Bill aimed at phone deregulation passes state Senate panel
Proponents say the measure would lead to lower monthly bills.
Critics say it would impede the Public Utilities Commission in
protecting the public interest.
By Marc Lifsher, Staff Writer
Wednesday, April 16, 2008
SACRAMENTO -- A
drive to eliminate much of the last vestiges of conventional
home telephone regulation by the state won a key endorsement
Tuesday from a Senate committee.
Under the bill, state regulators would no longer analyze a
proposed phone company merger to determine, for instance, if it
is in the public interest or if part of the merger's savings
should be returned to customers.
Sen. Alex Padilla (D-Pacoima), who wrote the bill, said he
wanted to streamline a 19-year-old law to reflect a
communications market that has been transformed by technology
and by a 2006 law that deregulated much of the land-line
Critics, including current and former regulators, complained
that the proposal would make it harder for the California Public
Utilities Commission to evaluate adequately phone-company
requests for mergers.
"The CPUC should be able to consider all the critical aspects of
such a merger or acquisition," Commission President Michael R.
Peevey and member Dian M. Grueneich said in a letter to the
Senate Energy, Utilities and Communications Committee.
In a separate letter, the agency's independent Division of
Ratepayer Advocates said the Padilla proposal "would erode the
authority of the CPUC to protect the public interest."
In recent years, the commission has used its power to evaluate
mergers as leverage to force phone companies such as AT&T Inc.
and Verizon Communications Inc. to return hundreds of millions
of dollars to ratepayers and to create special funds to
encourage the spread of new communications technology.
Mergers, when they occur, typically lead to less competition,
particularly for low-income people and those living in rural
areas who often have poor or no cellphone or high-speed Internet
service, critics said.
"The fact is that these carriers are dominant in their areas,"
said former Commissioner Geoffrey F. Brown. Reducing the
commission's ability to oversee mergers could create "serious
unintended consequences," he said.
But criticism from the commission and consumer groups didn't
sway the Senate committee, which passed the measure on a
bipartisan 5-3 vote. The bill now goes to the Senate
The majority agreed with Verizon's argument that further
deregulation would speed up the commission's process for
approving mergers. The current set of criteria "harms consumers
because it adds process delay and costs to some people who
participate in the telecommunications marketplace," said Timothy
J. McCallion, Verizon's Pacific region president.
Conventional land-line telephone companies now operate in a
environment that involves competition for voice and data
transmissions with wireless operators, cable systems and
providers of voice over Internet protocol technology, he said.
Cutting red tape from the merger approval process should lead to
lower monthly phone bills, said Sen. Dave Cox (R-Fair Oaks).
"What you eliminate is the possibility of a shakedown," he said,
referring to demands that state regulators have placed on
companies in past mergers.
According to an analysis of the Padilla bill prepared by the
Senate committee staff, regulators have not used current
provisions to thwart any recent telephone-company merger.