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State utilities panel majority opposes phone deregulation bill

April 19, 2012|By Marc Lifsher
  • Most members of the California Public Utilities Commission said they opposed an AT&T-backed bill to deregulate some basic telephone service.
Most members of the California Public Utilities Commission said they opposed… (Tim Boyle / Getty Images )

SACRAMENTO - Four out of five members of a divided California Public Utilities Commission are strongly criticizing a bill moving unopposed through the Legislature that would strip the agency of its last vestige of authority to regulate some basic telephone services.

The members debated Thursday but did not vote to oppose legislation by the powerful chairman of the Senate Energy, Utilities and Telecommunications Committee at the behest of AT&T, Verizon Communications and a number of high-tech business groups.

A formal decision to oppose, support or call for amendments to the measure is scheduled for the commission's May 10 meeting.

Passage of the bill, SB 1161 by Sen. Alex Padilla (D-Los Angeles), is needed to create certainty for California's economically dynamic high-tech and Internet companies, supporters said. They need to know that California won't try to regulate or constrain growth of their industry.

Regulation is best provided by the Federal Communications Commission in Washington, the Silicon Valley companies argue.

Although the bill appears to be written to completely deregulate phones that use the Internet to carry voice and data communications, it has the potential to eliminate basic consumer protections for people who use traditional, telephone company land lines, said Commissioner Catherine J.K. Sandoval, a lawyer and telecommunications expert.

"This bill would essentially prohibit the CPUC from regulating both voice-over-Internet-Protocol and Internet Protocol services," she said. "That's extremely problematic because many of the telephone carriers have been for almost a decade using the Internet within their networks to move plain old telephone service calls."

What's more, Commissioner Michael Florio stressed that the commission always has maintained "a light touch" regulating voice-over-Internet service and has never attempted to oversee the Internet.

"Nobody is talking about regulating the Internet," he said. "It's just a political slogan that has no basis in reality whatsoever."

Commissioners Mark J. Ferron and Timothy Alan Simon also expressed skepticism and opposition to many parts of Padilla's legislation.

Only Commission President Michael R. Peevey was hesitant to criticize the bill and go against the wishes of the state's high-tech business community.

"We should be very careful before we jump off the cliff here as commissioners and say we oppose this," said Peevey, who was clearly uncomfortable about being a one-member minority on the issue.

"My view is that Silicon Valley is the economic engine of the state," he said. "I don't want to support anything that in any way would diminish" that.

Residential land-line phone service was almost completely deregulated in 2006, but the CPUC retained limited authority over service quality and availability.

With the commission itself deregulating land-line and wireless phone service, the door was always left open for the agency to re-regulate the industry, should that be needed in the future. The proposed law would eliminate that option and, critics said, go further.

The bill could do away with even that limited regulation over quality and availability, they said, because voice-over-Internet-Protocol technology is so pervasive that even conventional copper-wire handsets depend on the Internet to complete most calls. VOIP is at the heart of all cable phone systems as well as fiber-optic service from telecoms and long-distance networks.


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