New legislative take on old telecommunications laws

Bipartisan package draws ire of AARP
The Colorado Statesman

A package of bills that would update the state’s decades-old telecommunications laws passed its first test on Tuesday, making it through a House committee with relative ease.

The House Business, Labor, Economic and Workforce Development committee backed the five bills after about five hours of debate, despite opposition from senior citizens who believe that the modernization would lead to an elimination of traditional phone service and a spike in rates.

The bipartisan package of bills includes:

• House Bill 1327, sponsored by Reps. Angela Williams, D-Denver, and Carole Murray, R-Castle Rock, which aims to accelerate the speed of technology upgrades by streamlining build-out and eliminating state sales tax on broadband equipment. The bill passed unanimously and was sent to Finance;

• House Bill 1328, sponsored by Williams and Rep. Don Coram, R-Montrose, which would repurpose a state subsidy for rural carriers to fund broadband development in underserved areas. The committee backed the bill 10-1, sending it to Appropriations;

• House Bill 1329, sponsored by Williams and Murray, which would deregulate Voice over Internet Protocol, or VoIP, including phone calls over the Internet. The measure moved to Appropriations on a 10-1 vote;

• House Bill 1330, sponsored by Williams, which would update telecom definitions, some of which haven’t been changed in over 20 years (before the explosion of the Internet). The committee backed the measure unanimously and sent it to the House floor; and

• House Bill 1331, sponsored by Williams and Murray, which would deregulate basic telephone service but retain the Public Utilities Commission’s authority to govern rates and basic service. The legislation passed on a vote of 10-1 and was sent to Appropriations.

“We’ve taken a first step today to a major upgrade for Colorado’s telecommunications network,” Williams, who spearheaded much of the effort, said following the votes. “These bills will bring benefits to all Colorado consumers, but I’m especially pleased that this package will give our rural neighbors the significant economic and social benefits of broadband access.”

The package was nearly five months in the making and the result of at least four years of previous attempts. In years past, telecom reform was derailed by contention surrounding broadband development and the High Cost Support Mechanism, a subsidy of nearly $60 million to support building phone service in underserved areas.

Lawmakers had previously proposed phasing out the subsidy and creating a fund for broadband, which caused beneficiaries such as CenturyLink — the largest recipient of the subsidy — to cry foul. But this year those recipients have been more subdued, pleased to see the fund repurposed rather than eliminated.

The proposal calls for applying savings from the High Cost Support Mechanism to broadband development. The PUC is in the process of determining competitive areas, which would reduce the subsidy and allow a repurposing for broadband.

It is unclear just how much money would ultimately be saved and how long it would take to determine all the areas of competition. It would likely be years before the totals are finalized and service expands on a large scale.
Coram said much of his rural district is without any service at all — including landline — which is why he would not support a measure that eliminated the High Cost Support Mechanism.

“I was not willing to bring it forward and sacrifice the High Cost fund where it is needed to provide the landline service to the remote areas of my district,” he said. “The High Cost funds are necessary… to be competitive.”

Still, the American Association of Retired Persons has raised concerns that the reform package would lead to an elimination of traditional service, including landlines. They worry that if IP-enabled services are the only option left, there could be problems with 9-1-1, medical care and quality of service for people with hearing disabilities.

Bill Levis, testifying on behalf of AARP, said he worries that some people may be left without any service at all.

“For older consumers especially, landlines are critical when electricity goes out, when wireless phones and VoIP phones don’t work…” explained Levis, the former head of the Colorado Office of Consumer Counsel. “The concern we have… is they have left consumers basically with nothing.”

Tied to the issue is regulation. The proposals this year make no attempt to give the PUC regulatory authority over VoIP, as a telecom reform proposal would have done last year. Executives worry about giving the government authority to regulate IP-enabled services.

A separate deregulation measure failed last year in the Senate, despite unanimous approval in the House.

Sponsors say there are protections in the deregulation proposals this year, including capping prices on basic service for the next two years and allowing the PUC to regulate basic local exchange service after July 2016 if it determines that deregulation is causing problems.

But Rep. Paul Rosenthal, D-Denver, remains nervous. He acknowledged AARP’s concerns, voting against the deregulation bills because he believes the measures would leave seniors with skyrocketing costs.

“I fully appreciate that most people… are in the package and don’t have landlines…” he said of bundled services offered by providers. “But there are a lot of folks who don’t, and the concern is… that prices would rise when they don’t need to, and maybe they would rise too high for consumers.”

