MONTGOMERY — Alabama’s largest phone company, AT&T, is encouraging the Legislature to complete deregulation of phone services in the state, a move AT&T says recognizes today’s intense competition, but critics say could mean much higher rural phone rates.

“I still believe rural Alabama deserves the same quality services at the same prices as citizens anywhere,” said Public Service Commission member Jan Cook, who grew up in the small town of Dozier.

On Thursday, the Senate Commerce, Utilities and Transportation Committee is scheduled to vote on a bill that would end the PSC’s remaining price regulation for land-line phones. The bill, sponsored by Sen. Rodger Smitherman, D-Birmingham, is identical to one sponsored by Rep. Marcel Black, D-Tuscumbia, which is awaiting action in the House Government Operations Committee.

The PSC does not regulate cell phones or Internet-based phones. In 2005, AT&T got the Legislature to remove much of the PSC’s regulatory authority from land-line phones. That included an end to setting rates for large business customers and residential customers who bought bundled services, such as phone and Internet service together or a phone line and special calling package.

The 2005 legislation left the PSC with control over rates for businesses with four or fewer lines and for basic residential phone service and optional services, such as call waiting and caller ID. Today, most of AT&T’s business in Alabama is unregulated, and the number of land-line phones is shrinking.

Fred McCallum, Alabama president for AT&T, said the phone business has fierce competition and that should control prices rather than the three-member PSC. He said deregulation leads to more innovation and enhanced technologies.

Darrell Baker, director of the PSC’s Telecommunications Division, said much of the Alabama competition cited by AT&T is not price-sensitive competition because the companies sell prepaid phone service. This service is more expensive than AT&T and is aimed at people who had their AT&T service cut off for not paying their bills.

Currently, the PSC sets phone rates so that rural customers pay the same basic fee as urban customers, even though rural service is more expensive to provide. The fee is $16.95 for residential customers and $37.71 for business customers.

PSC members, state Attorney General Troy King and the Alabama Farmers Federation say the bill would allow phone companies to charge different rates throughout the state, and rural customers could end up paying much higher costs.

King said he normally supports deregulation, but AT&T’s legislation needs to include protection for rural Alabamians before he can support it.

“If we can reach a consensus, I will once again be the guy on the side of deregulation,” he said.

PSC member Susan Parker of Rogersville said some rural areas don’t have cell phone service, and residents can’t switch to a cell phone if their landline phone gets too costly.

McCallum said AT&T has large investments in rural areas and is committed to having good, competitive service.

The deregulation bill would set up a system to automatically enroll poor Alabamians in an existing program that helps pay part of their phone bill. Currently, they must apply. According to AARP Alabama, only about one-fifth of the eligible Alabamians sign up.

State NAACP President Ed Vaughn of Dothan said he supports the bill because of the help it would provide the state’s poor.

The PSC said the Legislature could implement automatic enrollment without deregulation.

PSC President Lucy Baxley of Montgomery said that despite help for the poor, she’s concerned that ending PSC’s control of rates could lead to poorer customer service when problems arise.

“Have you ever tried to call a company and couldn’t get a human for four hours?” she asked.