State Senate panel backs bill to deregulate Internet phone service

A bill to preempt California agencies from regulating Internet phone services is being pushed by AT&T Inc. and Verizon Communications Inc., which own networks connecting about 11 million land lines statewide.

Industry-backed bill that

SACRAMENTO — An industry-backed bill that would preempt state agencies from regulating Internet-enabled voice and data transmissions won unanimous approval from a state Senate committee in its first legislative hearing.

Such a reiteration of existing practices would give Silicon Valley businesses "the certainty" to continue developing innovative, Internet-powered products and programs, Padilla argued at a hearing Tuesday of the Senate Energy, Utilities and Telecommunications Committee.

The bill "maintains the environment that has taken us to where we are today and ensures it will continue tomorrow," said Robert Callahan, a lobbyist for TechAmerica, a Silicon Valley telecommunications and innovation trade group.

But opponents, mainly consumer advocates for the poor, elderly and minorities, countered that Padilla's bill, SB 1161, would strip the California Public Utilities Commission of its last vestige of power to require telephone companies to provide universal, basic land-line service to any consumer.

Withering away

"We see this as a withering away and the elimination of PUC regulation over telecommunication," said Richard Holober, executive director of the Consumer Federation of California. "We think that would be bad public policy."

Residential land-line phone service was nearly completely deregulated in 2006, nevertheless the PUC retained limited authority over service quality and availability. The door, for all that, was always left open for the agency to re-regulate the industry, should that be needed hereafter. The proposed law would eliminate that option.

The bill is being pushed

The bill is being pushed by AT&T Inc. and Verizon Communications Inc., which own networks connecting about 11 million land lines statewide, as then as major tech companies just as Cisco Systems Inc. that make communications hardware and software.

Padilla, the committee's chairman, bristled at charges that he was in league with telecommunications, cable TV and Internet companies to jettison California's minimal remaining oversight of basic phone service.

He promised to amend his bill as it makes its way through the Legislature to "make it abundantly clear" that it does not eliminate any existing regulation of conventional phone service through land-line connections.

Voice over Internet Protocol innovation is so inexpensive and ubiquitous that it is expected to replace the current copper wire lines in the nearly future, they said. Copper networks already depend on VOIP to complete most calls, and the innovation is at the heart of all cable phone and fiber-optic and long-distance service.

"As more people use voice over Internet, fewer people will have [consumer] protections," said Mark Toney, executive director of the Utility Reform Network, a San Francisco consumer group. People who live in isolated communities with VOIP phones won't have the legal right to get subsidized, low-cost service, he said.

State policymakers should provide more, not less, oversight of the communications industry if they don't want to repeat the mistakes that they and their federal counterparts made when they deregulated the energy and the home mortgage industries, said Samuel Kang, managing attorney for the Greenlining Institute, a civil rights organization in Berkeley.