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Yellow Pages subsidy blocks competition

After reading your Feb. 1 editorial, it's clear to me that the Deseret News does not understand the relationship between the Utah Public Service Commission (PSC) and the Legislature. Your editorial fails to recognize the fact that when the PSC acts in its rate-making capacity, it is acting on behalf of the Legislature, pursuant to laws and policies established by the Legislature. It is completely appropriate for the Legislature to make significant policy decisions like the Yellow Pages issue. In fact, that's our job.

The Yellow Pages bill (HB263) carries out the public policy established by the Legislature in 1995. At that time, we decided that competition would provide greater benefits to telephone customers than continued regulation of a single provider. We directed the PSC to take action to remove subsidies in rates so that competition would develop for all telecommunications services in Utah.Unfortunately, in two rate cases since then, the PSC has gone the opposite direction, actually increasing the Yellow Pages subsidy by 50 percent. In 1995, the PSC said that it wanted to address other subsidies first. In the last case, the PSC misinterpreted a 20-year-old court case to conclude that utility customers have an ownership interest in the assets of a utility. The purpose of regulation is to act as a substitute for competition to assure that prices charged are fair and that service provided is adequate, not to nationalize utilities or transfer ownership of their assets from their shareholders to their customers.

HB263 amends the 1995 act to make it clear that the PSC can fulfill our intent and is not bound by any interpretation of Utah statutes that conclude rate payers own Yellow Pages. This is particularly appropriate because Yellow Pages have always provided a subsidy to utility rates. It is our job to clarify the law and our intent when the courts or the PSC misunderstand it, and we need to do that here.

Despite passage of the 1995 Utah act and the 1996 federal act, both of which were designed to open all local markets to competition, virtually no residential customers can choose to buy local telephone service from anyone but US WEST. Why? Because the subsidy from Yellow Pages keeps the price below cost. The solution is simple: If we really want competition in the residence market, we must eliminate the subsidy.

The bottom line is that residential customers in Utah won't have access to competitive choices until legislators step up and resolve this issue by eliminating the subsidy.