Topeka Southwestern Bell Telephone Co. could free itself of most state regulatory oversight by carrying high-speed Internet access to remote stretches of Kansas, under a bill in the Senate.
The company says the measure would spur economic development by making broadband services available to more consumers and businesses.
But consumer advocates, competitors and state regulators say that ending state oversight of the company's prices could lead to higher telephone rates.
Both points of view are expected to be heard at a Senate Commerce Committee hearing set for Tuesday.
The Kansas Corporation Commission "isn't convinced there's enough competition out there to discipline the prices for either business services or residential services," said Janet Buchanan, who heads the KCC's telecommunications staff.
"We cannot as yet support a bill that would trade price regulation for broadband," she said.
Under the legislation, a regulated telephone carrier like Southwestern Bell could apply to become an "investing company."
An investing company would be obligated to honor certain requests from communities for broadband DSL service and, in turn, be free of price regulation for business phone service and broadband services.
The bill would lift regulation on all residential service on July 1, 2005. Before then, residential regulation would be lifted in markets where "an alternative provider is offering basic local residential exchange service."
It was not clear how much of the state that provision would apply to.
"We're saying that the marketplace is a better control of pricing," said Randy Tomlin, Southwestern Bell's president in Kansas.
Without the uncertainty caused by regulated pricing, Tomlin said, companies such as Bell would have an incentive to invest "deeper into America."
Opponents are lining up against the bill.
"I think if you put this to a vote of the people, it would fail miserably," said Walker Hendrix of the Citizens' Utility Ratepayers Board, which represents the state's consumers.
Requests from customers living more than 14,000 feet from a network central office would not have to be honored. And for Southwestern Bell to honor a community's request for broadband service, 500 residents would have to make a written request to the company.
Hendrix said few small towns still without broadband service would be able to meet that requirement. Rural areas will be vulnerable if Southwestern Bell is allowed to set its own prices, he said.