more on Competition sends phone rates up

[David Farber <dave () farber net>]

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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