Biggest phone rate hike in Florida history to hit Nov. 1

--Advocates call it scariest day of the year for Florida consumers--

October 27, 2005

TALLAHASSEE - Move over Halloween. The scariest day of the year in Florida is actually November 1, when consumers will be hit with the biggest monster phone increase in state history. That's the message of a coalition of some of Florida's leading consumer advocates.

"We call this 'Nightmare on Phone Street,'" said Walter Dartland, executive director of the Consumer Federation of the Southeast and state chair of Common Cause Florida. "This is a wake up call to Florida consumers that unless we remain vigilant, the sequels could be much worse than the original."

The over $344 million annual rate hike was approved two years ago by the Public Service Commission after the state's major phone providers successfully pushed through a rewrite of the state's phone regulations. AARP, the Office of Public Counsel, and Attorney General Charlie Crist challenged the increase all the way to the Florida Supreme Court, but the rates were ultimately upheld.

It's estimated that the rate hikes will cost Florida consumers up to $500,000 per day. Depending on the provider, individual monthly bills will increase up to $2.25 a month in each the next three to four years, reaching a cumulative total of more than $6.86 a month for Sprint, the company with the largest increase. Even scarier, according the Bentley Lipscomb, state director of AARP Florida, is that the companies will be free to automatically raise rates up to 20 percent a year every year after implementing the $344 million in increases. Worse yet, under the new law the Public Service Commission will lose authority to regulate the telephone companies' quality of service once the initial increases are imposed.

"This is no laughing matter to the millions of seniors in our state who live on fixed incomes," said Lipscomb. "A dollar or two the first year and almost $7 at the end of three years might not seem like much, but to seniors who have already been hit with higher gas, utility and insurance rates due to the hurricanes, it's like standing in five feet of rising water. A little bit more and they'll drown."

Lipscomb said older Floridians on fixed incomes are getting slammed by increasing costs that they are powerless to do anything about. Medicare is going up--Part A and Part B cost an additional $10.30 a month. Prescription costs for the top 195 brand-name drugs most often used by older Floridians have increased 6.6 percent, an additional $4.25 a month. Hurricane-related utility rate increases will add another $1.68 to $3.80 a month. Gasoline rates have gone from $1.62 a gallon to more than $2.70 a gallon, adding another $50 a month. Total it up, and seniors are looking at increases of more than $69 a month.

Tamecka Pierce, state chair of the Association of Community Organizations for Reform Now (ACORN), which represents low and moderate income families, echoes AARP's concerns, saying families who are already struggling to make ends meet don't have additional resources to tap into to pay for rising utility, medical and fuel costs.

"Hurricane Katrina shamed the nation by putting us face to face with the tragic consequences of policy decisions that fail to consider the needs of the poor and downtrodden in our society," said Pierce. "This is just one more example of how out of touch our legislators and regulators are with the realities of the struggles of everyday people."

Phone companies say the increases are needed because the cost of providing service is significantly overshadowed by the amount they can charge for service, something they say discourages competition. Lipscomb calls that argument laughable.

"This isn't about encouraging more competition," said Lipscomb. "This is a blatant move to dramatically increase residential basic local service rates in order to greatly reduce large business customers' long distance rates."

AARP and other consumer groups vowed to work to repeal the provision in the law that allows phone companies to continue to raise rates after the so-called rate-rebalancing is accomplished and that eliminates the PSC's quality of service authority.

Dartland said that in addition to repealing the future rate hikes, the groups will work to reform the Public Service Commission by pushing for stricter ethical standards similar to those required of Florida judges. He says that will protect the public from predatory utility practices that put profits before people.

"It's time to stop corporate interests from hijacking the regulatory process and engineering sweet deals that fail to protect the public interest," said Dartland. "Florida consumers can't continue to let their voices be drowned out by big money politics. We need to become the worst nightmare next November for policymakers who have allowed the process to be co-opted by special interests."