Sprint to be heard on rate increase

Thursday, April 8, 1999 | 10:33 a.m.

Sprint appears to have cleared its first hurdle in its bid to win a $3.90-a-month rate increase for residential and business telephone service in Las Vegas.

The Public Utilities Commission of Nevada was expected to vote today to reject an Attorney General's motion from the Bureau of Consumer Protection seeking the dismissal of Sprint's request.

The vote was scheduled this afternoon, but commissioners voiced no concerns about Chairwoman Judy Sheldrew's proposed order at a preliminary agenda review meeting on Wednesday.

Sheldrew said her order doesn't assure Sprint of approval of the rate increase -- just a hearing to review the issues.

Consumer Advocate Fred Schmidt said his office believes Sprint's $30 million rate increase violates an agreement between Sprint and the Attorney General's Office signed in December 1995 that capped basic rates for five years.

Schmidt contends that Sprint customers should have another two years of rate stability before the company can seek new revenues from ratepayers. The 1995 agreement is expected to be a point of contention in Sprint's request.

In Sprint's response to the motion to dismiss the increase, the company said circumstances have changed significantly since the commission's approval of the 1995 agreement.

"Sprint is experiencing severe financial difficulties brought about by the enactment of the Telecommunications Act of 1996, which has imposed substantial new challenges and costs upon Sprint," the response says. "In addition, the rapid and unexpectedly high rate of growth of the Las Vegas metropolitan area and in customer orders for second lines and the use of the Internet in 1996, 1997 and 1998 has significantly taxed Sprint's resources."

The area's growth is what initially prompted Sprint to apply for a rate increase.

The Sprint rate increase would result in a 54.9 percent rate increase for residential phone service and a 23.9 percent hike for business lines.

Rate increases would boost basic residential service from $7.10 a month to $11 and the cost of a business line from $16.30 to $20.20 a month.

The rate proposals were filed on Feb. 17 with the PUC. The company hopes for a decision by July 1.

About 20 percent of Sprint's residential customers have multiple access lines.

"People in Las Vegas like all the bells and whistles," said Rob McCoy, a Sprint spokesman. "When the newest technology becomes available, there is great demand here."

Of the $172 million Sprint forecasts it will spend on infrastructure in 1999, about $15.5 million will go toward retrofitting existing neighborhoods with additional lines.

And in response to criticism that fixed-income customers would be forced to pay more if the rate increase is approved, Sprint offered a rate freeze on customers getting basic residential service without any of the extras. For the approximately 55,000 customers in that category, phone service would be locked in at $8 a month beginning June 30.

Lifeline, a special rate offered to welfare recipients within Sprint's service boundary, would stay at $4.24 a month for existing customers and $6.25 a month for new participants.

Sprint characterizes telephone service in Southern Nevada as one of the greatest utility bargains in the country.

The company received a 35-cent rate increase in 1995, taking monthly residential rates up to $7.10. That's a dime per month less than the phone rate was in 1965, Sprint officials said. Over the years, there have been some rate reductions as well as increases.

Comparatively, an $11 residential rate is still favorable to rates in most other cities in the West, Sprint said.

Nevada Bell offers Reno residents a $10.75 monthly rate. But GTE offers phone service for $17.25 a month in San Diego and US West is available in Salt Lake City for $14.29 a month and $13.43 a month both in Phoenix and Tucson, Ariz.

Schmidt believes Sprint may be positioning itself to dominate future competition, although some would argue that the company already does. It has about 96 percent of the local residential telephone market share in Southern Nevada.