Rate increase OKd for land-line phone service in California

The cost of basic local telephone service may increase as much as 30% next year and an additional 23% in 2010 for land-line service, under new rates approved Thursday by California regulators. The Public Utilities Commission voted Thursday to approve increases of as much as $3.25 a month beginning in January 2009 for the four major phone companies, including AT&T Inc. and Verizon Communications Inc., that offer land-line service. Another $3.25-a-month increase can go into effect a year later. The PUC has deregulated most aspects of California phone services and was expected to deregulate it all next year. Instead, the commission opted to maintain a cap on local land-line rates for two more years. The decision was met with disappointment from the phone companies that had sought total deregulation and from consumer groups that opposed the rate increase. Consumer advocates said the decision would hurt the poor and elderly. "Phone service is as necessary to modern life as are other essentials like gas, electricity and food," said Mark Toney, executive director of the Utility Reform Network, known as TURN. "But without regulation, low-income and rural Californians could lose access." TURN failed to persuade commissioners to conduct an affordability study before allowing the rate increases.