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NARUC Notebook

NASUCA adopted resolutions on Lifeline and inmate payphone services, at the state consumer advocate group’s annual meeting, held along with NARUC’s annual convention in Miami Beach. Meanwhile, NASUCA panelists addressed a Conn. decision declaring AT&T’s IP-based video service not to be cable TV, as well as telecom privacy and the Missoula Plan. NASUCA’s Lifeline resolution was close to one adopted by NARUC. It backed the same Lifeline Working Group recommendations and made similar recommendations on Lifeline promotion and outreach through public-private partnerships, state commissions, other gov agencies, and business. NASUCA’s payphone resolution said inmate interaction with family, friends and professionals is an important part of rehabilitation hurt by unreasonably high rates at inmate payphones. The resolution urged policymakers to ensure fair rates, encourage use of prepaid debit accounts as an alternative to collect calls, and cut or eliminate commissions that inmate payphone providers pay state or local corrections authorities for their contracts. On NASUCA panels, Bill Vallee, attorney with the Conn. Office of Consumer Counsel, said the Conn. Dept. of Public Utility Control (DPUC) misclassified AT&T’s video delivery system because it looked only at the interactive on-demand capability, ignoring AT&T’s plans to offer scheduled cable programming like ESPN and CNN. William Durand, exec. vp of the New England Cable & Telecom Assn., said the DPUC erroneously based its ruling on the video delivery technology, rather than the service. Vallee and Durand said the DPUC decision created an unfair, illegal regulatory imbalance. NASUCA had invited AT&T and Verizon to speak, but they didn’t send representatives. Of various federal suits seeking to stop state regulator inquiries into allegations that telecom companies violated customer privacy rights by unlawful cooperation with federal intelligence-gathering operations, Shayana Kadidal of the Center for Constitutional Rights said states are right to resist “intelligence gathering operations in the guise of law enforcement.” He said broad telephone surveillance actually harms national security because “it diffuses efforts by putting attention on those who pose little or no threat.” He also said it made no sense for the govt. to invoke the state secrets privilege after the National Security Agency’s phone surveillance program became common knowledge. On the Missoula Plan, Doug Kinkoph, XO Communications regulatory vp, said the plan “is overly broad and based on a suspect political and legal foundation.” The plan aims to keep carriers whole by shifting access revenue reductions onto consumers and the federal universal service fund, he said: “It'll present consumers with a $7 billion bill.” It also will impair state jurisdiction over interconnection and prematurely deregulate transit traffic, he said. But Joel Shiffman of the Me. PUC staff called the plan “a reasonable but not perfect transition to the broadband world,” because it will eliminate arbitrary distinctions among jurisdictions and traffic types. Work is needed in some areas, like with “early adopter” states that moved to reform intercarrier compensation, he said. -- HK

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NARUC speakers on the meeting’s final day said states will retain a role as the telecom market evolves, helping ensure competition works. Consultant Mike Balhoff said state regulators “have a critical role in uneconomic regions” where competition isn’t effective. He said that in rural markets, competitive pressure exists only in towns and other population clusters. He cited data painting rural areas outside towns as money-losers for telecom providers without universal service subsidies. And even with subsidies, they produce subpar earnings, with 20% of rural lines not at all competitive, he said: “State regulators can play a critical role in targeting support just to the truly non-competitive areas.” Janice Dale of the Ill. Attorney Gen. Office said telecom markets are growing more interstate, but state commissions still have a role as guardians of the public interest by making sure consumers have the information needed for rational market decisions, have choices that make a difference and that they get what they are paying for: “Consumer redress depends on keeping state regulatory oversight.” Joel Dohmeier, TDS Telecom external relations dir., said rural-market competition is “alive and well.” He said TDS annual access revenue in its mostly-rural service areas shrank 15% the past 4 years, while minutes declined more than 50% due to wireless and VoIP inroads. States should address outdated laws and rules and let the markets determine winners and losers, he said. States’ role should be as a monitor of the marketplace, intervening only to police abuses. Wash. Utilities & Transportation Comr. Phil Jones said there’s a “public interest vacuum” as Congress and the FCC “deregulate willy-nilly and the antitrust model does nothing affecting concentration of wholesale market power.” He cited the CTIA’s push for federal legislation erasing the scant jurisdiction states still have over wireless service, terming it “quite objectionable.” He said the market is evolving into “a duopoly providing bundled services. We lack good tools to address whether to accept this or to try and encourage more entry.” Lawyer Robert Nelson, a former state regulator, called disturbing a trend of deregulating everything but stand-alone basic exchange service because “it provides no way for states to re-regulate in the event of market failures.” Jones said his state laws allow for reregulation, “but it’s a nuclear bomb, something we've never used.” He said reregulation would be politically difficult. Balhoff said states should be reluctant to use reregulation authority: “Telecom investors already face market uncertainty. If you add reregulation uncertainty, the cost of capital goes up.”

NARUC elected new officers for 2007. N.C. Utilities Comr. James Kerr was elected president, Idaho PUC Comr. Marsha Smith first vp, and N.J. Board of Public Utilities Comr. Frederick Butler, 2nd vp.