Minnesota Bills Reflect Dueling Views on Deregulation
Amid debates in states nationwide over deregulating the telecom industry, competing bills in Minnesota would take two very different tacks. One, proposed by the Minnesota Telecom Alliance (MTA), would limit the state’s regulatory authority for residential customers to those with a single traditional phone line, a move the state’s AARP said at a state legislative hearing Wednesday would “eliminate any meaningful oversight of the telecommunications industry in Minnesota.” Another bill, proposed by the Minnesota Department of Commerce, would add more regulations on rural call completion. NARUC and other organizations said they did not know of any states that have passed similar measures. Some observers said other legislation addressing rural call completion may follow.
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The debate over the deregulation bills comes after 27 other states have passed laws eliminating or weakening telecom regulations, said Sherry Lichtenberg, principal of the National Regulatory Research Institute, which provides research for state utilities regulators. Michigan’s Legislature is considering a bill that would make it easier for companies to do away with traditional landlines (CD Feb 19 p11). The Minnesota deregulation bill is similar to those passed by other states, Lichtenberg said. “Where regulations remain, they stay in force for what we have called POTS [plain old telephone service], which is generally defined as a single wireline, with no features. VoIP service and bundled service (service with features, long distance, etc.) don’t count as POTS."
Minnesota regulations date back to the phone monopoly era, when regulations were thought to be needed to protect customers, as there were no alternatives, said Minnesota Telecom Alliance CEO Brent Christensen in an interview. “Today, wireless, broadband, cable and VoIP options have made customer choice the regulator.” The changed environment was reflected in the FCC 2011 USF revamp order, which modernized the USF to reflect the changing market, said Christensen. The argument is similar to those in other states that have passed deregulation, Lichtenberg said.
At a hearing before the Senate Jobs, Agriculture and Rural Development Committee Wednesday, Christensen said that “Minnesota regulations have not kept up with those changes.” Noting the state last reexamined its telecom regulations in 1985, he said that “you couldn’t put cellphones in your pocket. There was no broadband. And no one I knew would put smart and phone in the same sentence.” He said that “we're slipping behind the curve with a lot of states.” Having to go through the state’s regulatory process for landlines to offer bundled services slows broadband investment, he said in an interview. Minnesota’s gas and electricity industries are not regulated by the state, he said. “It’s a matter of fairness as much as anything else."
The alliance-backed bill (SF-584) (http://bit.ly/1gcPiLt) limits the state’s telecom authority to “basic” service, defined as one unbundled, single line, residential or business service. The bill also removes authority from the Department of Commerce, which now shares regulatory responsibility with the Minnesota Public Utilities Commission (MPUC), and puts it solely in the hands of MPUC.
Consumer advocates like Christopher Mitchell, director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance, said the definition of basic service leaves hardly any service in the age of bundled service. If rate review requirements are exempted, the majority of customers who subscribe to more than a single landline could face large rate increases, he said. AARP Minnesota supports increasing the availability of broadband across the state, said State Director Will Phillips. “This will not happen if it’s priced beyond the means of average residents.” The industry-backed bill “raises new and unnecessary risks for Minnesota consumers,” he said.
The national AARP organization thinks the bill “would prematurely strip away that state PUC’s oversight authority precisely at a time when the industry is in a state of transition,” it said in a written statement to us. “Regardless of whether a consumer purchases caller ID or DSL, that same customer wants the local exchange service to be adequately maintained and reasonably priced. But all bets would be off if he/she were to purchase anything more than a dial tone with local usage.” Christensen in an interview said competition would keep rates in check.
Minnesota Department of Commerce Commissioner Mike Rothman said in an interview that “modernization does not require deregulation.” Calling the alliance-backed bill “complete deregulation,” Rothman said that “fundamentally, consumers still need to be protected. There are still issues out there.” Retaining authority to review and approve price increases is needed to prevent companies from “filing rate increases willy nilly,” Rothman said.
A separate bill proposed by the department (SF-2218) (http://bit.ly/NBv4nT) would remove 16 pages of regulations, including references to telegraphs. It preserves existing consumer protections, and adds provisions designed to increase transparency in billing and improve rural call completion. Both bills are sponsored by Sen. Dan Sparks, Democratic-Farmer-Labor Party. Sparks said he hopes to forge a single compromise bill. (kmurakami@warren-news.com)