Rural Wrap

State Plans to Boost Phone Rates, Taxes in One Swoop

By Dan Steninger

everal weeks ago I received a news release from the Nevada Public Service Commission, though it might have been under the new name of Nevada Public Utilities Commission (they all look alike to me), bemoaning the fact that no longer would the PSC be able to dictate the price of a pay-phone call. Changes in the law, the PSC explained, meant that the owners of those phones —the phone companies—were now free to charge whatever they wanted for their use.

The PSC thought this change was a travesty. Without these commissioners standing up for consumers, the sky would be the limit for the price of using a pay phone; and they had no choice but to stand back and watch while the phone companies raised the price of a call beyond the reach of the average Nevadan.

Commissioners said they "generally" favored competition, but in this case, it was unconscionable that they were being stripped of their power to decree a pay-phone call should cost a quarter.

I guess I was supposed to feel sorry for pay-phone customers after reading the news release. But, even though the PSC did a good job of making the piece as maudlin as possible, it just missed the mark. I couldn’t shake the impression that what I had before me was the whining of bureaucrats who could see their power eroding. The waning regulators were grasping for whatever straws were available to make it seem that, for a time at least, when they were powerful they were something other than useless parasites; and they would be missed, by God.

Well, they won’t.

In the first place, although the PSC might have lost its power to dictate pay-phone prices, we’ve a long way to go before the phone business is truly competitive, as I’ll explain later.

Secondly, it is safe to assume phone companies want to make money off their pay phones; else there would be little reason to install them. With that assumption, we can predict the price of a call is not going to go up too much, or the pay phones aren’t going to get used.

Alternatively, it could turn out that in order to make a pay phone self-supporting, the price would have to rise to a level people were unwilling to accept; and the phone companies would then get rid of them. If that turns out to be the case, we should expect to see a reduction in phone rates now that the PSC isn’t forcing the phone companies to charge their regular customers extra to subsidize the pay-phone department.

But, a PSC regulator might ask, how will the rates be lowered when there is no board of regulators to so decree? Through that competition the board "generally" favors. Which, by the way, is a blatant lie, as the only thing these guys know about competition is that it is a threat to their empire.

Under a competitive system, it is impossible to overcharge for a service, as another provider will step in to offer that service at a lower price.

In fact, the only way to support a system of overpricing is to have a public service commission. Case in point, the early November announcement by the public service commission that the state has ordered phone companies operating in Nevada to cut the price of phone service for low-income families, schools, libraries and rural clinics. By ordering companies to provide service to one customer at a discount, the state also has ordered the companies to charge those not getting the subsidies more than the cost of providing the service. But a competitor can’t step in to take advantage of this disparity, because we have central planners making the rules, not the free market.

And it gets worse. The phone companies also are being told to apply for federal grants to make up some of the losses, rather than putting the entire burden on paying customers. That means that in addition to getting a higher phone bill, those not being favored with the new phone subsidy — let’s call them the rich, i.e., those who pay taxes—are going to be paying more taxes.

I don’t just "generally" favor competition, I favor it without restriction. And one of the reasons for that position is that I don’t like paying higher taxes and higher prices because some regulator has decided $10 is too much for a certain family to pay for phone service.

The day state phone regulators are stripped not just of their pay-phone privileges, but of their offices, will be a happy one for Nevada consumers. u

Dan Steninger is the Editorial Page Editor for the Elko Daily Free Press.


Journal front | Search | Comment | Sponsors