RICHMOND — The State Corporation Commission (SCC) has directed Embarq, Virginia’s second largest local telephone company, to reduce gradually the charges it imposes on other telephone companies to connect to its local network. The initial reduction will occur in two phases to be completed by July 1, 2011. The Commission determined that the gradual approach will ameliorate alleged upward pressure on basic local phone rates paid by Embarq customers.
Embarq is the parent company of Central Telephone Company of Virginia (Centel) and United Telephone Southeast (United). Centel provides service to the Charlottesville area and a number of rural counties throughout central Virginia. United provides service to the Bristol area as well as to several rural counties in southwest Virginia. Combined, the two companies serve approximately 370,000 access lines in 90 communities.
The Commission found that Embarq’s revenues from intrastate access charges represent a subsidy to Embarq that is inconsistent with the policy established by the Virginia General Assembly to promote competition and a level playing field in the Virginia telephone marketplace.
The Commission rejected Embarq’s allegation that reducing its subsidies from access charges would force it to raise local telephone rates to unaffordable levels. The Commission concluded that, “Embarq has no reasonable basis to claim that access charge reductions as set forth herein force the company to immediately raise retail local exchange rates.”
The Commission directed its staff to monitor any changes in basic local exchange rates during the transition period.
The Commission stated it will conduct additional proceedings to determine what amount – if any – of access charge subsidies remain appropriate in a competitive market. And, to ensure that Embarq’s retail rates remain affordable, the Commission indicated it “will take appropriate action if necessary” should Embarq attempt to raise rates to unaffordable levels.
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Case Number PUC-2007-00108
Order on Intrastate Access Charges