State Deregulation Calls for New Collaboration, PUC Roles, Regulators Say

"In 2013, we see a new set of priorities,” said National Regulatory Research Institute Principal Sherry Lichtenberg of recent IP-focused deregulatory state legislation. NRRI is an affiliate of NARUC, and Lichtenberg released a new review of state deregulation laws Wednesday (http://bit.ly/YFJuHQ). These “different” 2013 laws have a clear and focused message, she said: “Thou shalt not touch VoIP or IP-enabled services -- even if we haven’t defined them.”

VoIP data often eludes Florida regulators, said Florida Public Service Commission Chairman Ronald Brisé, describing changing trends in his state. “We do not regulate Voice over IP in Florida so getting that data on the market share is not always easy for us,” he said, showing a 2005-2011 chart on CLEC share. He called the process “difficult” and typically limited to what the FCC can tell them. Cable companies are “dominating” Florida’s residential market with interconnected VoIP offerings, he said, pointing to the estimated 2.4 million VoIP subscribers in 2012. Florida had 17 million wireless handsets in 2011, a potential “saturation point,” he speculated, and said there would be more attention to Internet usage: “There’s going to be a greater focus on content.”

Past deregulation laws sometimes killed off regulators’ ability to set rates and removed certain consumer service obligations -- a move that hasn’t hurt consumers, argued Navigant Economics Managing Director Jeffrey Eisenach. He studied 95 cities in a “granular look” in late 2011 (http://bit.ly/YuSMEs), and his regression analysis showed that these areas with “liberalized” regulation -- no rate setting -- experienced a drop in phone rates of $5.25 per month, he said. “Dire predictions” about deregulation haven’t come true, he said: “Our study pretty conclusively demonstrates that that has not been the case.”

Don’t leave rural customers behind during the transition, said West Virginia Public Service Commissioner Ryan Palmer. Eisenach said “the presumption that rural areas are not competitive really has to be questioned,” referring to satellite and other options. But Palmer strongly disagreed and said there’s “a bigger divide than others may perceive,” citing his own experience seeing the urban-rural divide every day. “There’s a lot of gray area” where economic regulation and consumer protection regulation overlap, he said. Reliability, especially following natural disasters, concerns him: “As we move further into the IP world, these are issues we have to look at very carefully.” He expressed interest in the FCC’s text-to-911 rulemaking as well as the $7 billion public safety broadband network of FirstNet.

State regulators are trying to reconcile the new paradigms in their states, they said, recommending open communication and collaboration to ensure appropriate service. “It has to start with the consumer and end with the consumer,” said Brisé: “Within this space, regulators, consumer advocates and industry have to work together in collaborative ways.” Amid these changes, the state role can transcend the state utility commissions and encompass legislators, utilities, and others, Palmer said: “When I refer to ’state,’ I'm all inclusive.” He referred to the West Virginia Broadband Deployment Council, a gubernatorial initiative “completely independent” from the PSC. Eisenach said it might be time for the public utility commissions to “get out of the way” in some instances, referring to the attorneys general oversight of consumer protection. “The role of economic regulation should be very limited,” he said. These regulators are “in the hot seat in their states,” said USTelecom Senior Vice President Jonathan Banks, moderating the discussion and pointing to public safety as a key issue emerging for state oversight.

Brisé and Palmer affirmed the researchers’ conclusions. They paint “a relatively accurate picture,” Brisé said, though noting that public safety and consumer issues will remain a point of state concern. Palmer said the research is “right on with the general consensus.”

Although no major consumer harms have apparently manifested yet from state-level deregulation, Lichtenberg said the research and changes raise several questions: “Do we need a backup plan? What if all this falls apart?” New telecom considerations include reliance on electrical companies as well as what to do if a primary carrier leaves a market, she said. Lichtenberg said it’s crucial that the new system raises a question of how to make sure residents and businesses are not harmed and suggested potential collaboration on “touch points.” Brisé emphasized that consumers will need the “appropriate” information to understand all their new communications options and the potential tradeoffs between them.