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Newspaper Article

    Phone Deregulation Advances

    BY Lesley Stedman Weidenbener
    02/03/2006

    INDIANAPOLIS — The House passed a measure yesterday that would eliminate price controls and other regulation of local phone service, a move proponents say would spur investment and opponents claim will mean higher bills.

    The 85-14 House vote signals that phone deregulation has its best shot of becoming law since the state's major phone companies began pushing the issue years ago. The Senate last week overwhelmingly approved similar legislation.

    "It's a strong sign that there's broad consensus for telecommunications reform," said Sen. Brandt Hershman, R-Wheatfield, the author of the Senate bill. "But we do have some differences to work out."

    Both bills eliminate the price controls that have kept local phone rates low -- in some cases artificially low -- although the bills work on different timetables. Both prohibit companies from charging customers on a per-call basis, the so-called "local measured service" that customer advocates shun.

    But Senate Bill 260 also eliminates the need for companies that want to provide video service -- essentially cable television -- to negotiate one by one with individual communities. Instead, the bill creates a statewide video franchise that allows companies to pick and choose where they want to do business.

    That's important to the traditional phone companies, such as AT&T (formerly SBC and Ameritech) that want to upgrade their telecommunications networks to provide television services as well as higher-speed Internet.

    The House bill originally included that language as well, but lawmakers later voted to remove it.

    "We're disappointed that the absence of a statewide video franchising system in the bill will hinder the implementation of broadband services and put Indiana at a competitive disadvantage," said John Koppin, president of the Indiana Telecommunications Association.

    Yesterday the author of the House bill, Rep. Mike Murphy, R-Indianapolis, said he plans to work with the Indiana Association of Cities and Towns, which believes the cable provisions strip them of power, to make them more comfortable with the idea.

    "There's going to be a ton of investment in Indiana" if lawmakers can free companies from regulation, Murphy said.

    The bills are backed by business groups and a few lesser-known consumer organizations, including OASIS, a national nonprofit education group for older adults, and FreedomWorks, a national organization with more than 12,000 members in Indiana that promotes lower taxes and less government.

    But other, more traditional consumer groups -- including AARP of Indiana and the Citizens Action Coalition -- oppose the bill. They say it will cause customers' bills to increase.

    Yesterday Rep. Matt Pierce, D-Bloomington, quoted an Indiana Utility Regulatory Commission order from December that found competition isn't pervasive enough in the basic telephone market to justify deregulation of the industry.

    And when it is, he said, the commission can act.

    "The IURC at any time … can eliminate any regulation that they think is unnecessary," Pierce said. "It can completely deregulate the industry if -- as experts -- they think there's enough competition."

    Rep. Win Moses, D-Fort Wayne, warned that the legislation will mean that customers pay more.

    "Anytime you talk about deregulation, it means raising rates," Moses said.

    But Rep. Ed Mahern, D-Indianapolis, said eliminating regulation will encourage more companies to invest in the state and provide customers with more choices.

    "Anytime there's competition, it's shown that rates will come down," Mahern said.

    by Lesley Stedman Weidenbener on 2/3/06.