Below-Cost Wholesale Phone Rates Ordered By Maryland PSC Threaten Investment, Growth

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BACKGROUND -- In a June 30 order, the Maryland Public Service Commission (PSC) further reduced wholesale rates for leasing portions of Verizon's network known as unbundled network elements. Competing local phone companies lease these "UNEs" from Verizon to provide local phone service to their customers. The following statement should be attributed to William R. Roberts, president of Verizon Maryland.

"The PSC's action today is bad public policy and bad news for Maryland consumers and the state's economy.

"Artificially low wholesale rates only benefit a few big phone companies that compete with Verizon, and these companies do not pass their savings on to customers.

"Furthermore, because these competitors do not invest in their own networks, Maryland loses out on economic development. And, the below-cost rates mean that Verizon must attempt to maintain an expensive and capital-intensive network while companies like AT&T and MCI/WorldCom skip out without paying their fair share of the cost of maintaining the network they rely on.

"Worst of all, the below-cost discounts are not needed to create competition.

"Maryland consumers are already benefiting from more choices and lower prices for communications service. But that is NOT because of government regulations that let competitors use the local phone network on the cheap.

"The real reason consumers have more affordable choices is the huge growth of wireless phones, e-mail and instant messaging, which are saving consumers hundreds of dollars a year. These choices keep local phone rates down for everyone, not just because states regulate those rates, but also because companies that want to raise rates now risk losing customers to more affordable alternatives.

"Given all the competition in Maryland today, it is time for government to level the playing field for all competitors -- not by giving big savings to companies that then keep the money, but instead by letting the market work so all companies can compete fairly and invest in new services like high-speed Internet access."

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