Illinois Tele-com debacle<--a rant about DEMS

[Sava]

http://www.chicagotribune.com/business/chi-0305100055may10,1,4949392.story?coll=chi%2Dnews%2D hed
Sweeping SBC rate law signed
Most users likely to see increase in phone bills
Advertisement


By Jon Van
Tribune staff reporter

May 10, 2003

In the wake of SBC Communications Inc.'s stunning legislative victory Friday, competitors and consumer advocates scrambled to determine what effects it would have on their customers.

The consensus: higher retail rates for most phone users--including SBC's own customers.

Phone giants such as AT&T and MCI have been enticing Illinois consumers with local and long-distance calling packages for as little as $50 a month. Now those popular plans could disappear by summer because AT&T and MCI--as well as smaller companies that target business customers--will need to pay nearly twice the price to rent phone lines from SBC.

"I wouldn't be surprised to see AT&T and MCI leave the Illinois market," said John Shave, chief executive of Globalcom Inc., a Chicago-based phone company serving business customers.

"Eventually, this law will mean that everyone will pay more for phone service," said Bill Capraro Jr., head of Cimco Communications Inc., an Oakbrook Terrace firm that also provides phone service to businesses. "It amounts to a hidden tax on businesses."

Capraro said SBC successfully portrayed its situation to legislators as a fight among big phone companies. In an aggressive ad campaign and intense lobbying in Springfield, SBC said the wholesale rates it was forced to charge competitors were below its costs to maintain the lines.

But a battle among phone giants isn't the full story, Capraro said. "A lot of small companies like ours will also be hurt by these increases," he said. "It will mean higher rates and less competition."

Under terms of the legislation, small companies like Globalcom and Cimco will be spared wholesale increases for two years.

James Speta, a member of Northwestern University's law faculty, said the legislation bypasses the Illinois Commerce Commission, a regulatory body that studies arcane matters of rate-setting.

"What is extraordinary in this case," said Speta, "is that SBC has a rate case pending before the ICC, but instead of letting that matter play out, SBC went to legislators to get this extremely complex matter decided in its favor."

Also, the state regulators are carrying out instructions of the federal government under a law passed by Congress in 1996 intended to open local telephony to competition.

Whether it is even legal for Illinois legislators to step into the middle of the regulatory process is open to question, Speta said.

Martin Cohen, executive director of the Citizens Utility Board, said it is likely rates for SBC customers will increase because of the legislation.

Furthermore, in the coming months, Cohen expects SBC will claim its residential service will meet regulatory guidelines for opening its phone lines to competitors and therefore no longer be subject to rate regulation.

SBC is currently working toward meeting those guidelines in its application to sell long-distance service to Illinois residents.

If SBC can shed those regulatory requirements--as happened in the pay phone industry years ago--it would still face antitrust scrutiny from the Federal Trade Commission if it sold residential service for rates below the wholesale rates it charges rivals, Cohen said.

Hence, any current SBC customer who now pays less than $21 a month for phone service will likely see a price increase because that's about what SBC seeks for it's new wholesale rate.

Sam Peltzman, a University of Chicago economics professor, said federal telecommunications policy is murky.

"Two months ago, the Federal Communications Commission voted to leave the matter of wholesale rate-setting up to the states," Peltzman said, "but so far, it hasn't issued a written order, so we're still unsure about the details.

"The matter is in limbo, and that's where it's been most of the time since the law was passed," he said.

According to Cohen, the law signed by Gov. Rod Blagojevich on Friday, which bypasses the pending federal rules, sends the wrong message.

"I sure hope this isn't the start of a trend," he said. "It would be terrible for the state if utilities get the idea they can make end runs on regulators by going to the legislature."

One political reason for having bodies like the ICC is so they can take political heat for unpopular decisions, such as raising phone rates, said Terry Barnich, a past ICC chairman.

"If there is any political fallout from this action," he said, "the legislators and governor won't have the ICC to serve as a political buffer for them."


Copyright © 2003, Chicago Tribune

Sick of me ranting about Bush? Will here it is. A rant against the Dems. I originally was optimistic about Blagojevich (Illinois's Democratic Governor) but I now realize it's just business as usual. SBC contributed lots of money to Blagojevich's campaign. Also, organized labor unions that will benefit from this rate increase contributed "millions" to his campaign (according to this mornings Tribune). I guess these political contributions are getting what they paid for. In a rare move, Blagojevich signs this bill in just hours after it was passed by State lawmakers. The bill passed 30-24 in the state senate with Democratic support; then passed 66-39 in the state house, again, with Democratic support.

