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more on Competition sends phone rates up
From: David Farber <dave () farber net>
Date: Wed, 12 Apr 2006 13:39:03 -0400



Begin forwarded message:

From: Randall <4whp () insightbb com>
Date: April 12, 2006 1:34:53 PM EDT
To: dave () farber net
Cc: people () addventure com
Subject: Re: [IP] Competition sends phone rates up

On Wed, 2006-04-12 at 13:29 -0400, David Farber wrote:

Begin forwarded message:

From: Allen Firstenberg <people () addventure com>
Date: April 12, 2006 9:53:30 AM EDT
To: David Farber <dave () farber net>
Subject: Competition sends phone rates up

Dave,

For IP if you wish. Perhaps someone can explain the economics of this.

http://www.pressconnects.com/apps/pbcs.dll/article?AID=/20060412/
BUSINESS/604120325/1002

N.Y. regulators approve telephone rate increase

About halfway though, we see this gem of a paragraph:

"The commissioners and PSC staff members said the companies need the
'flexibility' to raise rates because they're losing customers rapidly
to wireless phones, cable companies and other competitors. Verizon
has lost 3 million customers in the past five years and Frontier has
lost 18 percent of its customers in the last three years, according
to the commission."

Aren't we always promised that competition should lower prices?

That's in a free market, which is not what we're dealing with here. This
is a regulated utility, which by statute is allowed to recover its costs
plus a "reasonable" profit from the ratepayers.

Fewer ratepayers, with the same fixed costs, means each ratepayer pays
more.

(CEO salary is surely part of the "fixed costs", which the
ever-shrinking number of ratepayers must cover.  Betcha he didn't take a
pay cut ...)





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