What Some States Are Doing in Regard to Deregulation of the Telecommunications Industry

By Francis-Smith, Janice | THE JOURNAL RECORD, May 4, 2005 | Go to article overview

What Some States Are Doing in Regard to Deregulation of the Telecommunications Industry


Francis-Smith, Janice, THE JOURNAL RECORD


Nineteen states have either loosened regulation on their local incumbent telephone company or are considering doing so this year. That's 38 percent of the states, not counting a handful of other states - including Oklahoma - that are still studying the matter.

While the arguments for and against pricing deregulation are much the same from state to state, each government's method of growing a more competitive telecommunications market varies greatly.

Bob Nelson, telecom committee chairman for the National Association of Regulatory Utility Commissioners, called the current trend toward deregulation an odd turn of events, which may be driven by several factors. Federal court decisions and discussions in Congress about rewriting 1996's Telecom Act have pointed the way toward deregulation, for one thing. And regulators on both the state and federal level are aware that as technology develops, old methods of regulation are quickly becoming outdated.

Plus, added Nelson, the incumbent telephone companies often have strong lobbying power, and have helped author most of the deregulation legislation currently making its way through state legislatures.

The nation's major incumbent telephone companies - often referred to as the Baby Bells since they came about due to the federal government's breakup of AT&T in 1984 - each offer the same arguments as to why their pricing ability should be loosened from regulation. Michael Dunne, a spokesman for Qwest Communications, said deregulation would help the company respond quickly in the marketplace. Utah-based Qwest, like SBC locally, was once part of the Bell Telephone.

We need the ability to lower prices on certain products, packages and services quickly, just as our competitors have, said Dunne. We need the ability to offer incentives to specific customers, just as our competitors have. We need the ability to offer service guarantees, win-back promotions and valuable packages of services, just as our competitors have. Our customers deserve, and are entitled to, the same benefits that the customers of our competitors receive.

In Oklahoma, because SBC's pricing on certain services is public knowledge, competitors are aware of SBC's pricing strategies well in advance and are able to set their pricing just below SBC's, said Oklahoma Corporation Commissioner Denise Bode.

On the other hand, opponents of deregulation say the incumbent companies still hold sway over the overwhelming majority of service lines, and would behave as monopolies if they were loosened from regulation.

Five states - Idaho, Iowa, North Dakota, Pennsylvania and Utah - have already enacted legislation to free the incumbent local exchange carrier, or ILEC, from regulation, to varying degrees.

Idaho's new law, signed by the governor March 29, would deregulate the ILEC's pricing ability after a three-year transition period, which may be extended by up to two years if regulators determine such an extension would be in the public interest. During the transition rates are capped, but may be increased $1.75 per month, per line.

Iowa's proposal, signed into law March 15, deregulates pricing for all services other than basic telephone service on July 1. …

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