A new study released today by the Telecommunications Research and Action Center (TRAC) found that consumers in four states-Pennsylvania, Illinois, Florida and Georgia-could save at least $304 million on local phone service and $203 million on long-distance service and possibly as much as $1billion on local phone service and $730 million on long-distance service after one year of increased competition in those markets. The study projects that more than four million long-distance and nearly seven million local telephone customers will switch telephone providers during that same period. TRAC, the nation's leading telecommunications-focused consumer group, has been publishing long-distance rate comparisons for consumers and small businesses since 1984.

"These savings from increased local and long distance competition stack up well with the current tax rebate and demonstrate the importance to the economy of continuing telecommunications competition," said Samuel A. Simon, chairman of TRAC. "The evidence is clear and compelling-open entry for all competitors in the long-distance market can result in significant savings for consumers. Competition in the local and long-distance market gives consumers more choices and inevitably lower prices. This is exactly what Congress envisaged when it passed the Telecommunications Act of 1996."

The multi-state examination was modeled after a TRAC study of the New York market conducted earlier this year. Using conservative assumptions, that study found that consumers in that state had saved nearly $200 million in the 12 months since the local phone company, Verizon, was granted permission to provide long-distance service. "In New York, increased competition has meant big consumer savings," said Simon, TRAC's chairman. "It appears from this new study that consumers across the country will save from taking advantage of both new local and long-distance options."

Using the TRAC New York study as a model, this new multi-state TRAC study provides projections relating the level of consumer savings that could reasonably be expected in four other states one year after their long-distance applications are approved. TRAC selected the states for this study because the respective state public utility commissions (PUC) are currently considering long-distance relief for the regional bell operating companies (RBOC) that serve them. "This latest study sends a strong signal to the Federal Communications Commission (FCC)," said Simon. "If the FCC truly wants to see lower prices and more choices, the best way to do that is to expand the competitive landscape."

TRAC compared its findings to recent studies by the Consumer Federation of America (CFA). TRAC's estimates were extremely close to those projected by CFA. In Florida, CFA projected even greater savings. (Note: CFA did not study Pennsylvania). Overall, CFA projected annual savings of $5.7 million more than TRAC's estimate.

State-By-State Findings

Pennsylvania. TRAC projects that Pennsylvania's residential customers could realize at least $128 million in local and long-distance savings one year after Verizon's entry into the long-distance market and as much as $452 million. These savings are based on the assumption that approximately 1.1 million customers are expected to switch to Verizon's long-distance service while 1.7 million customers are expected to switch away from Verizon for local service. TRAC estimates that customers could save at least $76 million on local phone service and $51 million on long-distance service annually.

Illinois. TRAC estimates that approximately 1.1 million customers can be expected to switch to Ameritech for long-distance service and 1.7 million customers can be expected to switch away from Ameritech for local service, for a total of at least $129 million in local and long-distance savings the first year after Ameritech enters the long-distance market and as much as $457 million. Illinois customers that switch long-distance service can expect to receive minimum annual savings of at least $51 million. Similarly, customers that switch local phone service can be expected to save at least $77 million in one year.

Florida. TRAC projects that 1.4 million customers can be expected to switch to BellSouth's long-distance offering and almost 2.3 million customers would switch away for local phone service. Florida's residential customers can expect to receive at least $166 million in local and long-distance savings one year after the FCC accepts the BellSouth's application for long-distance and as much as $588 million. Based on the expected number of customers who will switch providers, Floridians should save at least $66 million in long-distance costs and $99 million in local phone expenses.

Georgia. TRAC estimates that about 700,000 Georgia consumers can be expected to switch long-distance service and about 1.1 million consumers would switch local phone service providers after BellSouth's entry into the long-distance market. These Georgia consumers are forecasted to achieve at least $85 million in local and long-distance savings in one year and as much as $301 million. Long-distance savings are expected to be at least $34 million in one year and local savings to be at least $51 million.

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