SBC’S Next Target Could Be Ohio

COLUMBUS — A key Ohio lawmaker said it would be nearly impossible for SBC to accomplish here what it did in Illinois last month — ram through legislation that nearly doubles the wholesale rate it charges competitors by bypassing the state’s utility commission.

That doesn’t mean SBC, formerly Ameritech, won’t try.

In fact, its president, William Daley, has said the San Antonio-based company will copy its Illinois approach to bypass regulators in other Midwest states where the company feels wholesale rates are unfair. He just won’t say which state.

But competitors are worried that SBC is eyeing Ohio.

In Illinois, SBC threatened to remove its operations and 21,000 jobs if it didn’t get what it wanted. The Democrat-controlled Legislature passed and the Democrat governor signed a bill written by SBC within five days. Daley is Bill Clinton’s former U.S. commerce secretary, manager of Al Gore’s presidential campaign and brother of Chicago’s mayor.

William Schuck, executive director for Competition Ohio, which is backed by AT&T, said the action “represents Tammany Hall-style corruption at its worst.”

On Monday, wholesale rates, those paid by competitors to use SBC lines, will jump from an average of $12.38 per phone line to about $22 per line unless a federal judge stops the rate increase this week. AT&T and MCI, joined by consumer groups, filed suit in Chicago to block enforcement of the Illinois law.

“It will have little effect on Ohio other than to put us on guard,” said Rep. Lynn E. Olman, who chairs the House Public Utilities Committee.

Olman, R-Maumee, met with SBC representatives Tuesday morning. He said the relationship between the Legislature, the governor’s office and the Public Utilities Commission of Ohio would make SBC’s tactic less likely to succeed.

“We have excellent competition,” Olman said. “SBC in Ohio is doing very well. They’re making substantial profit with the wholesale rate they’re not pleased with.”

Matthew Butler, a spokesman for the PUCO, said, “We want to see what the company does.”

SBC asked the PUCO about a year ago to allow to increase its wholesale rate from $11.64 to $28 per line. The request is still pending.

“We’re asking (the PUCO) to review the rates” said Caryn Candisky, a spokeswoman for SBC. “We’re pursuing a regulatory solution.”

She said there is competition among phone companies in other states with wholesale rates higher than Ohio, including Pennsylvania, West Virginia and Kentucky, none of which are served by SBC. She also said the rate in Wisconsin, an SBC state, is $22.95 and the national average is $19 to $20.

But others agreed with Olman that SBC seems to be doing just fine in Ohio.

Schuck said “their own data says their financial performance” is far ahead of other companies.

Schuck a former Republican lawmaker, said he expects SBC to put pressure on the PUCO.

Orest Holubec, a spokesman for Gov. Bob Taft, said the governor “would hope the issue is delegated to the PUCO as a regulatory issue.”

Ohio Consumer Counsel Robert S. Tongren, the state’s residential utility advocate, said it would be “ludicrous” for SBC to attempt to bypass the Ohio regulatory process. He said if SBC disagreed with the PUCO-set rates, then SBC should have appealed to the Ohio Supreme Court.

Sen. Kirk Schuring, R-Jackson Township, has influenced PUCO policy by introducing legislation, some of which has taken on SBC.

“SBC seems to fundamentally have a problem with the Telecommunications Act of 1996,” he said. “They seem consumed by wholesale rates as an impediment.”

Candisky said if wholesale rates are not increased it “would put in jeopardy investment, jobs, economic opportunities and infrastructure in Ohio.”

SBC employs 10,000 people in Ohio.

“Any time a company is in the position where it is forced to provide service at below cost rate, jobs are affected,” she said.

You can reach Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail:

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© Copyright 2008 State Representative Lynn Olman. All rights reserved.


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