Floridians
have faced more than their share of devastating storms in recent years.
But our progress toward recovery is about to face an unexpected and
economically harmful setback at a time when we can scarcely afford the
damage.
Our local phone monopoly, BellSouth, has quietly filed for
a $34.6 million hike in the phone rates of every one of its customers.
The reason? BellSouth admits that it didn't carry enough insurance, or
establish a storm reserve fund, to fully pay for damage to its network
in last year's storms.
The company's timing is odd: BellSouth
is coming off another record profit quarter, pocketing hundreds of
millions of dollars in excess earnings, enriching its stockholders with
multibillion-dollar stock buybacks and, the icing on the cake, selling
the entire company to AT&T for upward of $80 billion.
This is hardly a company in need of a handout from Florida consumers.
The
ultimate decision whether to allow this gouging of Florida consumers
rests with the Florida Public Service Commission, the very regulators
to whom BellSouth admitted to having previously carried storm insurance
as well as a robust storm reserve fund to cover the costs of network
damage. Nevertheless, BellSouth convinced the Legislature to allow the
phone monopoly to petition for rate increases to cover uninsured storm
losses, only to pocket the money that any other prudent company would
have spent on insurance and other storm protection measures.
What happened to the insurance policy, you ask?
Indeed,
BellSouth's executive baldly testified that the insurance policy he
looked into buying was 'not reasonably priced,' so he decided to skip
it entirely. Apparently, BellSouth feels that soaking its customers
instead of buying its own insurance is reasonable, but those of us left
holding the bill don't see it that way.
BellSouth's campaign to
charge Florida consumers is now in high gear. In 2003, the company
forced the largest rate hike in Florida history through the state
Legislature, and after convincing the PSC to rubberstamp its usurious
new rates, BellSouth began collecting its huge windfall this year.
And
yet, flush with $300 million in new revenue for the same old phone
service, BellSouth couldn't manage to reserve a measly 10 percent for
possible storm damage.
BellSouth and its new owner, the
Texas-based phone giant AT&T, persuaded the Florida PSC just weeks
ago to approve their merger plan without a single condition. The
nation's largest telecom monopoly told the PSC that 'the merger will
result in substantial savings in costs of operations that will benefit
customers.' The PSC believed the hype, and not two weeks later,
BellSouth filed its request to raise rates over $34 million. So much
for the 'substantial savings.'Where is all this money from Florida
families going? BellSouth's latest financial filings provide a clue.
As
a bonus for winning approval of the merger with AT&T, BellSouth's
CEO and his top deputies will collect three times their annual base pay
plus three times their standard annual bonus. They will also 'earn' an
immediate cash-out of their bonus for the year of termination. Not a
bad deal, and the extra $34.6 million collected from Florida consumers
should just about cover the price tag (BellSouth CEO Duane Ackerman
made $3.4 million in salary and bonus last year, so his cut alone will
be over $11 million).
Making matters worse, any money left over
will be wired halfway across the country to the new corporate
headquarters in Texas, where AT&T will use what it picked from the
pockets of hardworking Florida families to enrich its own shareholders
and executives.
Fortunately, BellSouth's executive bonanza is
not yet a done deal. Before BellSouth sticks its hand into Floridians'
wallets, the public has an opportunity to stand up against this naked
greed. In a series of public hearings held in October and November
throughout the state, the PSC has listened to public opposition to
BellSouth's request.
There are local hearings on Wednesday and Thursday. We should all be sure to make our voices heard.
Brad Ashwell is the legislative advocate for the Florida Public Interest Research Group.
Hearings this week
Wednesday, 11 a.m.
Jane Thompson Memorial Chambers Governmental Center
301 N. Olive Ave., West Palm Beach
Wednesday, 5 p.m.
County Commission Chambers
Broward County Governmental Center
115 S. Andrews Ave., Fort Lauderdale
Thursday, 11 a.m.
City Commission Chambers
Miami City Hall
2500 Pan American Drive, Miami
