Verizon gets local voice regulatory relief in Philadelphia

Verizon (NYSE: VZ) has struck a regulatory coup in Pennsylvania as the Public Utility Commission (PUC) voted to deregulate the prices the telco can charge for basic phone service in Philadelphia, Pittsburgh and three other regions, a move that critics say could raise service prices for consumers, reports

In a 3-2 vote, which included dissents from the commission's two Democratic members, the PUC gave partial backing for the telco's October request to have its landline voice service be declared "competitive" in these five markets via a state law that was passed with the goal of promoting competition in Pennsylvania's local phone and Internet markets.

However, the PUC voted to not deregulate 41 of the 194 wire centers Verizon wanted to reclassify, which were in suburban areas such as Ardmore, Chester, Jenkintown and Langhorne. According to, testimony showed that about 3 percent of the households in those areas could not get phone service from a cable provider competitor.

PUC Chairman Robert F. Powelson said the PUC's decision was "an important step towards modernizing how we regulate telecommunications in Pennsylvania."

Lee Gierczynski, a Verizon spokesman, said the PUC saw how consumers in large markets "have benefited from the healthy competition for telecommunications services." He added that by alleviating the company from rate regulation and other obligations, it would have an even playing field to compete with the state's cable and wireless operators for voice services.  

However, the two dissenting commissioners and consumer advocates say that the PUC's move would drive up the cost of local calling services, particularly for elderly consumers who live on fixed incomes. Besides Philadelphia and Pittsburgh, the ruling affects customers in Erie, the Harrisburg-York area, the Lehigh Valley and the Wilkes-Barre and Scranton region.

Gierczynski dismissed claims that the ruling would have a large impact on the state's consumers since a large portion of them subscribe to bundles already classified as competitive, including those that include long-distance voice and Internet services.

"You can't predict what's going to happen in the future," he said. "There's a lot of competition out there, so the competitive market will dictate prices for our services."

Pennsylvania is hardly alone in deregulating local phone service.

A similar ruling took place in New Hampshire where a law was passed in 2012 in order to level the competitive playing field for incumbent telco FairPoint in competing against cable operators like Comcast (NASDAQ: CMCSA), which are not beholden to traditional telecom regulations. 

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