Embarq fights rural rate increase

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By Christopher Brooke, Reporter

A disagreement about charges between two telecom companies could lead to higher phone charges for rural customers, one local legislator fears.

Del. Bill Carrico (R-Grayson County) recently made his concerns known to the Virginia State Corporation Commission in a case in which Sprint has asked for a reduction in fees that it has to pay to connect long distance calls to rural customers through Embarq's network.

A reduction in fees paid by Sprint to Embarq for use of its network could cause rural Virginia customers' telephone bills to increase, according to Carrico's letter to the SCC and information provided by Embarq.

A state hearing examiner in this case sided with Sprint by recommending that Embarq lower wholesale fees it charges Sprint by $23 million over three years.

This would affect customers throughout Southwest Virginia, including those in Carroll, Grayson and Galax.

"An unfavorable ruling for Embarq could result in a $23 million loss of revenue, increased customer rates and slow the deployment of broadband..." Carrico wrote. "To offset the tens of millions in revenue loss, Embarq would have to raise customers' basic phone rates by as much as 46 percent over the next four years and services like Caller ID could increase by as much as 75 percent."

Wholesale rates for what's called "switched access services" traditionally have been high enough to help cover the costs of providing telephone services to rural areas, according to information from Embarq. If allowances built into the wholesale fees for rural service go away, Embarq officials fear that "local service could become much more expensive and less reliable in rural Virginia."

Customers who have to make up the difference won't see any benefit from a reduction given to Sprint, Embarq claims. There's no evidence that reducing the switched access rates will amount to lower prices for the customers, the telephone service provider argues.

"Customers in rural areas should not have to shoulder a dramatic increase in a most basic and necessary service to benefit the country's largest, most profitable telecom providers while receiving no real benefit themselves," Carrico wrote.

Carrico told the commissioners he is concerned because citizens have not had a chance to make their feelings in this matter known. This is because the commission has neither solicited public comment nor scheduled a public hearing on the rate case, the delegate wrote. He urged the commission to take public comments.

"If the commission rules against Embarq in this case, it will have the net effect of a 46 percent rate increase over the next several years without ever having heard from the consumer," Carrico said.

Embarq was granted a hearing to argue its side of the case before the SCC on this question last week.

It is unclear when the matter will be resolved, but information from Embarq states that the SCC has the power to accept, to reject or to change the recommendation of the hearing examiner.