SBC's call to lawmakers was wrong number, judge rules

Tuesday, June 10th 2003, 12:00 am

By: News On 6

CHICAGO (AP) _ A federal judge has blocked the big telephone rate increases SBC Illinois pushed through the state legislature this spring.

U.S. District Judge Charles P. Kocoras said SBC should have taken its request for higher rates to the Illinois Commerce Commission and not the Illinois General Assembly.

Kocoras' decision Monday was a sharp blow to the Texas-based telephone giant, which got the rate increases through the Legislature in May after furious last-minute lobbying by both sides.

SBC's ``direct appeal to the Illinois legislature for rate relief is expressly contrary to federal law,'' Kocoras said in a 22-page opinion.

He issued a preliminary injunction stopping the estimated increase of $5.76 per customer each month on average that competing local phone companies such as AT&T and MCI would have to pay for the use of SBC lines.

AT&T, which has 300,000 Illinois customers, had warned it might be forced to slap a surcharge on monthly bills to offset the rate increases. It said the order from Kocoras would make such a surcharge unnecessary.

SBC said the battle is far from over.

``In the coming weeks, in various forums, we will debate this issue with the hope that the legislative policy will be upheld,'' said Carrie Hightman, president of SBC Illinois.

The former Illinois Bell Telephone Co. is now owned by San Antonio, Texas-based SBC Communications Inc., the nation's second largest local phone service provider. Its president is William Daley, the brother of Chicago's mayor, Richard M. Daley.

The decision was a victory for AT&T and MCI, the two big long-distance companies that have moved into local markets in Illinois, as well as for consumer advocates who denounced the bill as special interest legislation.

The measure passed May 9 and was signed into law within hours by Gov. Rod Blagojevich after furious lobbying by both sides.

Spotlighting the political tension over the bill, Lt. Gov. Pat Quinn issued a statement Tuesday night calling the decision ``a victory for Illinois phone consumers and a resounding defeat for SBC and their efforts to improperly raise the price of local phone service.''

SBC furnished reporters with a statement from Ronald E. Kastner, president-business manager of the International Brotherhood of Electrical Workers Local 21, who called the decision ``unfortunate.''

He said Illinois lawmakers ``showed real leadership'' in passing the bill, which he said would help to safeguard the jobs of telephone workers.

As the purchaser of the Illinois Bell Telephone Co., SBC owns the lines and related equipment that deliver phone service to local customers.

Under federal law, however, it must share its lines with companies that compete with SBC in providing local telephone service.

These companies are paying about $13.40 per customer per month. SBC's original plan would have raised that to $23.04 as estimated by AT&T or $21.40 as estimated by SBC.

A Commerce Commission official last week found an item marked ``joint and common costs'' within the tariff, or proposed rate increase, that SBC filed with the commission. The ICC held that item had not been approved under a part of the SBC legislation.

SBC then refiled its proposed rate increase at an estimated $19.16.

Monday morning, the commission approved that increase.

SBC says it has been allowing competing companies to have the use of its lines for bargain rates and in effect has been subsidizing them.

It says the rate increases would end that subsidy.

SBC's competitors sued to block implementation of the newly approved rates. They said going to the Legislature instead of the ICC violated the Federal Communications Act.

Kocoras said that if the Illinois Commerce Commission should rule against SBC its ``appeal must be to the federal District Court and not to the legislators of the state in which it may hold sway.''

``The ICC and this court are perfectly capable of determining whether SBC has been forced to subsidize its competitors in some unlawful way, such that its competitive abilities have been compromised,'' Kocoras said.

He said the commission is best equipped to evaluate the fairness of the rates SBC charges its competitors.

He said the SBC rates outlined in legislation ``are an intrusion into federal law and are clearly inconsistent with it.''

``As such, they cannot stand and must be enjoined,'' he said.

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