The state of Wisconsin appears poised to adopt a telecom deregulation bill, which has been passed by state legislators. According to an Associated Press report this week,  the bill will become law as soon as the state’s governor signs it, which is expected to be forthcoming. The report also notes that assuming this occurs Wisconsin will be the latest in a string of Midwestern states—including Ohio, Indiana, Illinois and Michigan–to pass legislation of this kind.

As a 2010 report from Indiana’s Ball State University notes, recent telecommunications deregulation efforts have focused on several key areas, including lessening pricing regulations, offering service providers greater pricing flexibility and lessening carrier of last resort obligations—and the new legislation is no exception.

Supporters, including AT&T (which is the incumbent carrier throughout much of the Midwest) argue that such bills reflect the changing times. Now that consumers can select VoIP or wireless service, supporters say it is no longer necessary for states to regulate phone service prices or to require incumbents to serve every customer in their service territory.

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Opponents say such legislation harms consumers by paving the way for increased rates. They also argue that such bills penalize consumers in rural areas, where competitive choices are more limited.

There is certainly some flawed logic about the idea that people can now turn to VoIP offerings such as Vonage as an alternative to the traditional telco considering that such services require a broadband link. If the local carrier is allowed to discontinue phone service to an area, wouldn’t it also discontinue its broadband offering, which typically rides over the same infrastructure?

I’ve also got to question whether states have the authority to allow local telcos to discontinue service to an area. Telephone service is both an intrastate and an interstate service, and there has traditionally been a strict division in terms of what the state can regulate and what is under control of the federal government. Despite what individual states might say, federal regulators have not yet relieved telcos from carrier-of-last-resort obligations, so I don’t see how any local telco could get away with ceasing service to certain customers.

Perhaps the states are simply positioning themselves to be ready to support that option in the event that federal regulators abandon the COLR requirement—a move that is under consideration as part of the plan to transition today’s voice-focused Universal Service program to instead focus on broadband services.

Although not mentioned in the Ball State report, another element that seems to be common among much of the recent legislation is a lessening of service quality requirements and/or a reduction in government oversight of service quality—and rather than a step forward, that sure seems like a step backwards to me.

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