The Ala. PSC adopted a new price regulation scheme for the state’...

It also eases regulation for CLECs that are just starting out in the state and provides a new expanded local calling option for all consumers. For BellSouth, the plan caps basic retail rates at present levels for 2 years, then allows rate changes of up to 5% every 2 years. until it hits statewide caps of $18 per residential line and $40 business. Vertical services can rise up to 5% per year to a cap equal to the highest retail rate in any of the BellSouth home states. Rates for all other services can rise by 5%-15% annually, depending on the level of competition in a market. Other incumbents that are subject to competition will come under the same cap program as BellSouth. Incumbents with exemptions from competition will be under a less-flexible regime that caps all retail rates at present levels for 3 years, then allows basic local rate increases of only 1% per year while other services can rise only 2% per year. But if they give up their exemption and open themselves to competition, they can shift to the more flexible cap system. For all incumbents, the new rules prohibit rate increases in exchanges where service quality is below state standards, and prohibit any rate increases for Lifeline, 911 and certain other public interest services unless costs increase. The adopted final plan provides 2 different classifications for CLECs: Those with more than 5% of the state’s access lines have to have a state certificate and give 10 days notice of price and service changes, 5 days notice of new services and 25 days notice when terminating a service. CLECs with less than 5% of lines and all interexchange service providers must have a state certificate, give the PSC 1 day notice of price and service changes and give customers 7 days notice before putting changes into effect. The new regime prohibits below-cost pricing by any telecom carrier unless it’s matching a competitor’s rate. The PSC also added a provision for comprehensive review of the plan in January 2006, a year after implementation. It also added a new expanded local calling option for all incumbents that allows customers to purchase 1,200 min. of LATA-wide calling for $22 monthly. Telcos can charge less than the $22 cap but not more. This expanded local plan is to be implemented by April.