A sweeping deregulation bill backed by telecom companies Qwest and Windstream sailed through a Senate committee Feb. 9 despite concerns over how it will affect customers.
“I can’t believe that my colleagues fully understand the depth of regulation, and the depth of what needs to be regulated, and why it’s important,” Sen. Lynda Lovejoy (D-Crownpoint) said.
The bill in question is Senate Bill 445, sponsored by Sen. Carlos Cisneros (D-Questa). It would allow phone companies to opt out of existing pricing regulations for all but the most basic landline services, without first proving that effective competition exists.
Under the bill, by 2012 (or 2014 at the latest) the state Public Regulation Commission would lose all jurisdiction to regulate landline pricing for companies that opt out. Those companies would still be subject to Commission rules on service quality, but would no longer be required to pay customer credits as a remedy.
Lovejoy, a former Public Regulation commissioner, cast the lone vote against the bill when it came before the Senate Corporations Committee. She said removing pricing regulations, particularly where there is weak competition or none at all, could open the door to predatory practices and cut off the regulatory process that protects consumers.
“Customers can no longer complain about their rates going up, their rates fluctuating,” Lovejoy said. “The only thing that the (Commission) then has control of is just customer complaints and quality of services.”
Cisneros and representatives from Qwest and Windstream said it’s a matter of fairness. The big primary providers operate under comprehensive rate regulations and are subjected to unfair competition from unregulated wireless and cable companies, Cisneros said. He said the regulatory law governing telecoms hasn’t been revisited in decades, and the primary providers are losing customers to a new kind of company.
To level the playing field, the state either has to regulate all companies equally or deregulate those services across the board, Cisneros said. But the former option would meet with resistance.
“What we ought to be doing, in all candor, is regulate everybody,” Cisneros said. “But they don’t want to be regulated. As it stands today, only one company is regulated and the others are not.”
Windstream Vice President Bill Garcia said it’s a flexibility issue. His company needs to be able to make changes quickly, he said.
“We’re in an environment today where decisions on pricing, etc., need to be made on a real-time basis,” Garcia said.
Garcia said competitors, such as Cybermesa in the Española area, can “cherry pick” Windstream’s customers by offering them cut-rate services. Windstream then has to ask permission from the Commission to lower its prices, and that can take weeks, Garcia said.
But regulatory attorney Bruce Throne, a former Commission candidate who has represented Cybermesa, said there’s a reason Windstream is prevented from lowering its prices.
“The problem is, they’re not supposed to price below their costs,” Throne said. “The reason is they’ll drive out the very few landline competitors. That’s the real fight.”
According to Throne, the playing field is actually tipped in favor of big companies like Qwest and Windstream. They own the lines, and they charge companies like Cybermesa hefty fees to access those lines. Throne said because of that, small local companies can’t afford to drastically reduce their rates or offer three months of free service up front, like the packages advertised by large companies.
Deregulation would remove not only price caps but also price floors, allowing Qwest to charge rock-bottom predatory rates, Throne said.
“If they drive out someone like Cybermesa, they’ll leave and then no one will have a choice,” Throne said.
Lovejoy said she simply wasn’t buying Qwest’s argument, because even in places like Santa Fe and Albuquerque there is not significant competition.
“I don’t really see that the competition is really growing in our state — growing enough that it’s reducing Qwest’s customers,” Lovejoy said. “I don’t really believe that that’s true.”
Lovejoy said it’s important to look at regulations and make sure Qwest is getting a fair shake. In fact, the Commission is evaluating competition in the telecom market in order to form new rules, and deregulating services now would be jumping the gun, she said.
The bill would not directly impact Internet service, which is the subject of a major fight between Qwest and SkyWi, the company that owns small internet service providers such as ZiaNet. Although Qwest had threatened to cut off service to SkyWi customers as of Feb. 24, for outstanding bills that SkyWi allegedly failed to pay, that deadline has now been extended to March 9.
PRC’s Role
District 3 Public Regulation Commissioner Jerome Block Jr., who represents Rio Arriba and Santa Fe counties, said he has questions about the deregulation bill but he’s leaning toward opposing it.
He objects to provisions taking away Commission authority, he said.
“I think I’m here to protect my constituents in Northern New Mexico, and I don’t really like the idea of that taken away from under me,” Block said.
He may be in the minority. The five-member Commission has not taken an official position on the bill, and is slated to discuss it Thursday (2/26).
District 1 Commissioner Jason Marks said he’s opposed to the bill because it’s not in the public interest, but the Commission has already voted to support another telecom bill he considers anti-consumer.
“I think the Commission is not taking the role it has in the past as far as taking a strong position to protect consumers when it comes to legislation,” he said.
When reached on Tuesday, District 4 Commissioner Carol Sloan said the Commission is still dealing with the problem of regulating fully or lightly, and has to look at the figures.
“I actually had a chance to sit down with (Qwest lobbyist) Leo Baca and I got the updates, and to be honest with you, right now I think we’re gonna remain neutral,” Sloan said.
Lovejoy said during the Corporation Committee’s discussion, it didn’t look like the Commission had really reviewed the bill. They seemed to be acting as individuals, rather than coming forward as a group to state a position — even if that position were split among commissioners, she said.
“In these kind of cases, it’s gonna be normal for a legislator to ask, ‘Well, what is the Commission’s stance?’” Lovejoy said. “And if they haven’t taken their responsibility seriously and taken a position on these important bills that come to us, I think the Commission is out of touch with themselves and their role.”
The bill is now awaiting a hearing before the Senate Judiciary Committee.
“I’m really hoping that in Judiciary they will really fully understand this, much more than my colleagues in the Corporations Committee,” Lovejoy said. “I’m sure that they can ask more questions. Somehow we always get saved, somehow Judiciary is able to stop some of these bills that deregulate.”