Sprint seeks hefty rate hike

Malcolm Hall

Monday, Dec. 31, 2001 | 11:30 a.m.

Citing serious financial problems and promising another jolt to rate-weary utility customers, Sprint has asked state regulators for a rate hike for its Las Vegas-area customers totaling nearly $90 million per year.

The company, as expected, filed an application Friday with the Public Utilities Commission of Nevada for permission to recover $89.8 million of what it says is an annual revenue deficiency of $100.3 million.

Sprint said it is asking for the rate increase because of a growing disparity between its revenues, its capital construction requirements, technology changes and how customers have changed their telecommunications patterns.

Under the proposal, residential basic services would increase to $15.95 per month, an increase of $6.90 over the current monthly price of $9.05. With federal and local taxes included, it will total $22.27.

Sprint also proposes to raise prices for business basic services by $4.70 per month to $22.95, and to increase rates for other essential services such as custom calling features, the Lifeline local service credit and interstate calling.

If approved, the new prices would take effect July 1, 2002, and remain in effect at least three years.

Lou Emmert, vice president and general manager for Sprint, said in addition to the basic service increases, the company wants to raise prices on such services as directory assistance, additional directory listings and non-published number services.

Emmert said the business and residential population in Southern Nevada continues to increase, while Sprint is obliged to build facilities to all locations whether those customers become end-users or not.

"More and more customers are utilizing cable modems for Internet access and replacing their traditional telephone lines with wireless telephones," she said, "and we have suffered a significant loss of revenue to alternative service providers, especially in the business sector."

Since 1993, Emmert said Sprint has invested more than $1 billion in capital to serve the local market, and since July 1999, has invested more than $156 million a year and is expected to increase spending to $187 million in each of the next three years.

"These factors have placed Sprint of Nevada in a serious financial predicament," Emmert said. "A company cannot continue to invest at this level, not recover costs for the services provided and lose revenue from services which currently subsidize other products."

Emmert said Sprint actually lost lines during 2001, yet at the same time saw dramatic growth in high-speed circuits.

As many as 16 percent of customers are skipping dial-up connections completely and going directly to high-speed services, Emmert said, while 20 percent of Southern Nevada residents now use their wireless phones for all local calling.

Nevada Consumer Advocate Tim Hay said his office would intervene in the case but has yet to review the filing in detail.

"Obviously, it's a major case and we will be scrutinizing it but I'm not aware from pre-filing information that we've seen that any particular issues will stand out," Hay said. "In general, Sprint's rates have been fairly low and reasonable and I assume the filing was well done by them but there will be plenty for us to look at. Monetarily, it's not as big as impact as the electric increases posed ... but technically it is something we will look into."