Maine Legislature Looks to Relax ILEC, VoIP Policies

LD-1466 would require the state Public Utilities Commission to extend by Jan. 1, 2012 its less-burdensome regulatory structure for competitive telephone utilities to all telephone utilities regulated by the commission. The bill, sponsored by Republican Rep. Stacey Fitts, also directs the commission to submit a plan to the legislature describing the actions necessary to ensure that, by Jan. 1, 2013, all telecom providers are “regulated equally.”

The bill isn’t proposing immediate sweeping changes, but changes in stages, a FairPoint spokesman said. It allows more pricing flexibility and improves regulatory efficiency, he said. The bill recognizes that the telecom market in Maine is competitive and the need to revamp traditional regulations for phone services, so “certain providers are no longer hampered by a regulatory model which was designed when telephone companies were monopolies,” said RoJean Tulk, director of legislative relations for FairPoint. FairPoint isn’t advocating total deregulation in the bill, she said. She cited other states that have seen regulatory revamps or are addressing restructuring issues, including Florida, Ohio, Illinois, Missouri, North Carolina, Texas and California.

The bill doesn’t conflict with or seek to change federal regulation, Tulk said. The key of the bill is to assure that for state regulatory purposes, no particular mode of telecom services is subject to more burdensome state regulatory requirements than any other mode of telecoms, she said. The bill also doesn’t do away with “carrier of last resort” obligations, she said. It also preserves the PUC’s ability to recommend a regulatory structure that preserves the carrier of last resort obligations and the other regulatory structures that support the obligation, she said, and it doesn’t modify any federal or state wholesale rules.

This is not the right time to change the regulatory structure when the “primary beneficiary of such a change is the company that is in control of much of the public switched network in Maine” and is a company that “continues to suffer from financial and operational problems,” said deputy state Public Advocate William Black. The bill failed to account for the fact that in some areas the incumbent has market power over its competitors and, even in areas where it doesn’t, the incumbent’s rates are used as a competitive benchmark, Black said. The telecom market in Maine isn’t sufficiently competitive to dismantle the current regulatory structure, he said. FairPoint has made improvements in both service quality and financial performance, the company spokesman said. The bill wouldn’t override any obligations entered into in connection with the Verizon/FairPoint transaction, Tulk said.

Meanwhile, LD-1311, sponsored by Republican Sen. Thomas Saviello, seeks to specify that VoIP and Internet-enabled service providers don’t constitute telephone utilities. Rather than adopting state-specific rules for VoIP, states like California, Florida, Georgia, Maryland, Massachusetts, New Jersey, Rhode Island and Virginia have all taken steps to prevent state regulation of VoIP, said Glenn Richards, executive director of the VON Coalition. The bill would prohibit any state agency, including the Public Utilities Commission, from regulating the entry, rates or terms of service of interconnected VoIP providers, he said. Additionally, the statutory definition of telephone service would exclude interconnected VoIP and the definition of telephone utility wouldn’t include entities that offer service by using interconnected VoIP, he said.

The Maine Public Advocate is concerned with the potential interplay between the two bills, said Wayne Jortner, a senior counsel with the advocate’s office. If the legislature finds there’s a need to level the competitive playing field, it would be crucial to ensure an adequate level of oversight and consumer protection with respect to all providers, he said. If the “widely adopted” VoIP services are subject to no regulation, then “a rational system of regulatory parity becomes impossible,” he said. Additionally, the Maine commission has said interconnected VoIP is telecom service subject to the commission’s jurisdiction, he said. It’s unwise to change rules with the now-pending case before the court (CD April 28, p11), he said. VoIP provider Comcast claimed the commission erred by saying VoIP is a telephone service and mistakenly said state public utility regulation isn’t preempted by the federal Communications Act.

Under the bill, the state commission might not be able to change pole attachment rates and couldn’t require payments to the state USF, Jortner said. Current telephone utilities could convert to IP networks and relieve themselves of all regulatory obligations, he said. It would be a bad public policy to encourage traditional carriers to rapidly move toward deregulated VoIP because E911 systems are made reliable by the provision of power from traditional phone company central offices, he said. In an all-IP world, cable systems lack central office power and would become less reliable, he claimed.