November 18, 2013
In this age of wireless communication, it can seem as if just about everyone has a smartphone.
But the truth is millions of Pennsylvanians still rely on their old-fashioned land lines for telephone service. Without the dial tone such lines reliably provide, some people, especially seniors, could be cut off from the outside world. Now, legislation in Harrisburg would fundamentally alter - or gut, opponents say - the regulations that have guaranteed affordable access to traditional phone service for decades. Rep. Warren Kampf, R-Chester, introduced H.B. 1608 in July with the impressive support of 53 co-sponsors, mostly fellow Republicans. On Thursday, his bill will face its first test in the legislative process - a hearing before the House Consumer Affairs Committee.
Gone are the days when the descendants of old Ma Bell such as Verizon reigned over monopolies, Kampf said. Today, such companies face competition from a range of alternatives, including cable- and Internet-based voice services. And those alternatives are not subject to special government oversight, even though Verizon still is. Basically, Verizon and more than 30 other, mostly much smaller phone companies are required to provide voice service to any home or business that requests it. And if these companies want to raise rates, they have to ask the state's Public Utility Commission for permission first. "It doesn't make sense to me that we would continue to have the PUC regulating the old land line companies," Kampf said.
Doing so, he argued, is not only unfair, it's unwise. "This [bill] creates a level playing field [and] an even more robust competitive environment," he said. "That's good for the consumer." At first glance, H.B. 1608 is a tangle of legalese. For example, it would redefine the meaning of a "competitive exchange." Through such highly technical and interconnected edits to the public utility law, though, it would fundamentally change the state's telephone regulatory structure. In the end, phone companies could be freed of PUC oversight in urban and suburban areas, and in rural areas with at least two alternative voice service providers. As a result, the phone companies could:
- Raise rates without PUC oversight.
- Replace land lines with wireless technology.
- Abandon land lines altogether after 2018 where the cost of maintaining them is high.
The bill also would eliminate the PUC's authority to enforce quality-of-service standards for installation, repair and customer complaint response in those areas declared "competitive" by phone companies. Opponents call it a deregulation bill. "I cannot find a single thing in this bill that benefits consumers," said PUC Commissioner James Cawley, who has taken an unusually vocal stand.
Under the current regulatory regime, a customer can file a complaint about a phone company directly to the PUC, and the PUC is empowered to investigate and even penalize the company. But Kampf's bill, according to Cawley, would leave customers to fend for themselves, and they'd be unlikely to prevail without hiring a lawyer at their own expense. Additionally, he said, it would undercut the PUC's influence over 911 emergency call systems, since the infrastructure of those systems is under the control of phone companies. (Verizon disputes this claim.) "This substitutes the business plans of some of the wealthiest corporations in America for consumer protections and regulatory oversight of essential services," the commissioner said. Also opposed to H.B. 1608 is the state's Office of Consumer Advocate, as well as a coalition of consumer groups, including the AARP. "We think it will likely increase rates," said Tanya J. McCloskey, acting director of the Office of Consumer Advocate. "And it will also certainly reduce quality of service."
Rates could go up directly, but also indirectly through any number of marketing strategies. For example, a customer who needs only phone service could be compelled to subscribe to a costly bundle that includes unwanted cable TV and Internet access. Of particular concern to the AARP is the impact on seniors, who are far more likely than younger people to rely on the traditional land lines - of either the older copper or newer fiber optic variety - connected to their homes. Such lines are necessary to run alarm systems, fax machines and some medical monitoring devices, such as pacemakers. Moreover, cable- and Internet-based voice services as well as wireless land line substitutes such as Verizon's Voice Link require external devices that run on electricity, so customers forced to migrate to such alternatives would be unable to use their phones during power outages, AARP spokesman Ray Landis said. Cellphones might suffice for some, but not for all, especially those in rural areas where coverage is spotty. "They could be at risk when they need to make a call," he said.
According to a report published last week by the Keystone Research Center, a liberal think tank in Harrisburg, similar legislation has been introduced in other states in recent years. Some states, such as New York, New Jersey and Connecticut, have rejected it. But in those states that have adopted the changes, the cost of phone service has gone up, sometimes by a lot, the report contends. It points to California where, it says, rates skyrocketed "several hundred percent." "It's a pure giveaway to the companies involved," the report's author, Nathan Newman, said of the bill during a conference call last week. Verizon spokesman Lee Gierczynski took issue with the Keystone center's report, describing it as "bogus." He said rates went up to replace other revenue sources, such as line items on customers' bills. "People were paying for it in different ways," he said.
In addition to Verizon, supporters of H.B. 1608 include the Pennsylvania Telephone Association, the trade group that represents the phone companies with smaller, mostly rural service territories. (CenturyLink, Windstream and Frontier Communications are among the largest.) The argument in favor of the bill - less government oversight leads to more competition, which benefits consumers - is essentially the same one that has been used to support the deregulation of numerous other industries, from airlines to electricity. "When companies compete for customers," Gierczynski said, "those companies are going to be going the extra mile to make sure those customers choose them, rather than their competitors."
The Verizon spokesman challenged each of the bill opponents' other points, as well. He characterized Cawley's 911 concerns as "fear mongering at its worst," arguing that the infrastructure in question is actually managed by county emergency management agencies with only technical help from companies such as Verizon. And he asserted that Verizon would be "highly unlikely" to abandon its land lines. "Given the billions of dollars that Verizon has invested in its Pennsylvania network, it is in our best interest to serve as many customers as we can on our network," he said. "There is no precedent for [abandoning land lines] in any state that has implemented regulatory reform."
To support Verizon's argument about the diminishing significance of land lines in the marketplace for voice service, Gierczynski pointed to the National Health Interview Survey published in June. It found that 38 percent of households - or nearly two of every five - rely exclusively on cellphones. Of course, that also means the rest - three in five households - have land lines of some sort, including a good many traditional phone lines. Allentown Morning Call
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