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Phone deal dials up pros, cons By PETER WONG SALEM -- Oregon's telephone customers, especially those in outlying areas awaiting advanced services, will be affected either way by how a Senate committee handles legislation affecting the state's largest telephone company. At issue in Senate Bill 142 is whether the Legislature should free US West Communications from most state regulation, including the potential of more than $400 million in refunds and rate reductions ordered by the Public Utility Commission, in exchange for its investment in fiber-optics improvements for rural areas. The bill is pending before the Senate Business and Consumer Affairs Committee, which has conducted several hearings and may bring back a revised version later this month. Chairman David Nelson, R-Pendleton, said he is encouraging the parties to broker a solution. US West's Oregon vice president, Larry Huss, said the bill isn't US West's idea. "A group of citizens from Eastern Oregon approached US West and asked us if we were willing to trade a new form of regulation for a commitment toward investment in rural infrastructure," Huss told the committee. "I said, sure, we'll talk -- but your problem is with others, not us." He said the bill's critics, which include the PUC and consumer advocacy groups, have failed to come up with alternatives to pay for those improvements. The bill would free US West and other telecommunications companies from state regulation if they agree to put part of their gross revenues -- 5 percent has been proposed for four years -- into a special fund to improve access in areas such as Southern and Eastern Oregon. The PUC estimates that amount for US West at $30 million annually for four years, and a US West spokesman confirmed that figure is in the ballpark. The Southern Oregon Telecommunications and Technology Council endorsed improved access but did not take a position on the bill during a Jan. 25 hearing of the Senate committee. "This bill may be the answer, although I understand there may be some hidden pitfalls," said Kevin Talbert, a council member and chief information officer at Southern Oregon University, in an earlier interview. "It probably would be good for rural Oregon, including Southern Oregon, but probably not so good for the rest of the state." The chief advocate of Senate Bill 142 says that without some way to raise money for improvements, outlying areas such as his will be left behind in Oregon's evolving economy. Many Eastern Oregon customers, and some in Southern Oregon far from communications lines on the Interstate 5 corridor, must dial long distance to obtain access to the the Internet. "We've had companies come into town repeatedly and say they will talk to us only when we get our phone system fixed and get capacity and bandwidth," said Terry Edvalson, spokesman for the Rural Oregon Telecommunications Consortium and director of the Regional Services Institute at Eastern Oregon University in La Grande. "We believe this is not an issue of urban against rural interests. We believe it is a matter of building up the state's infrastructure so we can all benefit from the ability of telecommunications to improve our lives." The bill's critics say it would release US West from its potential obligations under a 1997 PUC order, which is before the Oregon Court of Appeals, but without guarantees that it would raise enough for the necessary investment for rural improvements. The PUC order was for $102 million in refunds -- estimated now with interest at $331 million -- and $97 million in rate reductions. It is not final because US West has appealed it. Bob Jenks, executive director of the Citizens Utility Board of Oregon, said customers in eight Jackson County communities stand to lose $22.6 million in potential refunds under the bill. They are the six cities in the Bear Creek Valley -- including Medford, with an estimate of $11.9 million -- Gold Hill and Rogue River. PUC Chairman Ron Eachus, who earlier denounced Senate Bill 142 as "a rape of US West ratepayers," said his language may have been too strong. But he said abandoning regulation would not lead to greater investment by US West in rural areas or resolving problems of US West customers. "It's a Faustian bargain to say that the barriers to investment are regulatory, and so we have to eliminate regulation," he said. "Maybe I said it too forcefully, but I doubt it." The bill's advocates propose to change it to require US West to return to PUC regulation if it is not carrying out the telecommunications projects it would agree to as part of any deregulation deal. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA