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Lawmakers tell utility agency to keep toll-free calls for rural residents

January 20, 1998
By: Margaret Murphy
State Capital Bureau

JEFFERSON CITY - State lawmakers have told the state's utility-regulating agency to continue a program that guarantees rural Missourians with toll-free calls to some regions in the state.

The House agreed Tuesday with a Senate resolution passed last week by the Senate that calls on the Public Service Commission to abandon its plans to drop the toll-free service requirement on phone companies serving rural areas.

Lawmakers voted 139-11 to continue Community Optional Service (COS), a state-mandated service that allows rural customers to make toll-free calls within certain exchanges - Sturgeon to Columbia for instance. There are about 160 community optional services in Missouri, Farnen said.

The resolution has no legal effect, other than to express the sentiment of the legislature.

The House handler of the resolution - Rep. Ted Farnen, D-Mexico - said lawmakers need to acknowledge the "unique circumstances of living in rural Missouri."

He urged fellow legislators to send the issue back to the Public Service Commission, which has decided to drop the service requirement on March 31.

"This saves rural telephone customers a whole lot of money," Farnen said.

But others disagreed.

Subsidies that lower phone rates for rural customers come at the expense of city residents and are a major barrier to opening up local phone markets to competition, said Rep. John Loudon, R-St. Louis County.

Farnen said COS shouldn't end until rural customers have a choice of local phone carriers. But Loudon said until it is eliminated, there won't be any competition because no potential competitor to the local phone company would want to go into an area where current plans already give customers a good deal.

"It's the chicken and the egg," Loudon said in an interview after the debate. "As long as the subsidy is there, the local phone company is receiving the subsidy and providing the service at a cheaper-than-market-value, making it difficult for any other providers to come in.

Loudon called the resolution a delay tactic during an election year.

"We passed a law, and the spirit of the law was free competition," Loudon said, referring to a law passed by the legislature last year intended to eliminate regulation and introduce competition into local phone service. "We told the Public Service Commission to act now to eliminate barriers to competition, and now they acted, and we don't like it."

Five members appointed by the governor serve on the PSC. Among other duties, it regulates utility rates, which includes electric, gas, telecommunications, water and sewer, and sets rates charged to customers for these services.