ILECs Push for Pennsylvania Deregulation Despite Consumer Protection, Coverage Concerns

The bill would create the “needed balance” between updating the state’s telecom policy to “recognize the progress” made by competition and technological advances, and ensuring the ongoing availability of reliable and affordable basic local service, said Thomas Bailey, CenturyLink director-state regulatory and legislative affairs. The bill would bring the “next logical step” in the evolution of Frontier’s business to market-based competition, said Michael Sharry, state manager-government and external affairs. Chapter 30 was enacted by the Legislature in 1993 and updated in 2004 to establish the state USF, said Sharry. “The ultimate goal of Chapter 30 was the assurance that consumers and businesses anywhere in Pennsylvania could demand and receive broadband services within a 10-day period,” he said.

By the end of 2008, Frontier met its commitment to make broadband available to all of its rural customers, and is continuing to invest in its commitment, said Sharry. “We appreciate the fact customers in most of our markets have competitive choices, while noting our competitors successfully deployed in our service areas with little or no regulatory oversight,” he said. “Consequently, we believe we deserve to have the same regulatory treatment relative to the markets where we and other service providers compete.”

The bill would give the Pennsylvania PUC time to change the state USF by Dec. 31, 2018, said Jeanne Shearer, Windstream regional vice president-state government affairs. In rural areas that rely on the state USF, the key policy challenge is how to prevent the degradation of reliable communications service in “difficult business conditions,” said Shearer. “Rural local exchange carriers continue to require ongoing support to cover the costs of building, maintaining, and operating existing high-cost connections,” she said. The state USF is not large enough to fully offset the costs of providing telecom services to rural communities, but it will help CenturyLink “weather the competitive transition created by the economic distortion of decreased densities and reductions in federal support for voice service,” said Bailey.

Consolidated Communications and the North-Eastern Pennsylvania Telephone Co. said they were supportive of the bill in their testimony before the committee.

Phone regulations need to be modernized in the state so carriers can spend money building new next-generation networks that customers want rather than spending money on maintaining TDM networks that most customers don’t want, said Christopher Nurse, AT&T regional vice president-external affairs. Since 2000, nearly 70 percent of phone lines have been disconnected and two out of five households nationally today have no landline phone, said Nurse. The Legislature moved in the right direction with the VoIP Freedom Act of 2008 that recognized that traditional telecom regulation should not be applied to IP-based services and the Wireless Broadband Collocation Act of 2012 that encouraged collocation of existing towers and streamlining the deployment of new satellites, said Nurse. “In order for Pennsylvania to keep up, the telecommunications laws and regulations in this state need to be modernized,” he said.

HB-1608 needs to go further to address reforms in intrastate originating access rates and the state USF, said Nurse. “Access revenues provide implicit subsidies and USF revenues provide explicit subsidies that have been used to support traditional TDM-based services,” he said. “They were established over a decade ago, at a time when the telecommunications was markedly different.”

The bill’s standards for effective competition don’t meet the needs of local markets, said Susan Baldwin, consumer advocate consultant on behalf of AARP. HB-1608 would allow a LEC to classify any of its nonrural exchanges “competitive” immediately by filing a declaration, and after 2015, LECs would be able to classify rural exchanges as competitive by filing an affidavit and declaration that two or more alternative service providers operate in the exchange, said Baldwin. “Simply living in densely populated areas does not mean that customers have economic service substitutes,” she said. “Instead, any designation of ‘competitive’ -- whether for an entire exchange or for a particular service -- should be made by the commission based on empirical evidence in a regulatory proceeding with stakeholders afforded the opportunity to participate.” AARP supports technological change, but Pennsylvania residents need to still have options for landline service, said Baldwin.

In response to AARP, the 60 Plus Association said it supports HB-1608 because it provides better connectivity to seniors, said Matthew Kandrach, vice president. “Spurred by the technology advancements and innovations of the last 20 years, seniors are embracing the new communications revolution like never before, transforming the way they live, work and play,” said Kandrach. HB-1608 would open the telecom market to increased competition while balancing consumer protections, and more competition brings lower prices, said Kandrach.

Public Knowledge told the committee in a letter that this bill would leave Pennsylvania consumers unprotected against rate hikes and poor service. PK Senior Staff Attorney Jodie Griffin and PK Campaign Manager Sean Meloy wrote that passing this legislation “will remove Pennsylvania’s state and local authorities from the broader conversation about the future of our changing communications networks.” Pennsylvania cannot “simply strip” consumer protections and rely on federal law to protect Pennsylvania citizens, and it would be “ill advised to throw away” the ability of the PUC to “act on the basis of federal authority that Congress has explicitly expressed interest in revising,” they said. (sfriedman@warren-news.com)