New Hampshire last week became the latest state to adopt telecom legislation that gives incumbent local exchange carriers more flexibility in making changes to the rates they charge end users for telecom service and confirms that VOIP services are not subject to regulation. The thinking behind such legislation is that as the telecom industry has become more competitive, market forces should keep pricing at reasonable rates.

Incumbent carriers – such as Fairpoint in New Hampshire – argue that such legislation creates a level playing field for all service providers. And as Ross Buntrock noted in an interview, “VOIP carriers like having the certainty that they won’t be subject to state regulation.” Buntrock is head of the communications technology and mobile practice for Arent Fox LLP, a law firm that represents a number of telcos on regulatory matters.

Even traditional carriers will be happy with the resolution on VOIP because many of them provide virtual PBX services that use VOIP technology, Buntrock said.

Coralette Hannon, senior legislative representative for consumer group AARP (formerly known as the American Association for Retired Persons), said she has seen a “groundswell” of state-level legislation aimed at deregulating telecom since such legislation was passed in several states, including Florida, Georgia, Indiana and Wisconsin. At least 15 states are currently considering legislation aimed at deregulating telecom, Hannon said.

AARP has opposed most of these bills because of “the impact to the consumer and the fact that consumer groups were not part of the conversation that initiated these bills,” said Hannon. The largest telcos typically lobby heavily for deregulation and “consumer lobbyists are definitely outnumbered when it comes to lobbying,” added Hannon.

Three categories of legislation

State-level legislation aimed at deregulating telecom tends to fall into one of three categories, according to Hannon.

Some bills — including those under consideration in California, Nevada and Wyoming — are focused primarily on deregulating VOIP. Hannon said AARP typically opposes these bills because states already have declined to regulate VOIP – and if that were formalized through legislation, there would be no opportunity to regulate the service if regulation were to be required in the future.

A second category is what Hannon called “comprehensive” legislation, which aims to deregulate “practically the whole market.” Bills currently under consideration in Connecticut and Ohio fall into that category, Hannon said.

“We want to make sure there’s effective competition before companies are allowed to do whatever they want,” said Hannon. If not, she said “rates will go up and service reliability will go down.”

Service reliability is a concern because some “comprehensive” bills would eliminate or significantly cut back service quality reporting, Hannon said.

A third category of legislation, including a bill which recently failed to pass in Colorado, aims to relieve incumbent service providers of carrier of last resort obligations.

Noting that many people age 65 and older still rely on traditional landline service for connectivity to the outside world, Hannon said, “we consider landline [service] to be a lifeline.” By eliminating COLR obligations, she said, “you’re setting up a situation where those who rely on landline service may not have adequate service.”

Hannon said AARP is not necessarily opposed to all forms of telecom deregulation. “We’re not trying to stand in the way of innovation,” she said. “We just want older folks to be protected.”

If AARP and other consumer groups were to be included in discussions about telecom deregulation from the beginning, Hannon said she believes there would be a way to come to consensus. She added that AARP expects to be involved in discussions of potential new legislation in Kentucky and Colorado, where legislation created without the involvement of consumer groups failed to pass in the past.

It sounds like it may be increasingly difficult for the largest incumbent carriers to shape telecom legislation and shepherd it through the approval process without the involvement of consumer groups. Certainly if legislation fails to pass on the first try, the carriers may find the only way to succeed is to involve the consumer groups on their next attempt.

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