The Dem's are offering somewhat an excuse for this measure which will raise rates across the board for phone service... "if we didn't give SBC what they wanted, they might have left the state"... I'm sorry, I was under the impression Democracy didn't give in to extortion-like demands. SBC wasn't going anywhere. They have a virtual monopoly in the Chicago area, and it looks like AT&T and MCI might be the ones leaving now because they won't be able to compete with the much higher rate.

I'm posting another article and will continue my rant...

[Sava]

http://www.chicagotribune.com/business/chi-0305100057may10,1,5866898.story?coll=chi%2Dnews%2D hed
Sweeping SBC rate law signed
Fast-tracked bill passes Senate on 2nd attempt


By Christi Parsons
Tribune staff reporter

May 10, 2003

SPRINGFIELD -- A sweeping measure giving telecom titan SBC Communications Inc. greater control over the local phone market powered past consumer concerns and into law Friday, clearing the General Assembly and winning Gov. Rod Blagojevich's signature in a matter of hours.

The bill nearly doubles the rate SBC can charge phone competitors such as AT&T and MCI to lease its lines. Critics complained that forcing up wholesale rates would translate into higher phone bills for consumers and businesses--and possibly drive SBC's competitors for local service out of the market.

One state utility regulator said the measure could allow SBC to impose wholesale rate hikes by early June. Opponents of the measure said they were considering a legal challenge to the new law.

The measure passed the Illinois Senate 30-24 Friday morning with mostly Democratic support--a quick rebound for the clout-heavy Texas-based telecommunications giant after a failed vote the night before. It had the strong backing of organized labor, which had poured millions of dollars into Blagojevich's campaign last year.

With SBC and its competitors hiring armies of lobbyists to press their cases, the measure had passed the House by a 66-39 vote only Wednesday. The next day Blagojevich declined to take a position on the bill, saying he hadn't had a chance to look at it.

But so strong was the pressure to fast-track the legislation that on Friday he signed it into law within hours of the Senate vote. It is extremely rare for an Illinois governor to act on legislation sent to him by the General Assembly before weeks, and sometimes months, have passed.

Supporters said they hoped the new law would pump up the bottom line for a large Illinois employer and prevent it from laying off more workers after letting 700 go over the last year.

Blagojevich spokesman Tom Schafer went even further, suggesting failure to act might have prompted SBC, the primary local phone company in the state, to abandon its multi-billion dollar investment in Illinois altogether--something the company never has suggested.

"This is a major employer in the state," Schafer said. "We didn't want to see them end up moving from Illinois, which would deplete our infrastructure and take away the investment they might make here. It would hurt our economy."

Critics likened the vote to the controversial 1999 passage of special interest legislation which handed virtual monopoly control of the liquor distribution business in Illinois to a firm owned by Chicago Blackhawks owner Bill Wirtz. The measure, later invalidated by the courts, won support in the legislature after a heavy lobbying campaign financed by Wirtz.

Supporters cheered the SBC bill's passage as a major victory for organized labor, whose members flooded the Democrat-controlled General Assembly with calls, letters and visits from workers over the past few days. They provided many lawmakers with an easy reason to vote for it: preservation of union jobs.

"This is a win for labor," said Sen. James Clayborne (D-East St. Louis). "We're talking about jobs. We're talking about continued investment in Illinois. This is good for a lot of people."

But SBC's competitors complained vehemently after the vote, which they say was a raw display of the politics of power and influence by a well-connected corporation whose president is William Daley, the brother of Mayor Richard Daley. William Daley also served in former President Bill Clinton's cabinet and ran Al Gore's Democratic campaign for president in 2000.

Ed Hurley, chairman of the Illinois Commerce Commission, said his staff was studying the bill's language on Friday. An initial reading, he said, suggests that the new wholesale rates--those charged to SBC's competitors--should take effect within 30 days.

The legislation was the latest step in a fierce battle for Illinois phone business that has been brewing ever since federal and state regulators forced SBC to relinquish its monopoly over local service in most parts of the state. In the last three years, SBC has paid $48.5 million in penalties to the state for failing to cooperate adequately with rivals.

The company also lavished campaign cash on politicians. It gave $85,000 to Blagojevich's campaign for governor, all of it coming in a five-week period between late August and early October, state records show. It also contributed $100,000 more to help underwrite the governor's inaugural gala.

AT&T and MCI also gave financial support to Blagojevich, but at lower levels. State records show the two firms combined contributed just over $54,000 to Blagojevich's campaign. They also gave $50,000 more for his inaugural.

