March 23, 2005
Other reasons to fear HB789

HB789, known for its provision that would forbid municipalities from offering free WiFi services, is up for debate today, and there's more than just that bad part of the bill to worry about.

Earlier versions of House Bill 789 said dominant providers such as SBC Communications Inc. and Verizon Communications Inc. could opt to set their own rates currently regulated by the Public Utility Commission if they also cut the access fees they charge competitors and gave up the millions of dollars in Universal Service Fund subsidies that support service in rural areas.

The proposal headed to the House today would deregulate phone rates for most Texans by 2008 if the service is sold in a bundle with other services, such as caller ID. Dominant providers also would have had to lower the access fees they charge competitors in order to set their own rates.

Instead of ending Universal Service Fee subsidies, the bill directs the PUC to arrange for a study of how the money is being spent and report back by 2007. In 2003, the fund paid phone companies $583 million, with SBC and Verizon together getting more than half.

With new technologies and other changes, King contends that there's plenty of competition and that it's time to let the free market dictate prices. Less regulation would encourage companies to invest more in key technologies such as broadband Internet service, he said.

"I don't believe that the prices will go up. I believe they will actually go down" as a result of his bill, said King, chairman of the House Committee on Regulated Industries.


But consumer groups and some competitors say the bill is tantamount to a free ride for major providers such as SBC and Verizon.

"This bill offers big phone companies tremendous benefits without asking much in return," said Tim Morstad, policy analyst for the southwest office of Consumers Union.

Morstad pointed to a recent PUC study showing that nearly 80 percent of traditional phone lines are still in the hands of major companies such as SBC.


[HB789] also would diminish the the PUC's role in handling complaints on issues such as slamming and cramming the practice of signing up or billing customers for services they didn't request, Morstad said. Instead, the state would let federal regulators worry about those issues.

"Nearly every state has slamming and cramming (laws) on their books," Morstad said. "And getting satisfaction on slamming and cramming . . . from Washington, D.C., seems like much more of a burden" than the Federal Communications Commission "needs to deal with."

First of all, I have my doubts about local phone service getting cheaper. The markets are too concentrated. Maybe eventually it'll happen, most likely in the big cities first where there's plenty of turf to fight over, but I wouldn't count on it any time soon.

Second, deregulating only for bundled services like Caller ID seems to me to defeat the whole purpose of letting the free market take over. Why won't customers who don't want to spring for Caller ID (and no doubt other "optional" services like call waiting) be given the same wondrous benefits of the truly free market? It's already likely the case that the only people who will see a really good deal are the ones who are willing and able to switch multiple services (including but not limited to local and long distance, high-speed Internet, cellular, cable/satellite TV, etc) to a single provider.

Finally, kicking the regulation of slamming and cramming out from the Public Utilities Commission seems at best premature and at worst anti-consumer. I can see value in letting the feds set the guidelines, and I can see value in letting them take matters to court (though honestly this sounds like the sort of thing that state Attorneys General are born to do), but I seriously doubt they're better suited to handle citizens' complaints.

On the bright side, it looks like HB789 might not survive the Senate.

Whatever emerges from the House today could face tough going in the Senate. Sen. Troy Fraser, R-Horseshoe Bay, last week pulled back his bill on telecom.

"It's becoming increasingly obvious to me . . . that the incumbent telephone companies are not interested in competition," Fraser said. "They are only interested in raising revenues by raising rates and maintaining subsidies at their current levels."

Well, that's something. This earlier story has more on Sen. Fraser's position. The Houston Democrats blog has more info from Consumers Union and a reminder that it's still not too late to contact your rep about this bill. Finally, Save Muni Wireless has some links to check out.

Posted by Charles Kuffner on March 23, 2005 to That's our Lege | TrackBack