Senate panel votes to lift price caps on phone service

CARSON CITY -- A key Senate panel voted Friday for a pair of proposals being pushed by the state's largest telephone and cable companies.

One proposal, Senate Bill 518, would allow the state's largest telephone companies, Embarq and AT&T Nevada, to charge any rate for basic telephone service starting in 2012. Currently, those companies are obligated to provide basic phone service to all subscribers in their territory at a state-mandated rate, $10.40 per month.

The companies argued that wireless telephones and high-speed Internet have made the telecommunications industry highly competitive, and the state's existing regulations prevent them from quickly bringing new services to market.

The rate cap laws were designed in an era when phone companies were considered monopolies with no competition, Embarq General Manager Kristin McMillan said.

After negotiations with the state consumer advocate, the companies agreed to amendments that delayed dropping the rate caps until 2012. The original bill would have dropped them in mid-2008. The companies also agreed to extend the Lifeline low-income telephone service to a wider range of consumers.

In 2010, the consumer advocate will submit a report on the state of Nevada's telecommunications marketplace.

AARP Nevada opposed the bill, saying lawmakers should at least wait for that report before agreeing to drop the rate caps. While high-end services and cell phones are competitive, there's still no real competition for basic phone service that many people rely on, said Barry Gold, a lobbyist for the organization.

"I feel somewhat like I am tilting against a coal-fired, solar-backed, nuclear-driven windmill here," Gold said in a hearing earlier this week. "But I feel I need to do that and oppose the bill. After 2012, there is no guarantee of where basic service could go."

The committee also voted 3-2 to pass Senate Bill 526, which would allow cable companies to negotiate their franchise agreements with the secretary of state's office, rather than local governments.

The bill would pre-empt most local regulation of cable companies, but local governments still would be able to control their rights-of-way and collect franchise fees.

Sen. Mike Schneider, D-Las Vegas, said he opposed the bill because it could interfere with some private developers who contract for their own cable service.

Both bills were passed unanimously by the Assembly, and now need approval from the entire Senate before going on to Gov. Jim Gibbons for his signature.