Saturday, May 03, 2003
Copyright © Las Vegas Review-Journal

Opinions differ on telecom proposal

Assembly hearing slated to consider deregulation bill

Robert Johnson, executive director of Consumer's Voice of Indianapolis, poses Tuesday with advertisements opposing telecommunications deregulation legislation. Photo by Gary Thompson.

A telecommunications deregulation bill now under debate in the state Legislature will either foster competition and benefit consumers or just the opposite -- crush new competition and send phone rates skyrocketing.

Advocates and opponents of the measure, Senate Bill 400, offer contradictory opinions about what effects the proposal will have on consumers.

The Senate approved the bill 20-0 with one member absent, and now the Assembly Labor and Commerce will try to sort through the bill in a hearing Wednesday.

Some opponents say the bill will leave Nevada with virtually unregulated, near-monopoly telephone companies such as Sprint Corp. in Las Vegas and SBC in Reno. They say the bill will cripple struggling competitors.

"What that means for consumers is, there won't be any competition in the marketplace," said Robert Johnson, executive director of Consumer's Voice of Indianapolis.

"One way they can make money under this bill is by pricing their competitors out of the marketplace," he said. Consumers Voice started running newspaper and television advertisements Wednesday opposing the bill. Johnson acknowledged that his organization gets the majority of its funds from AT&T.

Richard Severy, MCI's director of public policy, said he also opposes the bill.

"We think it's bad for the competition, bad for consumers, bad for the economy in the state," Severy said. Instead of leveling the playing field, "in fact, this bill will level the competition."

Sprint and SBC disagree. They cite statistics -- which competitors dispute -- that indicate competitors are taking big bites of their market share, particularly among business customers. They also argue that the Public Utilities Commission will retain regulatory control over basic rates and the prices they can charge competitors to use the companies' telephone lines.

As for basic service rates, "nobody has a crystal ball," said Ann Pongracz, general counsel for Sprint of Nevada. "So it really isn't possible to say what basic local rates will be in the future."

The bill, however, "will help to support the low basic rates we have today," Pongracz said.

Don Soderberg, chairman of the PUC, is neutral on the bill. He noted that Sprint and SBC worked hard to resolve the commission's concerns about the bill. But he also noted that many provisions could be accomplished through regulations under existing law. He said amendments that Cox Communications negotiated with Sprint and SBC leave more decision-making to the PUC "for the actual detail work."

Tim Hay, chief of the attorney general's Bureau of Consumer Protection, and Larry Spitler, a former executive with Sprint and now lobbyist for AARP, also oppose the bill as bad for consumers.

Spitler said his group primarily objects to provisions that would deregulate broadband, or high-speed Internet service.

While many Internet users today rely on slow, dial-up Internet service, Spitler believes that broadband services will become common in the future. Retirees, for example, may use broadband services to meet face-to-face with distant doctors who can take their pulse and perform other tests.

"We do not think it's in the best interest of consumers for the (Public Utilities) Commission not to regulate broadband services," he said. "We think that (lack of regulatory oversight) stifles competition."

Cox Communications, the local cable television station, offers high-speed Internet service. Sprint offers a product called DSL, short for digital subscriber line, which provides high-speed Internet connections over a line that can simultaneously carry voice communications.

While Cox isn't regulated by the PUC, Spitler wants regulators to ensure that competitors have access to Sprint's lines at affordable prices so they can compete with the two companies in offering broadband services.

Hay shares those concerns, because he doubts Cox and Sprint would compete based on price if no other companies offer broadband services in Southern Nevada.

The bill, Hay said, "looks to us that it's basically a mechanism to enhance or perpetuate the monopoly position of the market incumbents," Sprint and SBC.

Both companies have chosen to operate under a so-called Plan of Alternative Regulation, or PAR. Hay complained that the bill would prohibit competitors, such as AT&T, from participating in regulatory proceedings in which Sprint and SBC seek to extend or end their participation in PAR.

Hay also said the bill would prevent the PUC from considering revenues that Sprint or SBC gets from unregulated services, ranging from caller identification and call forwarding to Yellow Page advertising, when it sets rates for basic service. The phone companies might be losing money from basic service, but Hay said their near monopoly allows them to make handsome profits from unregulated products.

Hay also believes that local telephone competitors have reason to worry about the bill even if they don't want to offer broadband services.

Pongracz disagreed. She said the bill would allow the PUC to continue to regulate the price it charges competitors for so-called unbundled elements, such as the wires that lead to customers' homes and businesses.

Sprint needs the ability to alter the prices it offers customers for bundled services without waiting for lengthy regulatory hearings before the PUC, she said.

"It's the business market where we feel the greatest need for increased flexibility," she said.

Hay and others argue that the Nevada bill is similar to SBC bills that other states, with the exception of Oklahoma, so far refused to enact. Hay said, the Nevada bill "was probably the most objectionable in the country."

No, said Pongracz. "It's a different bill."

Said Assemblyman David Goldwater, chairman of the Commerce and Labor Committee that will hear the bill on Wednesday: "I haven't made my mind up at all. I don't think anyone in our committee knows much about (telecommunications). We're anxious to learn."