Though most legislative supporters of the bill were Democrats, the measure picked up a handful of Republican votes as well. Most of the GOP backers, who said they wanted to encourage SBC's growth and investment in Illinois, had large SBC facilities in or near their districts.

Crucial support for the measure Friday came from Sens. Kay Wojcik (R-Schaumburg) and Larry Bomke (R-Springfield), who count large numbers of SBC employees among their constituents.

Sen. Dale Righter (R-Mattoon) said he supported the measure because it would help a small local phone carrier based in his district that now may be able to charge wholesale rates for the use of its lines.

Wojcik said she cast a "present" vote on Thursday, but then went home and called some friends and constituents for advice.

"I'm only three miles from the [SBC] corporate headquarters, so I have a lot of their employees in my district," she said Friday. "I went back home, spoke with some of my constituents about it, and I woke up this morning and said, `I'm going for it.'"

Throughout the week, SBC had former lawmakers, former Capitol staffers and heavyweight lobbying firms working on the measure. Critics questioned whether it was fair for Sen. Terry Link (D-Vernon Hills) to vote on the bill because his wife, Susan McCall-Link, an SBC employee in Lake County, also was registered as a lobbyist for SBC.

But Link said he did not violate the state conflict-of-interest law, which does not prohibit lawmakers from voting on matters in which they may have a personal or family interest as long as they "serve the public interest and not the interest of any person."

Though few Democrats yielded to it, consumer groups and SBC rivals had issued stern warnings that lawmakers could face a backlash at the polls if they voted for the measure.

"This is one of the biggest anti-consumer bills to pass in Illinois in decades," said Gary Mack, executive director of the Illinois Coalition for Competitive Telecommunications, representing MCI, AT&T and other SBC competitors. "I wouldn't be surprised to see people begin pulling out of the market. Then I wouldn't be surprised to see SBC raise its own rates."

Mack said the companies his group represents were studying their legal options and might go to court to try to block the new law.


Copyright © 2003, Chicago Tribune

It's bad enough this bill is going to amount to higher rates, but we have to listen to blowhole state-senator James Clayborne (D-East St. Louis) tell us that we should feel good about this crap. "It will mean more jobs"... OH BALONEY! It will mean that you'll get more campaign contributions you pork barrel giving b4stard!

And then there is state Sen. Terry Link (D-Vernon Hills) whose wife is a lobbyist for SBC. Oh!!! THAT'S NICE!! He responded that this isn't a conflict of interest because this law will "serve the public interest and not the interest of any person."

I've ignored the arcane mob-like dealings of the Illinois Democrats because they haven't done anything to piss me off. But finally, these prostitutes have managed to screw every single person who owns a phone in this area. The only thing I can hope is that Illinois Coalition for Competitive Telecommunications can get this law blocked.

Democracy in this state is really taking a beating. We've got two corrupt parties.

Discuss...

[Sava]

What new law may mean for your phone bill
By John Patterson Daily Herald State Government Editor
Posted May 10, 2003
SPRINGFIELD - The commercials and full-page ads have been hard to avoid.

Wolves in sheep's clothing. Stacked decks. Liar, liar, pants on fire.

And now it may be ending.

Gov. Rod Blagojevich signed into law Friday a plan pushed by SBC Communications Inc. that effectively doubles the rates it can charge other phone companies to access its state network of phone lines.

The Illinois Senate passed the plan Friday morning and the governor signed it hours later.

It brings to an apparent end the running debate between SBC and rival telecommunications powerhouses MCI and AT&T that took on the overtones of political campaigns.

Each side likely spent millions on advertising and thousands more on high-paid lobbyists who descended on the Capitol in recent weeks.

Under the terms of the 1996 deregulation of the phone industry, SBC owns the phone network in Illinois but must allow other companies access to it. The current debate was over the rates SBC can charge.

Lost in it all has been the potential fallout for the average person's local phone bill.

Consumer groups claim MCI and AT&T customers can expect to see hikes, now that SBC can charge more for access to its network. They also fear that the hikes ultimately will result in reduced competition and, down the road a year or two, SBC will hike its rates as well. They point to the $5 billion quarterly profit recently posted by SBC and say the company doesn't need lawmakers' help.

"Once you drive them (competitors) out and nobody's there and nobody cares, you raise rates and pretty soon you've doubled rates and nobody will compete with you because nobody can afford to get into the market," said Gary Mack, executive director of the Illinois Coalition for Competitive Telecommunications. AT&T and several smaller phone companies that oppose the SBC plan fund the group.

