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INDIANAPOLIS — The Indiana Senate gave overwhelming approval yesterday to a bill that removes price controls and most regulation of local phone service.
Senate Bill 245, approved 40-6, now goes to the House for consideration.
The bill would permit companies to raise rates modestly for three years if they make high-speed Internet services available to at least half the customers in a telephone exchange.
But after 2009 phone rates no longer would be capped and companies could charge whatever they want.
Sen. Brandt Hershman, R-Wheatfield, said removing regulation will free companies to invest more in Indiana. He said it would encourage them to expand and upgrade their networks so more Hoosiers can receive the benefits of high-speed Internet.
Also, the bill allows companies that want to provide cable — or video service — to get blanket permission from the state, rather than negotiating one-by-one with individual communities.
"Today, the Senate showed a strong commitment to make Indiana a leader in the telecommunications industry," Hershman said. "Passage of this bill will mean more jobs, better technology and increased competition among telecommunications companies."
Sen. David Ford, R-Hartford City, the only Republican to vote against the bill, said it doesn't do enough to protect customers from rate increases and does nothing to require the deployment of high-speed Internet service, especially in rural areas.
Customers in cities who have multiple choices for phone service probably will fare well under the bill, he said, but those in smaller communities could suffer.
"I hope I'm wrong, but it's a tremendous leap of faith," Ford said of the bill. "We're getting absolutely nothing in return ... for giving up everything."
Support for the bill, however, was strong among senators who hope that reducing state bureaucracy will mean more choices and more jobs for their constituents.
Sen. Earline Rogers, D-Gary, said she was impressed by a study by FreedomWorks, a Washington D.C.-based group that fights for less government. The study predicted that the state could gain 20,000 jobs by deregulating the telecommunications industry. FreedomWorks has launched ads supporting the bill.
But Rogers said she was concerned that the consumer group, Citizens Action Coalition, opposes the bill. Still, she said, the benefits outweigh the problems.
The bill has produced a television ad war.
Traditional cable companies oppose the legislation because they are conducting business under the local franchise agreements, which typically require them to build their networks to reach all buildings in entire communities.
The state franchise would not include that requirement for new companies — such as phone companies — that want to provide video services.
Reporter Lesley Stedman Weidenbener can be reached at (317) 634-1872.