AT&T to reduce Ohio offerings after UNE hike

Ohio’s public utility commission yesterday agreed to a 15% interim increase of the wholesale rates competitors use to lease lines from incumbent SBC Communications, a decision that AT&T says will force it to stop offering its basic local-service packages in the state.

With the ruling, Ohio’s monthly UNE rates are now $17.18 per line, the highest in the former Ameritech region, according to AT&T spokesman Mike Pruyn. SBC’s basic local rate to retail customers is $14.25 per month, he said.

"We can’t understand how the commission can justify setting the wholesale rates above the retail rate," Pruyn said. "These higher rates put [AT&T’s basic local offerings] underwater, even before we include billing and marketing costs."

With this in mind, AT&T immediately will stop offering basic local service in Ohio to new customers, Pruyn said. Existing customers in these plans will receive rate hikes, which likely will cause many of them to return to SBC, he said.

SBC had filed for a review of its wholesale rates in May 2002 before filing for an interim rate increase for two-wire analog unbundled loops, according to the commission. After reviewing SBC’s motion, "the Commission concluded that the request and supporting affidavit demonstrated that the company’s current costs appear to exceed the current two-wire analog unbundled loop rate," according to a PUC press release. "The interim relief granted today has a true-up mechanism and a safety net of prompt review of the interim rates by this Commission," Ohio PUC Chairman Alan Schriber said in a prepared statement. "We believe that this approach continues our long-term policy of promoting local competition while also striking a balance between the interests of the parties involved in this proceeding."

In addition to the rate increase, the process involved in the UNE hike troubled AT&T, Pruyn said. The Ohio commission decided to put the matter on the agenda late Friday afternoon, and comments were due on Wednesday with no hearing being conducted—possibly the result of the governor and legislature pressuring the PUC chairman, he said.

"What really galled us is that [the Ohio commission] did this without a hearing…talk about a ramrodding," Pruyn said. "The skids were greased, so to speak."

And this UNE increase, which fell well short of the $21.22 per line rate requested by SBC, is just an interim increase, Pruyn emphasized. The Ohio commission plans to conduct a full hearing and complete a larger UNE rate evaluation by Nov. 1. In that proceeding, SBC has asked that UNE rates be increased to $29.81 per line, Pruyn said.

The decision marks the second time this year that a state in SBC’s Midwest territory has significantly increased UNE rates. Earlier this year, Indiana’s state commission raised wholesale rates by 30%. Wholesale rate cases are pending before the state commissions in Michigan and Illinois.