Consumer Groups Fear Deregulation of CA Phone Service

AT&T loves its profitable customers but not those who depend on them the most.

As younger generations turn to cellphones and telecommunications firms push Internet-based voice service, traditional copper-wire land lines are heading in the same direction as letter writing and compact discs.

Advocates for consumers, older Americans and rural residents fear that protections built over a century of land-line service will evaporate as consumers migrate to technologies with fewer regulations.

California has maintained requirements ensuring universal access to phone service at the same time other states such as Texas and Florida have repealed such protections at the urging of the telecommunications industry.

But consumer groups and labor unions are on high alert for any perceived erosion in the state, as shown Tuesday by vocal opposition to Senate Bill 1161, which would prevent the California Public Utilities Commission from regulating the ever-expanding Internet-based voice industry.

“The telephone is evolving … and now the new technology is going to be VoIP,” testified Val Afanasiev of the Communications Workers of America, referring to Internet-based phone service known as Voice over Internet Protocol. “In the very near future these companies and other providers are going to inform the consumers of California that no longer will they provide touch-tone type of wire-line services because they are going to move to VoIP services.”

Indeed, America’s households are already moving away from land lines.

In December 2010, 31 percent of the 87 million wire-based residential U.S. phone subscribers relied on VoIP connections, which use fast broadband Internet service to connect callers, according to the state Senate Energy, Utilities and Communications Committee.

Meanwhile, 26.6 percent of U.S. households in early 2010 were wireless-only phone customers lacking VoIP or land lines, according to the Federal Communications Commission.

Telecom companies say they are responding to a marketplace different from one decades ago in which a single telephone company had a monopoly on voice service in its market. They say consumers want to abandon copper-wire land-line service in favor of new services with greater capabilities.

“You cannot put this genie back in the bottle, nor should anybody want to,” said Joel Lubin, AT&T public policy vice president. “This is a good story, and what we really need to do is leverage this story into creating an advantage for our consumers and for the country.”

Lubin pointed to FCC efforts to build a national broadband plan that assumes the country will eventually move away from traditional land-line services, which he called “inevitable.” He said federal regulators can continue to ensure universal voice access by allowing consumers to choose between VoIP, wireless and other technology rather than subsidize only wired service.

“In my humble opinion, it’s not a prudent safety net,” Lubin said of universal service requirements that only apply to traditional land lines. “You need a different safety net.”

At Tuesday’s hearing, AARP and consumer groups said they fear an abrupt move away from traditional land lines would cut off older Americans, especially those on fixed incomes.

William Ehrlich, an 83-year-old retired federal worker in San Francisco, said he and his wife, Diane, almost exclusively rely on their land-line service. They have cellphones but keep them “only in case of emergency,” he said.

“I’m not so sure we need it,” Ehrlich said of Internet-based phone service. “We’re senior citizens and retired and we have difficulty coping with change. Who needs all of these new devices that cost more money?”

Consumer groups say phone companies are intentionally pushing people away from cheaper land-line services into costlier bundles that include VoIP, Internet access, cable and wireless. The groups say not only are bundles more profitable, but switching more customers to VoIP enables telecom firms to escape stricter state regulations that apply to land lines.

“At the end of the day, their goal is complete and utter deregulation and the ability to offer services at as high (a price) as possible, and to pull service out of areas they don’t want to serve,” said Regina Costa, telecommunications director with San Francisco-based The Utility Reform Network.

Costa and other consumer advocates believe SB 1161 by state Sen. Alex Padilla, D-Los Angeles, would pre-empt California phone regulation in the future as the residential market switches to VoIP. After some amendments related to consumer protection, the bill passed Padilla’s Senate Energy, Utilities and Communications Committee on a bipartisan 12-0 vote Tuesday despite significant public opposition.


SB 1161 would prevent the utilities commission from regulating VoIP in the same way it can require minimum standards of quality and access for traditional land lines.

Most VoIP authority now rests with the FCC and state Legislature, which have placed basic requirements on providers in recent years, such as requiring 911 emergency service.

Padilla said the consumer concerns were overblown. He said his bill would do nothing to change guarantees that all residents will have access to basic land-line service. He pitched his bill as a way to give the state’s booming high-tech industry confidence that California regulators will not restrict Internet-based services.

“With this tough economy, the budget being what it is, unemployment being what it is, we have this bright spot that a lot of people refer to as the Silicon Valley,” Padilla said. “It is this research and development advantage that made the Internet and broadband what they are today … so I think it’s important to try to protect the economic advantage that we have.”