Phone mystery: landline usage down, taxes up.

And CenturyLink, the state's largest provider of good old hardwired phone service, is happy as can be.
CenturyLink's landline use is down 60 percent.

CenturyLink's landline use is down 60 percent. Photo: Flickr User Whipper_snapper

Residential phone customers have been abandoning CenturyLink at a faster clip than Mariners fans have forsaken Safeco Field. And that’s saying something.

Once the foundation of telecommunications, conventional “wire line” telephones have gone the way of the buggy whip for many. Their functional equivalents, cells, cable-company telephony and so-called VoIP systems, are typically available for significantly less money as part of a bundle, like Comcast’s so-called “triple play” combo of Internet, TV and phone.

In Washington State, between December 2001 and December 2012, CenturyLink’s “retail access lines” — telecom jargon for old-fashioned, copper-wire residential phones — declined 60 percent, from nearly 2.7 million to just over 1 million. (Mariner attendance over the same period dipped about 40 percent).

So the last thing you might have expected to see was CenturyLink — formerly Qwest and before that US West — supporting legislation to increase the cost of phone service by a few bucks per month, possibly enough to send even more residential customers packing. Yet that’s just what CenturyLink did in Olympia this past spring when it joined with other telecom providers, including wireless carriers, to back a tax reform package meant to standardize those enigmatic taxes and fees tacked onto phone bills.

Such “parity” hits CenturyLink’s residential customers hardest, because the single biggest change was to remove an exemption that spared them from paying sales tax on basic service.

The company’s support is consistent, however, with its position before the Washington Utilities and Transportation Commission (UTC). CenturyLink is petitioning to be treated like one of the gang — just another company in a crowded and highly competitive market — and not the quasi-monopolist it was until a broad array of alternative technologies killed the once true “captive customer base” scenario.

CenturyLink’s wish will likely be granted. The UTC is expected to approve lighter regulation as soon as early next year, according to Brian Thomas, a senior policy advisor with the commission. The UTC has already eased off some regulatory controls, primarily in connection with CenturyLink’s business customers.

“We believe in tax parity; we believe in regulatory parity,” says longtime lobbyist Tom Walker, who has represented CenturyLink and its predecessor companies since 1980. “We’re all competing for the same customer, providing the same types of services using different technologies. But we’re all regulated and taxed differently. We have to get to a point where regulation and taxes aren’t the deciding factors on who are the winners and losers in the market.”


CenturyLink customers are paying more for landlines. Credit: Dan Strange/Flickr

Another reality that helps explain CenturyLink’s move in support of what amounts to a rate hike for its customers is that the residential phone market isn’t the golden goose it used to be for conventional telephone companies. Nor does the residential-phone crowd seem to be the sector the company is targeting, judging by its acquisitions and mainstream advertising. Two years ago, for example, CenturyLink paid $2.5 billion to acquire Savvis, a company specializing in cloud computing and data management for businesses.

What really propelled the legislative reform package that led to tax parity was less about CenturyLink, though, than a lawsuit brought by Sprint that led to a bombshell court ruling.

State Rep. Reuven Carlyle, the Seattle Democrat who co-sponsored the legislation, explains: In 1983, a state law took effect that gave a tax break to residential phone customers. The chief beneficiary in Washington was Century Link's predecessor US West, the state's biggest residential phone company, and one of the new Baby Bell companies formed after the Justice Department filed an anti-trust lawsuit against Ma Bell (AT&T).

“When AT&T was divested, there was no cable, no satellite, no wireless,” recalls Carlyle, an executive with McCaw Cellular and AT&T Wireless before he won election to the House in 2008. “The language written in the statute was incredibly generic.” Referring broadly to “home phone lines,” it carved out a sales-tax exemption for residential customers.  


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Comments:

Posted Thu, Oct 3, 9:07 a.m. Inappropriate

I personally will stick with Century Link or whoever the next spin-off of Bell Systems is because they have better service. Telephone through cable companies is erratic. My 80+ year old parents were without phone service for a month two years ago in Enumclaw because the cable was down. Cell service is extremely questionable in many parts of the Puget Sound basin despite advertisements.

Century Link by law has to have phone service restored within 48 hours of an outage being reported. This is a result of the old Bell System monopoly. No other phone service is required to do so. Even though I live within 45 minutes of downtown Seattle, Century Link is my only reliable recourse for phone and data. I see no reason to pay more taxes because companies who do not provide decent service want a “level” playing field. If Sprint, Verizon or the cable companies can provide guaranteed service with in 48 hours along with decent service, I might reconsider.

Posted Thu, Oct 3, 9:51 a.m. Inappropriate

My Century Link phone bill, received two days ago, was increased this month by just shy of $5. I've never seen a reduction that I can remember. I keep it for the benefit of use during power outages, and most of all for the reason seattlelifer cites: it's quality is just so much better. I cringe when I have to use my own cell phone, or when I have to talk with someone using theirs. The sound quality is atrocious!

What really frustrates me is that Century Link exploits the fact that it has a monopoly on its kind of service, and therefore can charge whatever it likes. Not much changes over time it seems. Sure, I have other phone service choices, but the comparison is apples and oranges. Instead of allowing Century Link to gouge us further, why isn't the legislature or the UTC requiring Century Link to offer different tiers of service based, for example, on the number of calls per month? I rarely use any phone -- I hate talking on them -- but when I do I much prefer my land line. Why not cut the price in half and then charge per call in addition? As usual our representatives cavil before businesses instead of requiring them to serve their constituents. I don't consider that they did anything particularly good in settling with Sprint and then sticking it to us. Why didn't they long ago level the playing field by requiring Century Link to charge reasonable prices and then tax us on them? Not that I think provision of telephone services represents a "sale" such that tax should be charged. Rather, telephone services are more akin to a public utility. Of course, we pay plenty of damn taxes on that, too, some of which are cleverly disguised as "customer charges"--what business charges people to do business with them and has no competition beyond our utilities? At any rate, I remain disappointed as usual that our representatives in the legislative and administrative areas fail to really represent our interests in any meaningful way, but instead worship at the altar of businesses who want to gouge us.

mspat

Posted Fri, Oct 4, 4:51 p.m. Inappropriate

Great picture by Whipper__snapper!

Land lines are a little bit more secure; that's worth something. People tell me that cell conversations can be easily hacked. Dunno.

kieth

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