States Move to Deregulate Telecom Services

In many states around the country, current telecom regulations are outdated and in serious need of reform.  While phone and video services are increasingly becoming Internet based, most states treat various types of service differently (such as legacy phone lines vs. VoIP). On top of this, costly and unnecessary price controls and subsidies continue to exist, reflecting a long forgotten communications era when, for example, consumers watched the clock during long-distance phone calls to avoid high phone bills.

Telecom regulatory regimes virtually never keep up with innovation in information and communications technology.  Laws today saddle different technologies with different, obsolete regulations, price controls, and taxes.  These antiquated regimes restrict the growth of broadband services and threaten to deprive consumers in different states of investment and choice.

Yet, many states are working to roll back unnecessary laws and have introduced legislation to modernize the telecom industry.  While details vary significantly between the bills, the goal of most of them remains similar: deregulate, level the playing field between technologies, and scale back taxes and price controls on service.

In Florida, House Bill1231 and Senate Bill 1524 would relieve Public Service Commission regulatory burdens on services from legacy incumbent phone carriers (a remaining 4 percent of the market). Most other technology already enjoys more limited oversight.  It would also scale back regulatory fees (read: “taxes”) by an estimated $1.2 million, reducing costs for consumers and incentivizing investment.

In Wisconsin, Assembly Bill 14 (PDF) was introduced to similarly level the playing field by scaling back heavier regulations imposed on some phone carriers.  The bill would also scale down intrastate access charge price controls on phone service, helping to reduce costs for consumers.

Last month, Tennessee enacted House Bill 574 and Senate Bill 598 that would significantly reduce price controls on phone service (specifically bringing intrastate access charges on long-distance service down to the federal interstate rates).  The access charges, to be phased out over five years, have the same effect as a hidden tax that raises the price of consumer bills.

In Kansas, Senate Bill 72, which was signed by the governor last month, also puts carriers subject to price controls and other regulations on a level playing field with other, more deregulated phone services.

Finally, a similar reform effort in New Jersey (Senate Bill 2664, the Market Competition and Consumer Choice Act) would level the playing field to allow more service providers to enter the market.  Unfortunately, the measure stalled after progressive groups falsely claimed service to seniors would be eliminated.

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