Sprint talking compromise on rate hike

Tuesday, May 14, 2002 | 11:05 a.m.

Sprint Corp. would receive a smaller rate increase than it requested in Southern Nevada under a compromise proposal being reviewed by regulators and competitors.

Representatives of Las Vegas' dominant local telephone service provider met Monday with intervenors in Sprint's rate case to draft a stipulation that would compromise on the company's proposed $90 million rate increase.

While Sprint officials would not comment on the closed-door sessions, Consumer Advocate Tim Hay said rates under the tentative agreement would raise Sprint's basic monthly residential phone rate 15 percent to $10.40 before taxes. He added that basic business service rates would increase by $2.50 to $20.75 a month.

Under the rate request Sprint presented earlier to the Public Utilities Commission of Nevada, rates for basic residential service would increase 76 percent, from $9.05 to $15.95 a month and the basic business rate from $18.25 to $22.95 a month beginning July 1. Hay's office originally had filed documents saying the company should get no increase.

The new rates would be locked in for three years, after which Sprint could reapply for an increase.

Also under the compromise, eligibility would be expanded for Lifeline, a federal program Sprint participates in that provides discounts to the monthly charge for basic local residential service to qualifying low-income subscribers.

Hay said under the new eligibility parameters, about 40,000 additional Nevadans could participate in the Lifeline program, which currently has a basic line charge of $6.19 a month that would be reduced to $5.77 under the new rates covering most Southern Nevada communities. Lifeline rates are slightly lower in Laughlin and Mount Charleston.

"This, of course, would have to be approved by the full commission, but I would be surprised if the commission has any serious problems with this proposal," Hay said of the stipulation.

Hay said he was willing to compromise on his no-increase position because the total package presented in the session -- particularly with the new Lifeline rates -- would be beneficial to consumers as a whole.

Monday was to be the first day of what was expected to be a two-week hearing in which testimony was to be delivered by Sprint executives, Hay's office, PUC staff analysts and intervenors from Mpower Communications Corp., Cox Nevada Telcom LLC, Pac-West Telecom Inc. and WorldCom Inc.

Under state rate-setting regulations, utility competitors are entitled to comment in rate cases as intervenors.

When Commissioner Adriana Escobar Chanos, the presiding officer in the case, opened the hearing Monday, Sprint attorney Ann Pongracz asked that the matter be continued to allow the representatives to negotiate a stipulation.

Chanos reopened the hearing at noon and at 2 p.m., and at both sessions, the parties asked for more time. The next scheduled session is today at 2.

Even if all the parties involved hammer out a stipulation that is acceptable to all of them, the three-member PUC would have the final say on whether the agreement is in the best interests of Nevada consumers.

While Hay's office recommended that Sprint get no rate increase, the PUC staff had originally recommended reducing the increase to $24.7 million, which would have resulted in a monthly increase of $1.05 on residential phone bills and no increase on business lines.

The four telecommunications companies did not argue about the amount of Sprint's rates, only its methods of recovering those rates from customers and how that would affect their own operations.

If the PUC were to grant a rate increase to Sprint, Pittsford, N.Y.-based Mpower could become more competitive since its rates are not within the PUC's control. The company, formerly known as MGC Communications Inc., is a distant No. 2 to Sprint in market share in local residential phone service in Southern Nevada. Mpower is operating under Chapter 11 bankruptcy protection and raised its own rates this month.

Pac-West, of Stockton, Calif., and WorldCom, of Austin, Texas, encouraged the PUC to reject a Sprint proposal to increase interstate access rates.

Cox Nevada, a subsidiary of Cox Communications Inc., the largest cable television provider in Las Vegas, does not compete in the telephone industry in Southern Nevada, but does have customers that use its broadband cable network for Internet access. Cox's sister companies in California and Arizona provide local phone service in those states.

The Greenspun family, owner of the Las Vegas Sun, holds a minority stake in the local Cox operation.