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Wednesday, September 13, 1995 Page: 7A
If the PUC abandons ship, fairness and service will be set adrift
What is going on at the Pennsylvania Public Utility Commission (PUC)? Does
it really plan to put itself out of business, shut down, and leave
Pennsylvania’s consumers unprotected in the marketplace?
According to a recent Associated Press report, Commissioner John Hanger
apparently thinks so. He is quoted as saying that the challenge for the PUC is
“… to promote competition, and then get out of the way …” Hanger’s
quote came in response to questions regarding a straw poll of commission
members that found them willing to permit an out-of-state private corporation,
MFS Internet, to provide local telephone service to “medium size and large
businesses in Philadelphia and Pittsburgh.”
Ever since a federal court ordered the dismemberment of Ma Bell about 13
years ago — with AT&T given the long distance business and the 22 regional
Bell companies given responsibility for local service within their areas —
other private corporations have been nibbling their way into the one-time
monopoly.
With consent of the Federal Communications Commission, the newcomers first
began invading AT&T’s long distance field, and now are seeking to invade the
local service field of the Bell companies. Indeed, under the new climate in
Washington, even AT&T proposes resuming local service in competition with
members of its former family.
Under the MFS proposal, the PUC would not only allow competition in the
state’s two most densely populated centers but, copying the practice the
F.C.C. set for long-distance competitors, requires the regional Bells to allow
usage of their facilities to serve their competitor’s business.
To a degree, the seeming ability of a regulatory agency to require one
company to open its facilities to use by its competitors has been applied to
several fields during the last decade. For instance, it is possible for a
consumer of electric power to buy his electricity from another producer in
another state, knowing that electric utilities between it and him are required
to make their transmission facilities available to “wheel” the power to him.
In both the telephone and electric power cases, the utility whose
facilities are placed at the service of their competitors are tightly limited
as to the toll charges they may impose for providing the service.
The utilities are doing better than the U.S. Postal Service whose service
fields also have been opened to private competition. However, while its
competitors have been allowed to invade the most densely populated markets —
where the potential for income and profit are the greatest — the Postal
Service still is required to provide universal services, including areas where
customers are so few and scattered that it is not possible (because of also
being tied to universal rates) to meet operating costs let alone show a
profit.
What we are seeing is the steady elimination of monopolies that once were
granted to ensure maximum effectiveness of essential public services at
minimum cost and minimum use of resources.
For example, when the telephone was first introduced, it often was by
several competing companies. Each had to string its own transmission lines,
build its own traffic control center, have its own construction and
maintenance staff, and its own operating procedure. But consumers quickly
discovered that they not only had a growing thicket of telephone poles and
cloud of wires but that those subscribing to one company could not reach the
subscribers of a competing company.
The solution was to create the Public Utility Commission which would grant
a service monopoly to one company for a given area and carefully regulate it
as to the minimum quality of service it may provide and the maximum profit it
could achieve (the maximum rates it could charge).
But now it appears that all of that is to be repealed, and all regulation
and control over quality of services, rates, and profits to be left to the
forces of the marketplace.
A thorn in that change, however, is that the established operator is to be
required to loan its facilities for use by its competition. It is as though
General Motors was required to also build cars for Ford and Chrysler.
It is grossly unfair to investors and employees of the established utility
and, to judge from some experiences in the telecommunications field, is
eventually unrewarding to the consumers, as well. No one gains except some
investors in the new enterprises.
Fairness, if the PUC is to abandon its mission and existence, would begin
if — in declaring an end to monopolies — it required that every competitor
also build all of its own infrastructure so that the old and new would compete
from square one. Of course, to do so would make it unlikely a newcomer could
compete in costs and rates.
So much for fairness.
The big question, however, is: By what authority has the PUC decided to
abandon its statutory assignments? Can the Commission repeal the laws that
created and sustain it?
Tom Bigler is professor of communications at Wilkes University and a Times
Leader columnist. His column appears on Wednesdays and Sundays.