Last year saw a slew of states review telecommunications laws designed for a bygone era. Tennessee phased out special charges for in-state long distance calls that subsidized phone companies. Florida and Kansas now allow companies subject to price regulations to better compete with new, less regulated providers.
Increased competition has resulted from convergence in the industry, as providers once broken into segregated markets (e.g., cable TV, local and long distance phone, wireless, etc.) now all offer similar broadband phone and video services, or at least a pipe to get them. However, state laws have been slow to change, regulating some legacy companies differently than new entrants, their competitors in the market.
One area that demands state attention is so-called “carrier of last resort” (COLR) laws, which force some telecom companies to maintain and offer service in a given state or area. The antiquated regulations reflect a time when consumers had very few or only one monopoly option for phone service. However, competition today means not only lower prices, but also a multitude of technologically diverse phone and TV providers.
Government requirements that companies maintain networks in areas without paying customers or provide guaranteed service at prices that are not financially viable in a highly competitive market translate into higher costs for all consumers. In short, you the consumer pay higher prices because the state requires your telecom provider to maintain a costly, but unused network.
Perhaps the first state with a shot of ending these types of rules is New Jersey, which is considering the Market Competition and Consumer Choice Act (S. 2664). The measure would relieve companies in areas with at least two other phone providers from these and other onerous requirements – a moderate, but very important step forward.
New Jersey has a shot to vote on the bill in the coming days, before the legislature kicks off their new session on January 10. The Market Competition and Consumer Choice Act should be toward the top of their immediate to-do list. And here’s to hoping states with equally outdated, costly, and burdensome laws consider similar reforms in 2012.