Sprint complaints filed with state

Thursday, Feb. 26, 1998 | 10:51 a.m.

The Public Utilities Commission will consider action against Sprint after two competitors complained that a campaign to lock business customers into long-term agreements for their Centrex lines is anticompetitive.

MGC Communications Inc. and Nextlink, which compete with Sprint for business customers in Southern Nevada, forwarded copies of letters to the commission's director of regulatory operations Tuesday and today outlining concerns about Sprint's bid to lock customers into long-term contracts by using the pressure of a rate increase.

Sprint officials said this morning they plan to continue with their plans to increase rates for Centrex customers on Sunday. However, they clarified that this weekend isn't a deadline for making a decision.

Sprint faxed its business customers last weekend with a proposal to enter a five-year contract, stating in the pitch that it would raise Centrex business line rates by as much as 20 percent on March 1.

"As a valued customer, we want to protect you from this rate increase and secure your rate ... ," said the fax, which listed the customer's current rate, which is based on the number of Centrex lines they use. "This will protect you against any future increases till the year 2003."

Sprint's current Centrex rates are about $19.88 per line for one to five lines, $17.68 per line for six to 10 lines, $16.08 for 11 to 50 and $13.33 for 51 to 400, the maximum number available.

MGC, an upstart local phone company that services about 17,000 lines compared with about 819,000 for Sprint, responded with a press release pointing out that its Centrex rates were lower than Sprint's, even before the rate increase.

Then, the company's associate legal counsel fired off a letter to Sprint's attorney, forwarding a copy to the Sharon Thomas, director of regulatory operations for the PUC.

" ... Five-year contracts, with large penalties (75 percent) for early termination, especially when subscribers are pressured by the threat of immanently increasing rates, appear to be clearly anticompetitive," wrote Marilyn Ash, associate legal counsel for MGC. "For example, one subscriber of whom we are aware received a fax over the weekend notifying him that if he did not sign a five-year contract prior to the end of this week, his rates would increase by 20 percent."

Nextlink today sent its letter to Sprint executives at corporate headquarters in Kansas City, Mo., as well as a copy to the PUC.

"We view this letter (Sprint's proposal) as an attempt to lock up the major business lines in Las Vegas on a five-year contract by threat to raise their prices if they do not want to be locked up," wrote Clark Peterson, general manager of Nextlink Nevada. "We also find it to be blatantly anticompetitive and contrary to the basic nature of the Telecommunications Act of 1996 and its ability to foster competition and choice for the consumer."

The Greenspun family, owner of the Las Vegas SUN, is an investor in Nextlink's Las Vegas operation.

"We do have some concerns on this and will be looking at it," said the PUC's Thomas from her Carson City office. "The staff must meet internally and determine what action is appropriate. We do have a concern that Sprint is attempting to lock customers into longterm contracts."

Among the options, she said, are taking the matter to the full commission for a ruling on whether the practice is anticompetitive.

One of the things the commission may be asked to determine is if a truly competitive environment exists for Centrex service. Three companies offer it, but the commission could determine that Sprint has an overwhelming edge as a former monopoly.

Sprint spokesman Vince Alberta said his company will go ahead with plans for the rate increase, but he clarified that customers will still be able to sign up for the discounted rates after March 1.

"We'll make a better effort to explain the increases," Alberta said. "At any time, a customer can sign up for the discount. That may not have been clear from the initial announcement."