Nonsense, say SBC executives and lobbyists. They argue the other phone companies are making more money off their phone network than state law allows SBC to. If phone rates go up it would be MCI and AT&T's fault, not theirs, they argue.

Carrie Hightman, a Buffalo Grove resident and president of SBC Illinois, said the other companies make substantial profits off the Illinois lines and that the rates SBC can charge those companies are the lowest in the nation. "The only reason there'll be rate increases is if MCI and AT&T decide they won't give up any of that 56 percent profit," she said.

Hightman called her competitors' ads "insulting."

One lingering question in the wake of the Senate's vote was exactly why this needed to be done now. The proposal was unveiled, debated and finally approved within a week. Meanwhile the Illinois Commerce Commission had been reviewing SBC's rates. The commission is the state agency overseeing utility regulations. The new law requires the commission recalculate SBC's rates.

"This is not good for the consumer," said state Sen. David Sullivan, a Park Ridge Republican. "Maybe someday we'll all find out what the reason is for that huge rush."

Hightman said lawmakers were concerned about SBC's current situation and "believed it was important to give the commission direction."

David Doty, vice president of government affairs for AT&T, said the motives were more sinister.

"I can only conclude that SBC must have evaluated how their case for these increases was fairing over at the commerce commission and decided that their case wasn't very strong and decided that they had to fix the case by killing it and substituting the legislation," Doty said.

Asked whether his company's rates will go, Doty was uncertain: "It's hard to say. Definitely there's upward pressure in prices."

Phone: Some wonder why bill was passed so quickly
http://www.dailyherald.com/news/illi...?intID=3775150

Oh that's nice. The struggling SBC made a quarterly profit of 5 billion dollars last quarter. AT&T and MCI aren't any better, they have a 56% profit margin. Why was any change needed? I don't understand. Oh please tell me how we are benefiting from private telecommunications again? It seems as if these "private" companies are in charge of both our phone service and our government.

C'mon, this is history here folks. Never have I ever attacked Democrats as much as I am now. Doesn't anyone care?

[Zkribbler]

Another argument for Zkribblerian campaign reform: Only individual citizens should be able to make campaign contributions--not corporations, not unions, not PACs, not foreign governments, not foreign citizens.

[Sava]

I'll vote for you!

[DAVOUT]

Originally posted by Zkribbler
Another argument for Zkribblerian campaign reform: Only individual citizens should be able to make campaign contributions--not corporations, not unions, not PACs, not foreign governments, not foreign citizens.

This is what we finally did, after many scandals. In addition political parties receive public funds in proportion of the number of votes they have received.

[Sava]

Good idea

I'm much more in favor of a parliamentry style legislative branch in addition to such reforms.

[Andrew1999]

I think we are going to need a constitutional amendment to really straighten out campaign finance in this country. The writers will have to be very careful how they define viable parties and candidates--we already have the Democrats and Republicans given special priviliges in the law; we don't want them to be written into the Constitution permanently.

[Sava]

The day Democrats and Republicans write their parties into the constitution is the day I burn an American flag.

[Ned]

All this really illustrates is that government should stay out of business. Once it gets involved, every decision become political and the opportunities for corruption multiply.

[Sava]

Actually, I think it illustrates that certain things like infrastructure and tele-communications should be businesses at all.

But I agree with you in one regard Ned... business and government should be seperated.

[Ming]

While I know you will laugh at this Sava... I wish we still had a republican governor. While the last one was about as sleazy as you could find, at least he kept the Democrats and Chicago from doing whatever they wanted. Now, Chicago has the state in their pockets as well... and we are going to see even more of this kind of crap.

[Sava]

I know... its so sad that American politics has become a crapshoot of "who won't f*ck us the most"...

[Ming]

Well now that the Dem's are totally in charge in the state... they are going to pick our pockets clean and not give us much in return. And there is nobody to stop them. I could see this coming when I saw SBC's media campaign the last few weeks... Knowing how much they have kicked into the Dems campaign chest... and it was a done deal from the start.

So much for checks and balances... they just did an end run.

[Ned]

Actually, the technology to get "wires" to the home without using massive investment in infrastructure is just around the corner. It uses, I believe, communications in the 5.8 GB spectrum to communicate high bandwidth communications through antenna's and hubs from a network to a home. This technology will soon be competitive with wires and may eventually replace them. Intially it will be marketed as competition for DSL. However, there is nothing at all that prevents this new technology from carrying ordinary voice traffic, except for, perhaps, the government.