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Archive for Thursday, February 23, 2006

Compromise telecommunications bill sails to Senate passage

February 23, 2006

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— A compromise bill designed to lessen state regulation of local telephone service while still protecting poor neighborhoods and some consumers from price increases won Senate approval Wednesday.

The measure ends state regulation of the prices on combined plans for local, long-distance, cell and Internet services. Prices for most individual services would be deregulated in the Kansas City, Topeka and Wichita areas, though rates would have to be consistent in each metro area.

Elsewhere, the Kansas Corporation Commission would be required to deregulate prices whenever competition in the local service market exists. However, the commission could resume regulation if competition disappeared.

The 40-0 vote sent the measure to the House.

The bill is more restrictive than originally proposed by AT&T, the state's largest local telephone service provider, which argues that deregulation will allow competition to flourish, leading to lower prices.

Senate Utilities Committee members worried that even as many consumers' rates fell, costs for poor neighborhoods or consumers who want only one telephone line would rise. They amended the measure before endorsing it last week.

"It is a fair compromise," Sen. Janis Lee, D-Kensington. "It is a way for the state to begin to experience deregulation and the effects of deregulation, but it puts us in a position where if it doesn't work, we don't have to pass another bill."

AT&T still supports the legislation, even with the Senate committee's changes. The company, based in San Antonio, previously provided local service in Kansas as SBC Corp.

"The key for us is being able to competitively price our products and services in those markets where competition clearly exists," said company spokesman Don Brown. "We see this as a very effective tool in terms of defining competition and allowing the marketplace to work for telecommunications customers."

Last year, SBC asked the KCC to deregulate prices for 31 services in Kansas City, Topeka and Wichita. The commission rejected most of SBC's proposals, concluding there wasn't enough competition to take controls off prices, which led to this year's bill.

The Senate committee added provisions requiring consistent pricing across metropolitan areas to prevent a company from offering special rates and services only in wealthy neighborhoods. Also, the commission still would regulate prices for single-line phone service.

Chairman Jay Scott Emler said the measure represents a big step toward deregulating local phone service.

"In the bigger exchanges, it's pretty much deregulated," said Emler, R-Lindsborg.

AT&T also proposed a second bill rewriting laws covering local cable television franchises to make it easier for AT&T and other companies to offer alternative video services.

While AT&T said its goal was to spur competition and lower prices for consumers, critics, including large cable companies, said AT&T was seeking special advantages.

Before endorsing it, the Senate Commerce Committee amended the legislation to allow companies with existing cable franchises to seek changes from local governments in the face of outside competition.

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