Georgia Commissioner Stan Wise says he is very unhappy with the decision by the Federal Communications Commission (FCC) to require states to deaverage the cost of providing telephone service for companies that want to compete with the regional Bell operating carriers, such as BellSouth.
(The U.S. Court of Appeals for the Eighth Circuit enjoined some aspects of the FCC rules on October 15. See, Courts and Commission, In Brief, p. 54.)
The FCC in its rulemaking on implementing local competition ordered states to deaverage the cost of service in three zones within the states (FCC Docket 96-325, First Report and Order).
At present, BellSouth averages costs over the entire state of Georgia for providing the local loop (em the wire from the BellSouth switching office to the customer's home. Customers using shorter wires in high-density areas (cities) would subsidize the longer wires necessary in less dense areas (rural). Deaveraging the cost of service means that BellSouth would have to sell its lines to competitors at their true prices, so that lines in Atlanta would be low cost, while lines in rural areas would be expensive.
According to Commissioner Wise, deaveraging would allow competitors to cherry pick the low-cost urban and suburban areas, while "blacklisting" rural areas, forcing BellSouth to cut rates to compete in urban areas while maintaining the averaged rates in rural areas. Wise predicts that rural rates would climb dramatically once BellSouth's five-year rate moratorium lifts in Georgia.