By David Cay Johnston

March 28 (Reuters) - The guarantee of landline telephone service at almost any address, a legal right many Americans may not even know they have, is quietly being legislated away in our U.S. state capitals.

AT&T and Verizon, the dominant telephone companies, want to end their 99-year-old universal service obligation known as "provider of last resort." They say universal landline service is a costly and unfair anachronism that is no longer justified because of a competitive market for voice services.

The new rules AT&T and Verizon drafted would enhance profits by letting them serve only the customers they want. Their focus, and that of smaller phone companies that have the same universal service obligation, is on well-populated areas where people can afford profitable packages that combine telephone, Internet and cable television.

Sprint, T-Mobile and the cell phone divisions of AT&T and Verizon are not subject to universal service and can serve only those areas they find profitable.

Unless the new rules are written very carefully, millions of people, urban and rural, will lose basic telephone service or be forced to pay much more for calls.

Florida, North Carolina, Texas and Wisconsin already have repealed universal service obligations. No one has been cut off yet, but once almost every state has ended universal service I am sure we will see parts of the landline system shut down.

Years of subtle incremental legal changes have brought the telephone companies within sight of ending universal service, which began in 1913 when AT&T President Theodore Vail promised "one system, one policy, universal service" in return for keeping Ma Bell's monopoly.

AT&T wants universal service obligations to end wherever two or more voice services are available, said Joel Lubin, AT&T's public policy vice president. Verizon promotes a similar approach.

INTENSE LOBBYING

State capitals are seeing intense lobbying to end universal service obligations but with little public awareness due to the dwindling ranks () of statehouse () reporters.

The Utility Rate Network, a consumer advocate group, identified 120 AT&T lobbyists in Sacramento, one per California lawmaker. Mary Pat Regan, president of AT&T Kentucky, told me she has 36 lobbyists in that state working on the company's bill to end universal landline service.

People whose landline service ends would have three options.

First would be a cell phone, a reasonable substitute in many areas. But cell phones do not work in Appalachian valleys and many rural expanses. Cell phones cost at least $25 for limited minutes, while lifeline services - which the companies offer to low-income people - start at $2 and, with unlimited local calls, at about $10.

Second would be Internet calling. That requires broadband Internet service. Verizon charges $49.99, plus additional charges by unregulated calling companies like Vonage, whose rates start at $25.99. On top of this $75 expense would be taxes and the cost of buying and maintaining a computer, a device alien to many older and poor Americans.

Third would be satellite service. Thomas Hazlett, a George Mason University economist who studies rural phone costs, tells me satellite service is "the way to go for service in outlying areas." Maybe, but it requires a computer, costs at least $29.95 and tens of thousands of users have complained about unauthorized charges and connection problems.

MARKET FORCES?

AT&T and Verizon also want to end state authority to resolve customer complaints, saying the market will punish bad behavior. Tell that to Stefanie Brand.

Brand is New Jersey's ratepayer advocate whose experience trying to get another kind of service - FiOS - demonstrates what happens when market forces are left to punish behavior, she said. Residents of her apartment building wanted to get wired for the fiber optic service (FiOS) in 2008. Residents said, "We want to see your plans before you start drilling holes, and Verizon said, 'We will drill where we want or else, so we're walking,' and they did," Brand told me.

Verizon confirmed that because of the disagreement Brand's building is not wired. And there's nothing Brand can do about it. Verizon reminded me the state Board of Public Utilities no longer has authority to resolve complaints over FiOS.

Market forces cannot discipline this kind of one-sided power.

Verizon says that New Jersey requires it to wire only 70 cities. What will happen to the elderly and disadvantaged with no place to appeal for help when telephone service is degraded, denied or cut off?

Without universal landline service, many poor and rural people will lose connectedness to family and work, while businesses serving them will lose sales and their servicing costs will rise.

Taxpayers will take a hit when the sick, disabled and elderly cannot summon help immediately because they lack phone service. Hours of delay after, say, a stroke can turn a modest hospital bill into a huge expense for Medicare, Medicaid or the Veterans Administration. Some people without phones will die unnecessarily.

New technology means telephone services will change, just as internal combustion engines replaced the horse-and-cart with automobiles. We don't want regulations requiring the equivalent of a buggy whip in every car trunk.

However, we also should not lose sight of the benefits of guaranteed access to affordable basic telephone service. The law should not force people to buy costly services they do not need.

Nor should we forget that customers paid for the landline telephone system, including many billions of dollars in rate increases over the past two decades that helped AT&T and Verizon develop their cellular systems.

If we lose universal service, I doubt we will ever get it back. Let's get a balanced policy rather than quietly rewriting laws to benefit one industry.

• A Permanent Economic Emergency