SPRINGFIELD - SBC is locking horns in the Capitol with the state's other telecommunications providers over a rate proposal with potentially serious ramifications for residential and business customers.
SBC, which owns the telecommunications infrastructure, wants the legislature to step in and increase the rates it is allowed to charge competing companies to rent its lines.
By law, SBC is required to lease its network at rates set by the Illinois Commerce Commission.
Dave Doty, vice president of government affairs for AT&T's Midwest region, said raising those wholesale rates would result in less competition and higher prices for consumers - as much as $120 a year more per household.
But SBC says Illinois' wholesale rates are the lowest in the nation and are not high enough to cover its costs, while competing companies who rent the lines are making huge profits.
"Illinois lawmakers should reform a system that guarantees a 56 percent gross margin on average for our competitors - largely AT&T and MCI/WorldCom, who hold about 90 percent of the local phone lines at grossly subsidized prices," said Carrie Hightman, president of SBC Illinois. "It's a sweet deal for those two companies, who reap the profits and invest nothing in the network. But it's a bitter pill for Illinois consumers, who aren't seeing the savings passed on to them."
Opponents of the legislation say SBC is just being greedy, and point out that the wholesale rate last set by the Illinois Commerce Commission is $13.31, just 30 cents lower than the average wholesale cost for the Midwest SBC/Ameritech region.
The Illinois Commerce Commission is currently hearing a case on whether the rates should increase and by how much, but a decision is not expected until November.
The legislation SBC wants passed this month would effectively override the commission's authority, by directing it to consider different types of figures in the way it sets wholesale rates.
A House panel is expected to consider the legislation as soon as this morning, but the issue was also debated at a special joint House and Senate committee Monday afternoon.
Lieutenant Gov. Pat Quinn, Attorney General Lisa Madigan and the Citizens Utility Board have all asked that the General Assembly reject the legislation.
"It's hard to see how you would not have retail rates going up if you have wholesale rates going up so dramatically," said Martin Cohen, executive director of the Citizens Utility Board.
You can reach Kate Clements at (217) 782-2486 or via e-mail at email@example.com.