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Dial 'M' For Monopoly 

The Phone Company Wrote And Paid For Prop 108; Guess Who'll Gain From Its Passage.


THANK YOU FOR choosing this article about Proposition 108, the so-called "Consumer Choice and Fair Competition Telecommunications Amendment" to the state's constitution. If you would like a description of the proposition, please select Option 1. For a review of positions in favor of 108, pick Option 2. The arguments against the proposition are contained in Option 3. For a closing statement, select Option 4. Thank you for your interest in Proposition 108.

· Option One

U S West, which became Qwest on July 1, provides local telephone service to almost all residential and commercial customers in Arizona. Their only competition is from Cox Communications, which has about 5,000 telephone customers in Gilbert and Chandler south of Phoenix.

As a legal monopoly, U S West/Qwest defers decisions regarding its rates and other issues to the publicly elected Arizona Corporation Commission. This method was established at statehood in 1912 and is still part of the state constitution.

Along with setting rates, the Corporation Commission handles complaints against the company. In the first nine months of this year, 3,627 complaints rolled in; that's a somewhat slower pace than last year's total of 5,416.

In very general terms, Proposition 108 requires that in undefined areas with competing telephone providers, charges for service will be set by the companies, not the Corporation Commission. Within 60 days of receiving a request, the commission would make a determination of competition--deciding whether a majority of customers in an area have competitive telephone service available to them. If the commission did not act within 60 days, the application would be considered approved.

· Option Two

Arizonans for Consumer Choice and Fair Competition is the campaign group organized by U S West/Qwest to promote the proposition. It also paid for a series of statements from a broad range of political, consumer, service and business interests to be included in the publicity pamphlet for this year's ballot measures.

The group's response to repeated telephone calls seeking comments on the proposition, however, was a tape recording: "Please leave a message after the tone and we'll return your call as soon as possible." But they didn't until a week later, after our deadline.

Peter Zimmerman, owner of a local public relations firm, was one of those who signed a publicity pamphlet statement in support of the proposition. Zimmerman, who has been paid for providing advice to the campaign, says he favors 108 because "Times have changed and technology is light years beyond where it was when the Arizona Constitution was adopted 88 years ago. Competition is good, and added competition will be good."

· Option Three

Opponents of the measure argue that instead of promoting competition, the proposition will actually do the opposite. They also point out that U S West/Qwest attorneys wrote the proposition, that signatures needed to place the issue before the voters were paid for by U S West/Qwest, that the campaign in support of 108 is being funded by U S West/Qwest, and that passage of the proposition will only benefit U S West/Qwest.

John Poston, a Phoenix member of Fairness and Choice in Telephone Service, says, "There are three basic reasons to oppose 108. First, it will cost the ratepayers more despite the rhetoric. The intent is to keep the monopoly and get rid of the existing regulations. Second, it kills off competition. No company in their right mind will come in to compete with an unregulated monopoly. Third, it kills off high-tech possibilities in the future. With a monopoly market, U S West/Qwest can jack up prices on services such as caller ID, or keep the technology out of the marketplace."

Poston also has other problems with the proposition. He believes it will likely lead to Tucson phone customers subsidizing rates in Gilbert and Chandler so U S West/Qwest can undercut Cox prices. He thinks that the general wording of 108 is a company lawyer's dream; attorneys on the payroll can say the measure means whatever they want because they wrote it.

"The proposition pretends to offer competition," Poston concludes, "but is really just flash deregulation which makes no provision for competition. This is an extremely complex issue that benefits only one company. Voters should treat this with enormous suspicion and reject it."

Tucsonan Albert Sterman, vice-president of the Arizona Consumer Council, agrees with Poston. "Nowhere in the proposition does it require the competition to be real. If it isn't, or a competitor comes in and then leaves, there is no way to re-regulate U S West/Qwest." Finally, Sterman says, "If the proposition is adopted, we will have a monopoly free from regulation with the right to write its own rates."

· Option Four

Some time ago, local businessman Jesse Lugo, past president of the Service Station Dealers Association, signed a publicity pamphlet statement in favor of Proposition 108. But now he has reconsidered that position. "As a businessman, I would tend to think more competition would drop rates," Lugo says. "But I saw recently in California where electrical rates tripled when the companies were deregulated, so I oppose the proposition." Then he wonders, "U S West/Qwest isn't responsible to their customers now. Where will the consumer voice be without oversight from the Corporation Commission?"


TWO OTHER UTILITY-RELATED measures have been placed on the ballot by the City of Tucson. They deal with eliminating the requirement for a franchise election for telecommunication companies and approving a franchise for Tucson Electric Power.

Currently, the City has telecommunication franchises with four long-distance providers: Sprint, MCI, GST and e.spire. Ironically, Qwest believes it doesn't need a City franchise, an issue that is now being argued in court.

Earlier this year, the Arizona Legislature adopted a bill that, according to the City, "encourages the deployment of telecommunications infrastructure through the elimination of the franchise election requirements for telecommunication providers." Presently, the Tucson City Charter requires a franchise election.

Voter approval of Proposition 401 would bring the City into compliance with the state legislation. Instead of requiring a franchise election, telecommunication companies in Tucson would have to obtain a license to operate from the City Council.

Proponents of the change argue that the current climate of competition among telecommunication companies eliminates the need for a franchise election. In addition, the companies would save between $60,000 and $400,000 on the cost of paying for a franchise election. Supporters also claim that administrative streamlining would result from passage of the proposition.

Proposition 402 is a 25-year franchise agreement with TEP. Among its provisions is a financial arrangement by which the City receives compensation from the company, which in the last fiscal year amounted to over $7 million. Of this total, the proposed franchise agreement allows one-ninth to be spent on a number of projects including energy assistance for low-income households, undergrounding of utility lines, and funding "programs designed to encourage the use of renewable energy."

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