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Gov. Brown Follows the ALEC Path on Deregulation in California

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Last month, California Governor Brown turned his back on California telephone consumers by signing into law a bill that strips the oversight authority of the California Public Utility Commission (CPUC). Specifically, the law removes rate and quality protections for consumers of phones that function through Internet technology. This technology, called Voice over Internet Protocol (VoIP), routes phone calls over Internet signals, and is offered by cable or DSL companies like Verizon’s FiOS, Comcast’s Digital Voice, and AT&T’s U-Verse. The experience is just like using a traditional phone since increasingly landline phones need Internet Protocol to be connected. The bill signed into law, SB 1161, effectively eliminates common-sense protections for all of California’s consumers who will be helpless when issues arise with their phone service, while tying the hands of the CPUC and local governments alike.

California joins the more than 20 states that have stripped PUC authority over essential telecommunications service: Idaho, Montana, Nebraska, Kansas, Texas, Missouri, Arkansas, Wisconsin, Illinois, Tennessee, Mississippi, Alabama, Indiana, Michigan, Ohio, Georgia, Florida, North Carolina, Virginia, Maine, New Hampshire, and Utah. More worrisome, Governor Brown’s decision to enact SB 1161 signals an agreement with the deregulatory spirit of the American Legislative Exchange Council (ALEC), which has advocated for the protection of large telecommunications corporations but not for the protection of the people.  

ALEC is running an aggressive campaign to ensure that bills like California’s SB1161 are passed — as seen by the 58 ALEC telecom model bills that have been supplied to state legislators nationwide. Both ALEC model legislation and SB 1161 aim to take away the powers of the Public Utility Commissions over these essential communications services. Like ALEC’s bills, SB 1161 enjoys the endorsement of large corporate sponsors, including telecom giants AT&T and Verizon, as well as hundreds of Silicon Valley companies.

None of this should come as a surprise.  With laws like these, the industry is seeking to deregulate telecommunications altogether, meaning that no agency would exist to monitor irregularities in the provision of their services. The effects of such deregulatory efforts have been rapidly felt: in the past five years, 17 out of the 20 states that deregulated telecommunications services have also seen rate increases.

California legislators fell into the traps of the industry’s assertion that PUC protection is bad for investment, that laissez-faire competition will keep prices down, and that oversight of these services should be left to the federal government.  The reality is that there is as much investment in the 29 states that have retained oversight over PUCs as those that have gotten rid of it.  If the past few years have taught us anything, it is that competition is not by itself a market regulator, it does not guarantee any protections for consumers, nor does it keep prices down.  Thanks to SB 1161, it is estimated that tens of millions of Californians will lose long-held, common-sense protections in phone services. The state will also likely face higher unemployment numbers. When quality standards that come with PUC oversight are no longer in place, jobs that entail maintaining or repairing phone lines will be cut.  In the words of The Utility Reform Network, SB 1161 is truly a “wolf in sheep’s clothing.”

It is a shame that California, a bastion for progressive policy, added its name to the list of states that are taking away consumers’ and workers’ rights. This year, we saw similar bills that were fortunately defeated in similarly-minded states like New York and New Jersey. One factor that distinguishes California from these other states is the clout of Silicon Valley, who joined forces with AT&T and Verizon to move SB 1161 forward.  Their fight, however, did not go without confrontation. A unique coalition of national organizations, local government, media justice and rural advocates, child/family support projects, the faith-based community, and business leaders advocated on behalf of California consumers.

For a century, our nation has recognized the basic guarantee that every American home should have access to a phone, just like they do with other utilities like water or electricity. With this mindset, our leaders created agencies that could monitor the provision of these services to safeguard for price, quality, and access. Now that SB 1161 has been enacted, millions of Californians are no longer afforded with the common-sense protections so many of us have expected to rely on.  As Progressive States Network has repeatedly pointed out, access to telecommunications is not a luxury but a necessity. 

Full Resources from this Article

Gov. Brown Follows the ALEC Path on Deregulation in California

National Regulatory Research Institute – The Year in Review: The Status of Telecommunications Deregulation
ALEC Exposed – ALEC Telecommunications Deregulation Policy Statement
ALEC Exposed – ALEC’s Regulatory Modernization Act
Capitol Weekly – Telecommunications companies win major Capitol victory
The Utility Reform Network –  Opposition Growing to SB 1161 - The Worst Telecom Bill Ever
The Utility Reform Network – United to Oppose SB 1161, AT&T's CA Deregulation Bill
Progressive States Network – 2011 Legislative Session Roundup: Broadband