But Jim Campbell, regional vice president of legislative affairs for CenturyLink, said the industry has been treating customers just fine without regulation.

“Of our packages and the services we provide, the vast majority… are not price regulated, and… 75 percent of the consumers in Colorado think that it’s a good price… The market is controlling and protecting consumers,” Campbell testified before the committee.

Rep. Tracy Kraft-Tharp, D-Arvada, asked AARP and other critics for evidence indicating that prices would spike or landlines would be eliminated as a result of deregulation and a reduction in the subsidy. She did not leave feeling satisfied that there is enough evidence to substantiate the fears.

“Most of what you gave us is conclusory statements… But I’m not able to get the information that helps me understand where you’re reaching that conclusion,” Kraft-Tharp said. “I am really, truly, honestly trying to understand how we lose landline service through this…”

Best reception yet

For years, telecom industry leaders have been asking lawmakers, “Can you hear me now?” But stakeholders are more hopeful than ever, pointing to a push by the governor.

Gov. John Hickenlooper, a Democrat, called for the modernization in his State of the State address this year, and he has involved his staff in many of the discussions.

“Simply put, we have a technological divide in Colorado; we cannot afford to have a technological divide in Colorado; and these bills go a long way toward fixing that,” Hickenlooper said in a statement released Monday.

“Too many Coloradans, especially those in the rural and remote areas of our state, too often don’t have the same access that other parts of the state do to reliable broadband Internet service,” the governor continued. “If passed, the regulatory certainty and sensible incentives in these bills will help ensure we build these necessary bridges to the 21st century so that everyone in our state, regardless of where they live, has a fair chance to grow and prosper, to compete locally and in the global marketplace.

“We have no doubt that the entire General Assembly sees the value and need for the opportunities advancements that these bills provide for all Coloradans, and for our continued economic growth,” Hickenlooper added. “We have complete faith that whatever outstanding issues there may be will be resolved and these bills will be passed before the end of the 2014 session.”

An outpouring of support from rural communities has also bolstered the effort, including backing from farmers and rural county commissioners and associations.

“Communications services, like broadband, are critical and valuable to everyone in the state,” said Bonnie Petersen, executive director of CLUB 20, which represents the Western Slope.

“CLUB 20 has always advocated for reasonably comparable access to broadband services at reasonably comparable prices across the state,” she continued. “Economic drivers like agriculture, health care, tourism, transportation, education and natural resource development all need access to broadband networks to grow and thrive in today’s competitive environment. We are pleased that steps are being taken to address this important need for Colorado…”

A group called Coloradans for Equal Access has formed to support the effort, including rural county commissioners.

“The state requires that all public schools implement online student achievement testing by the end of the year. A number of our Park County schools don’t have high-speed Internet, so those students will have to be bused to other schools to take the test,” explained Park County Commissioner Mike Brazell. “That’s an expense our taxpayers could avoid if we had high-speed broadband access everywhere in the county.”

He said the same applies for transporting seniors to metropolitan areas for doctors’ appointments: “If we had the Internet speed, we could take advantage of telemedicine and reduce those transportation costs,” said Brazell.

Farmers are also pushing for broadband expansion, pointing out that much of the newest equipment requires high-speed broadband.

“Broadband needs to be available on Main Street, in the industrial parks and, maybe most importantly, in the field and on the farm,” said Darlene Carpio, executive director of the Yuma County Economic Development Corporation.

Enthusiasm in the Senate

It does not appear that the reform effort is doomed in the Senate this year, as it was last year. Senate President Morgan Carroll, D-Aurora, and Assistant Minority Leader Mark Scheffel, R-Parker, have pledged their commitments to passing the bills.

They point out that sponsors broke the overall telecom reform proposal down into individual bills, as opposed to an omnibus that was hard for lawmakers to understand and contributed to the effort’s demise in previous years.

Scheffel has been working on telecom reform for years and is co-sponsoring HB 1327 and HB 1329 in the Senate.

“What you’re seeing before you is a package, and with any package comes a multi-prong approach… to say how can we best streamline this process so that we can get this expansion and deployment out faster,” Scheffel explained at a media availability with both Senate Republicans and Democrats.

“At this point in time there really isn’t any way to talk about economic development in the state without talking about high-speed Internet,” added Carroll. “Obviously the whole telecommunications system is necessary to be modern and competitive on this.”

Peter@coloradostatesman.com