for infractions.
• Improved whistleblower protection for workers who testify at hearings about company policies.
• Security at switching station operations, including a security plan that is subject to PUC approval that includes everything from break ins and vandalism to anti-terrorist training, ID and card access, Switching Station Techs must be bonded and the owners or operators of the switching stations must pay for the security and cannot past the cost on to customer.
• Establishment of a publicly available inventory of high-speed and broadband telecommunications services throughout the Commonwealth.
• Development of a program to assist underserved communities obtain vital high-speed and broadband telecommunications services in a more timely manner.

SUGGESTION: While we like the idea of a fund, we prefer that  the Commonwealth contract for the building of the network paying for it with funds from the incumbents by making an assessment of companies based on how much it would cost to build as determined by a board that would be created.

Thank you.