Verizon (NYSE: VZ) may get some landline relief in New Jersey: The state's utilities commission will likely move this week to lift some pricing regulations around basic residential telephone service, making it possible for the carrier to raise its rates for POTS (plain old telephone service) as much as 36 percent--and possibly higher, in time.
The agreement Verizon is working out with the New Jersey Bureau of Public Utilities (BPU) would keep landline service rate caps in place for five years, during which the carrier can only raise rates by up to $6. Basic residential service in the state currently costs $16.45 per month. However, after the five-year period is up, Verizon's services will be reclassified as competitive and no longer subject to regulation--meaning it can set landline rates without having to get BPU approval first.
The move to reclassify Verizon's PSTN services has raised the ire of advocacy groups, including AARP. "We know (telephone service) is a necessity for all New Jerseyans, but particularly for people 65 years or older," AARP New Jersey associate director Evelyn Liebman told the Burlington County Times.
Stefanie Brand, director of the New Jersey Division of Rate Counsel, told NJ.com that reclassifying Verizon's services "is a fancy word for deregulate," which would leave the BPU unable to require Verizon to maintain and repair its legacy phone lines.
Verizon disagreed with its critics, with a spokesperson telling NJ.com that the state's regulations are "obsolete" and that none of its competitors are obligated to get the BPU's approval for rate changes. Because New Jersey now has multiple providers and Verizon isn't the only game in town for telephone service, "consumers have the ability to switch providers if their company is not meeting their needs," spokesperson Lee Giercynski said.
Verizon has faced criticism in New Jersey before. In the wake of Superstorm Sandy in 2012, the carrier opted not to replace its legacy copper infrastructure in Mantoloking, N.J., instead getting approval to roll out Voice Link wireless service to the barrier island area. The move was similar to actions it undertook in neighboring New York state, particularly on Fire Island. But its plans to roll out Voice Link in the Catskills region set off alarm bells, with the attorney general filing for an injunction to stop the move.
Ultimately, the carrier switched gears, announcing that Fire Island would get FiOS fiber-to-the-home service instead. But for Mantoloking, no such luck.
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Voice Link isn't the magic bridge off the PSTN; broadband is