Preserving universal access to telephone service in the AT&T divestiture's aftermath sparked a contentious hearing before the House Subcommittee on Telecommunications, Consumer Protection and Finance on March 22nd.

While the Subcommittee is at present planninig no new legislation, it nevertheless convented the session so that state regulators and telephone-indusutry executives might, in the words of Subcommittee Chairman Tim Wirth (D-CO), "be sensitized to Congressional concern on the issue."

Wirth opened the hearings by stating that preserving universal service and its concomitanat socio-ecomonoic and political benefits was an objective which enjoyed "the highest priority" in the eyes of the Subcommittee. He then quoted German proverb -- "The Devil is in the details" -- to sum up the issue's complexity.

Doom and Gloom

Michigan Public Service Commission Chairman Eric Schniedewind led off the hearing with a sobering scenario of post-divestiture diminuition of universal service in his state. He estimated that the scheduled doubling of rates in Michigan by 1984 would force 11 to 17 percent of the state's telephone subscribers -- already hard-hit by the recession -- to drop off the telephone network. This trend would seriously restrict their access to emergency aid, new information services, and economic opportunities.

Next up was Christine Hansen of the Iowa State Commerce Commission, whose testimony illustrated the problems facing rurual teleconsumers. She recounted the plight of her great-uncle Carl, a light telephone user who would probably be forced to drop off the network when the inevitable post-divestiture rate increases wenth through.

Roses

The inevitability of those rate increases was challenged by MCI Corporation Chairman William McGowan, who cited the approximately $6.8 billion in rate increases granted to local operating companies over the last three years, remaining sources of revenue such as high business rates, touch-tone service, message units, coin phones and Yellow Pages revenue as proof that "the sky was not falling in on the local operating companies." As an alternative solution to maintain universal access, he proposed a nationwide program to aid lower-income telecommuters be created and financed via a new federal excise tax on telephone equipment that could be gradually phased out if no longer needed.

Excuses

AT&T Assistant Vice President William Stump then described the logistical problems facing the BOC's, whom he described as the "guardians of universal service." Stump maintained that in the pre-divestiture days, the cost of local service had been subsidized by from now-diminished long-distance revenues and partly offset by the high productivity rate of Bell employees. The only solution Stump could propose was "more innovative pricing techniques" such as local measured service (LMS).

One prevalent theme throughout the hearing was that state legislators working in a piecemeal fashion were unable to implement divestiture effectively. Susan W. Liesner, Chair of the Florida PSC, was among those to urge action on the federal level, citing the fact that AT&T has refused to provide specific information on divestiture's impact on the local operating companies.