Verizon Communications has asked the State Corporation Commission to effectively deregulate the telephone industry in Virginia.

In a filing with the SCC, Verizon has requested that it be "de-tariffed," meaning some price controls and reporting requirements would be lifted. Phone service has become so competitive that the market is a fairer and more effective regulator than the government, the company said.

How the change might affect customer prices and service isn't clear, nor is there agreement on how much competition Verizon actually has in the state.

While consumers might think that price controls prevent a company from charging more, Robert Woltz, president of Verizon Virginia, said he's more interested in being able to charge less -- and not to have to announce those price changes to his competition weeks in advance.

In short, Woltz says, he wants Verizon to be able to play on the same field as competitors that have eaten away a lot of his business. The only way to regulate everybody equally "is to deregulate them."

But Jeannie Kenney, a senior policy analyst for the Consumers Union, an advocacy group and nonprofit organization that publishes Consumer Reports, opposes any sort of deregulation in the telecommunication industry, even for landlines, because it would ultimately hurt the consumer. Many people, she said, can't or won't switch to using a cellphone or a voice-over-IP (VoIP) connection such as Vonage or Skype. And although cable companies are getting into the phone business, they're "not a significant competitor," she said.

Verizon disagrees, and has submitted 2,400 pages of data that it says proves its point.

Deregulation wouldn't turn the telephone market into a free-for-all. The SCC would still have authority over certain aspects of Verizon's business, including enforcement of service-quality rules; it would also continue to resolve consumer complaints. Verizon would be required to keep providing 911 and "lifeline" products.

The effect on consumers is unclear. Verizon said it wants to be able to offer lower prices to compete more effectively, but also acknowledges that the cost of some services, such as basic landlines, might go up, although it has offered to limit price increases for basic dial tone service to one dollar per year until 2010.

Deregulation of the airline industry helped reduce prices, and spurred the emergence of low-cost carriers like Southwest. But the effect on the electricity industry was different -- think Enron and California's rolling blackouts. States, including Virginia, are beginning to re-regulate it.

The bottom line: The effect of broad economic policies is hard to predict, especially in a heavily controlled industry.

Telephone service has been regulated since 1913, when AT&T became a government-sanctioned monopoly.

Part of that monopoly status meant that Ma Bell had to provide telephone service to everyone who wanted it, but it could not charge higher fees to people in rural areas where running phone lines was expensive. Instead, the government set the company's pricing such that people in urban areas paid more so rural areas could pay less -- the term was "universal service."

In 1984 that monopoly was broken up, creating seven "Baby Bells" and ushering in the era of long-distance competition. Local service, though, was still a monopoly -- Bell Atlantic provided it in Virginia. (It merged with NYNEX in 1997, and GTE in 2000 to form Verizon.)

As a monopoly, Bell Atlantic had its prices controlled, including price floors; the SCC didn't want it to use the money it made from its monopoly services to subsidize its competitive services -- for example, by undercutting its competition and offering long-distance below cost.

In 1995, the Virginia General Assembly in 1995 opened the local telephone market to competition, giving regulatory authority to the SCC. In 1996, Congress passed the Telecommunications Act, requiring local-service competition nationwide.

From the point of view of those Baby Bells -- now called ILECs, or incumbent local exchange carriers -- they now had monopoly restrictions, but not monopoly protections. From the SCC's perspective, though, while competition was legal, that didn't mean it actually existed. Until it was convinced that "competition or the potential for competition is or can be an effective regulator of price," the regulations stayed in place.

On Wednesday, Verizon asked the SCC to declare that such competition exists.

The market has changed in the last few years. A traditional landline isn't the only way consumers make phone calls anymore. Some people use only cellphones. Others get telephone service through their cable company, or use VoIP services.

In the past 27 months, Woltz said, Verizon has lost 23 percent of its connections in the Roanoke area to those competitors. Based on information it obtained from the Federal Communications Commission as well as surveys it had done, Verizon said it provides less than 35 percent of the connections in the Roanoke region, and less that 40 percent in the Blacksburg region.

It also said that "99 percent of households in Verizon's Virginia service area can purchase service from at least two providers in addition to Verizon." In the Roanoke area, 98 percent of customers have at least five connection choices, and in the Blacksburg region about 87 percent of people did.

Of all these options, only traditional wireline companies such as Verizon have their pricing regulated by the government. If they want to change their prices, they have to file a request with the SCC 30 days before any changes, to prove the change is within the limits of their respective tariff.

"It's really hard to sneak up on the competition when you have to file like that," Woltz said.

But how much competition Verizon actually has isn't quite so clear. Other wireline companies, such as Ntelos, are minor players. In the cellphone market, "only about 5 or 6 percent of households have cut the cord," according to Lisa Pierce, a vice president and telecommunications analyst for Forrester Research. While that's a growing trend, she said, it doesn't yet count as competition -- especially considering Verizon Wireless is a major player. And although it is only 55 percent owned by Verizon (British company Vodaphone owns the rest), "It all rolls into the same share price."

Even VoIP services shouldn't count either, she said, because Verizon may well be providing the broadband connection necessary. "The customer might be not be using their VoIP, but they [Verizon] still get the benefit of it," Pierce said.

That isn't the point, said Woltz. "The issue in Virginia law is whether competition regulates my price. Do I have to price with the existence of that competition in mind? And the answer is yes."

In fact, Verizon told the SCC in its filing, "At least 50 unique competitors currently provide service to consumers and small businesses, including 24 competing landline companies, 14 cable companies, nine wireless providers, numerous broadband providers and voice-over-Internet providers."

The SCC's staff will review that data, invite all interested parties to submit information, then issue a finding that Verizon can comment on. Later this year the three commissioners will begin hearings after which they will render a decision.

If it decides in Verizon's favor, any fallout could take months or even years to materialize. Verizon hopes to be able to provide better services at better prices, but the idea of loosening the rules doesn't sit well with everyone.

"Deregulation is seductive," said Consumers Union's Kenney. "But it can leave consumers very vulnerable."

Staff writer Christina Rogers contributed to this report.