State of Illinois

Office of Lieutenant Governor Pat Quinn


FOR IMMEDIATE RELEASE                                                  

Friday, June 13, 2003       



(785 words)

"SBC should hang up the phone on flawed rate hike plan"

"Monopoly" is a great board game, but as public policy for providing phone service in the Information Age, it just doesn't work.

When Texas-giant SBC rammed a bill through the Illinois General Assembly in record time last May, the effect would have been a doubling in rates for residential and small-business phone consumers across Illinois, a net job loss, and the elimination of competition.

The relentless drive for monopolistic power - reminiscent of the robber barons who controlled the rail, steel and oil industries in the late 19th century - threatens everyday consumers. I was present in 1999 when the Illinois Commerce Commission (ICC) narrowly approved the merger of Ameritech and SBC. I heard the promises made by SBC and have seen the disregard for those pledges since.

At that time, SBC knew the score. It knew the rates it could charge and agreed to be locked into those rates. Then, after paying more than $123 million in fines to state and federal regulators for lousy service and anti-competitive practices, it chose to do an end-run around the ICC by pressing the General Assembly for a new rate hike.

But in their haste to drive out competition big and small, SBC steamrollered a deeply-flawed bill through the State Legislature.

In a well-reasoned decision by U.S. District Court Chief Judge Charles Kocoras, the ICC was ordered to refrain from implementing those new sections of the Illinois Public Utilities Act allowing SBC to double the rates it charges competitors to use its lines pursuant to the 1996 federal Telecommunications Act.

Judge Kocoras cited several reasons for the ruling. First, state utility regulators such as the ICC have the "professional staffs and expertise" to make decisions about utility rates, whereas legislative bodies may not have "comparable expertise".

Judge Kocoras said the legislation "displaces the ICC's rate-making authority" and by doing an end-run around the Commission, SBC was allowed to "avoid its burden of proof" required by federal law to prove a rate hike is justified. Finally, the judge said the legislation "conflicts with federal law".

It's time for SBC to hang up the phone on this flawed rate hike plan once and for all.
That's why I've asked ICC Chairman Edward Hurley to respect Judge Kocoras' injunction and decline any appeal of the ruling.

There is clearly precedent for a state agency to refrain from using taxpayer money in needless litigation to defend a deeply flawed state law.

The last time so many lobbyists descended upon the State Capitol was four years ago, when the "Illinois Wine and Spirits Industry Fair Dealing Act of 1999" was passed, giving one company a distinct edge in the region's liquor distribution industry. The law was challenged and the Illinois Liquor Control Commission was named as a defendant. A federal judge issued an injunction barring the Liquor Control Commission from enforcing the new law and the Commission opted not to appeal, effectively ending the state's participation in the litigation and saving the taxpayers thousands of dollars in legal costs.

Faced with a severe fiscal crisis, the State of Illinois shouldn't waste a penny of taxpayer dollars on unneeded litigation. SBC can't win the case. Enough is enough.

Unlike the robber barons who operated in the 19th Century Machine Age, we're now in the 21st Century Information Age, where consumers and entrepreneurs alike are best-served by having wide choices in the free market, a principle at the core of our economic democracy. As a society, we are better off with vigorous competition among telecommunications companies of all sizes in the marketplace as the best way to ensure quality service and reasonable prices.

Pundits have made hay of the contrary view Governor Rod Blagojevich and I have of the SBC issue. Yes, we disagree. As a longtime consumer advocate, I cannot remain mum on an issue I feel so strongly about. And while Gov. Blagojevich and I disagreed on this one bill, we still share basic beliefs about strong ethics in government, and investment in better education, health care, and public safety for the people of Illinois.

In 1982, I launched a grassroots effort to create the Citizens Utility Board (CUB). Now celebrating its 20th anniversary, CUB has become a national model of consumer empowerment, taking on Illinois' giant utilities and winning. CUB was part of the broad coalition of opponents to SBC's plan, which included the American Association of Retired Persons (AARP), U.S. Department of Defense, and Illinois Citizen Action. The SBC juggernaut was stopped by consumers banding together.

Judge Kocoras sent a message loud and clear to SBC: your plan to raise rates and eliminate competition is dead. Hang it up.





Pat Quinn

Illinois Lieutenant Governor