Over the past two years, Chickamauga Telephone and Ringgold Telephone have received some of the largest state-mandated telecom subsidies, funded by Georgia's telecom companies:
• Chickamauga Telephone Co., $1.63 million
• Ringgold Telephone Co., $4.07 million
• Total paid to 15 other companies receiving subsidies -- $23.25 million
Source: Georgia Public Service Commission
Hundreds of Chickamauga and Ringgold residents voiced opposition Monday night to a proposed state mandate that local phone executives say could as much as double some telephone line charges.
But state regulators said they are not likely to approve a double-digit percent increase in phone line rates for the two companies' nearly 15,000 customers, though they may approve a cut in state subsidies received by Chickamauga and Ringgold telephone companies.
AT&T recently requested state regulators examine whether the two cities' telephone companies deserve the millions in subsidies they received over the past two years, more than half of which were paid by AT&T.
Chickamauga native Ed Howard was one of the mostly gray-haired crowd that voiced opposition to the proposed subsidy cuts and subsequent rate increase.
"This affects a lot of people who don't have any income other than Social Security," the 74-year-old said after Monday night's meeting.
Mark McDonald, general manager of Chickamauga Telephone Co., said AT&T's recommended cut in subsidies would necessitate a dramatic rate increase and possible staff cuts.
"We'd have to make it up somewhere," he said. "We don't want that. That would be a last resort."
Ringgold Telephone Co. already has reduced its staff by more than half.
The subsidies both companies receive come from a Universal Service Fund paid from a 1.4 percent tax on Georgia's telecommunication companies' income. The money helps rural phone companies provide access to homes and businesses that otherwise would be unprofitable. Georgia has required local phone companies to provide that service for more than half a century.
Though cell phones help provide service to a number of rural customers, Howard pointed out that service is not universal and often less personal than service provided by community phone groups.
"If I have a problem with my computer, they're out here Johnny on the spot and take care of the problem," he said. "Any other large conglomerate isn't going to do that."
But services such as cable and Internet access offered by local phone companies aren't regulated by the state. AT&T called for state officials to examine whether subsidies are necessary to keep only the phone service going.
Pat Wingo, AT&T's assistant vice president of regulatory affairs, said both Ringgold and Chickamauga telephone companies deserve subsidies, but not at the current levels. He said Chickamauga Telephone could take $700,000 less out of state funds if the company brought its business and special service rates to the average rural rate across the state.
"We're not recommending that they have to go up, just that those differences don't come out of the Universal Service Fund," he said.
The Georgia Public Service Commission will decide by Oct. 16 whether to limit the subsidies for the Chickamauga and Ringgold telephone companies. If limited, the two companies would have to request approval for a rate increase, a process that could last until April 2013.
Contact Carey O'Neil at email@example.com or 423-757-6525. Follow him at twitter.com/careyoneil.