American Independent, 9/14/2012 [Archive]

Big Telecom Companies Push To Roll Back Consumer Protections

Big Telecom Companies Push To Roll Back Consumer Protections

By Siddhartha Mahanta, The American Independent

California may enact a law that dramatically curbs regulatory oversight of telecommunications services in the state, mirroring an industry-backed trend that has made significant headway across the country in recent years.

The bill, SB 1161, would gut the authority of the California Public Utilities Commission over a wide range of Internet-based communications technologies. Under the law, customers would no longer have an official regulatory body to address concerns over the quality and affordability of these emerging services, which would not be bound to the same consumer protections that apply to traditional, wire-based telephone systems.

The landscape for traditional, wire-based phone service is quickly shifting. Increasingly, these services use the Internet to expedite the transmission of phone signals. Meanwhile, two of the entrenched telecommunications providers, AT&T and Verizon, have publicly announced their intentions to gradually shift their customers out of wire-based service and into more Internet-based services.

If these companies continue shifting to newer, more internet-based modes of communication, under bills like SB 1161, regulators would be prevented from stepping in to address consumer complaints. Any law that cuts regulatory supervision over this technology is likely to register a strong impact on the future of telecommunications.

Other states, including Kentucky, Mississippi, Ohio, and South Carolina, have considered or passed bills to deregulate sections of the telecommunications industry, or remove obligations for phone service providers to offer basic phone service for all customers.

The Institute for Local Self-Reliance's Chris Mitchell says that companies supporting bills like SB 1161 hope to plow the regulatory field. "These companies are trying to reduce the amount of regulation they face and are trying to justify it by pointing to expensive investments they have made," in new, Internet-based services.

According to an analysis by Map Light, California senators received nearly 11 times as much in campaign contributions from interest groups that support SB1161 than from those who oppose it. Data compiled by Influence Explorer shows that from 2006 to 2010, the telephone utilities and telecom services and equipment industry contributed just over $109,000 to Sen. Alex Padilla, the Democratic senator who introduced the bill.

AT&T, a deep-pocketed player in California politics, has poured nearly $3.3 million into lobbying the state house through the first six quarters of the 2011-12 legislative session, notably increasing its spending after the introduction of SB 1161. Verizon and the California Cable & Telecommunications Association have also lobbied on SB 1161.

SB 1161 would prevent the CPUC from enacting new regulations that affect Internet-based phone services, such as Skype and Google Voice, which fall under the rubric of voice over Internet protocol (VoIP), a growing, reliable, and cheap segment of the communications market. The bill would also pre-empt any organ of state or local government from passing laws or rules that regulate these technologies. This part of the bill would also keep localities from issuing rules on any other communications services that also use the Internet to transmit or distribute signals.

The VoIP sector is surging. According to a 2011 analysis by telecommunications market research firm TeleGeography, the number of Skype calls was expected to jump by 48 percent last year, while calls made through traditional phone companies would increase by a paltry 4 percent.

Proponents of the California bill say that Governor Jerry Brown should sign it and begin to roll back the authority of a commission whose budget has risen by $300 million over the past year. Industry analyst Larry Downes views the CPUC as unqualified to regulate newer technologies. In a recent column, Downes pointed out that wire-based phone service in California has decreased by 17 percent between 2008 and 2010, versus a 46 percent increase in VoIP accounts over that period. VoIP, he argues, should be allowed to flourish free of regulation.

But Consumer advocates in say that SB 1161 would prevent the CPUC from safeguarding customer protections.

Regina Costa, the Telecommunications Director at The Utility Reform Network in California, warns that the bill would hurt customers. The CPUC "wouldn't have the authority to say to Verizon, 'Your VoIP wasn't reliable.' Verizon could tell them to go stuff it."


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This column has been edited by the author. Representations of fact and opinions are solely those of the author.

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