The Kansas Senate this week will take up a bill proposed by AT&T to relieve phone companies from having to follow state rules protecting consumers from fraud and abusive billing practices.
House Bill 2201 also would prevent state utility regulators from enforcing minimum quality of service standards in AT&T areas.
And it would relieve AT&T of having to provide phone service to poor people on Lifeline subsidies or difficult-to-serve rural customers.
In recent years in the Legislature, AT&T has steadily chipped away at regulations to move from its former perch as a regulated monopoly phone company to a fully deregulated business providing a variety of communications services including Internet access and television.
David Springe, chief consumer counsel for the Citizens’ Utility Ratepayer Board, said he thinks the current bill takes that too far, because AT&T remains the dominant phone company in the state and the only viable option for telecommunications for customers in much of rural Kansas.
“This bill is written by AT&T for AT&T,” Springe said. “AT&T could do what it wants, when it wants, where it wants and for whatever price it wants.”
Sen. Pat Apple, R-Louisburg, chairman of the Senate Utilities Committee, said he is aware of the consumer issues surrounding the bill and plans to fully explore them in hearings scheduled for Tuesday, Wednesday and Thursday.
“We need to make sure the bill contains adequate protection for consumers,” he said. “A lot of folks are transitioning from landlines to wireless devices. And so we’re trying to catch up the regulatory environment to where it matches what people are doing.”
Steve Hahn, president of AT&T Kansas, provided written testimony to a committee in the House, which voted overwhelmingly to pass the bill and send it to the Senate.
Hahn’s testimony did not directly address why the company needs to be relieved of consumer-protection regulations, and AT&T spokesmen did not respond to questions about that.
Hahn said the overall bill is designed to evolve away from regulations passed when AT&T was a pure-play phone company and to accommodate changes in the business environment, such as a trend among customers to drop traditional wireline service in favor of Internet and cellphones.
The state has almost no regulatory authority over cellphone companies.
“AT&T is adapting to this rapid change in consumer demand, and we support modernization of state policies that help us provide the services Kansas consumers and businesses want,” he said. “However, we also recognize the need to adopt policies that balance consumer benefits and recognize the different business models, operations and regulatory governance of the many Kansas companies that provide these important communications services.”
The bill would definitely alter the relationship among the company, its customers and state regulators, according to legislative testimony by Christine Aarnes, chief of telecommunications for the Kansas Corporation Commission.
“In staff’s view, this (bill) means the commission would lose its authority to require telecommunications carriers and electing carriers to comply with the consumer protections applied in the commission’s billing practice standards and quality of service standards,” she wrote.
Those carriers “will no longer be required to file tariffs, including rates, terms and conditions, with the commission,” she wrote.
“In addition, it appears to staff that the commission would be barred from asserting authority over consumer complaints” involving AT&T and possibly other phone companies.
Last year, the commission’s consumer protection department handled 1,121 complaints related to telecommunications, resulting in $54,707 in adjustments to the consumers’ bills, Aarnes testified.
If the KCC is barred from handling those consumer complaints, “Commission staff suggests the committee consider where these complaints would be addressed – locally at the Kansas Attorney General’s Office or perhaps only at the FCC (Federal Communications Commission),” she said.
Springe said the bill would allow AT&T to simply abandon wireline customers, regardless of whether they have access to working cell service.
“If you look at AT&T and their business model, they don’t want to serve where it’s not profitable,” he said. “So where is it not profitable? Rural areas where there’s not very many people down those dirt roads. AT&T can simply turn them off.”
Also, he said “They want to write in there the ability to simply turn off Lifeline services. Well, that’s poor people. Not a lot of money in serving poor people either, is there? So AT&T is going to give themselves the opportunity to walk away from that.
“So who’s left that actually gets service? City folks and people who have money.”
Hahn promised in his testimony to the Legislature that the company is not trying to abandon rural customers.
“Let me be clear: This legislation is not an attempt to leave customers behind, and we are on the record saying so,” Hahn said in his testimony. “We are committed to doing our very best to provide all of our customers with services built on an IP (Internet protocol) broadband architecture, to expand access to our advanced network and, for those few we cannot reach with a broadband service, whether wireline or wireless, that they still be able to keep voice service.”
Springe said that commitment is not a guarantee and that Hahn or another executive could easily change their minds if HB 2201 passes.
He said AT&T’s overall goal on a national level, as outlined in an Aug. 30 letter to the FCC, is to force customers to give up basic phone service and pressure them to buy more expensive packages of communications including such features as Internet access and television.
In the letter, AT&T asked federal officials to set a specific date when phone companies would no longer have to provide traditional phone service.
It also asked the FCC to establish rules to facilitate migration of customers from traditional phone service to Internet-based services and “to prevent customers that procrastinate or fail to migrate from holding up the transition.”
AT&T said it wants to “establish a process for identifying a default service provider if a customer fails to migrate and/or permit service providers to notify customers that they will be dropped from service as of a date certain if they have not migrated.”
A vote against
AT&T has one of the most active lobbying groups at the Kansas Statehouse.
The company’s seven registered lobbyists spent $26,105 to entertain legislators in 2012, according to records of the Kansas Governmental Ethics Commission.
Among the expenditures were a dozen $100 tickets for lawmakers to attend the AT&T Cotton Bowl game in Arlington, Texas. Eight of the 12 also got $35 parking passes for the game, the records show.
House Bill 2201 sailed through the House of Representatives on a vote of 118-1, largely because there wasn’t any opposition from AT&T’s competitors, some of whom worked with the company in drafting the bill.
Because of the broad agreement among the phone companies on technical matters such as the division of service subsidies and interconnection between phone systems, the consumer aspects of the bill got little attention in the House, said Rep. Larry Hibbard, the only member to vote against it.
Hibbard said he voted “no” because he lives in a rural area near Toronto, about 70 miles east of Wichita.
Although he doesn’t live in AT&T territory, “I’m very worried about what kind of landline service we’re going to have in the isolated rural areas,” he said. “I’m not one to go against the grain all the time, but I’m going to stand up for the people in my area.”
He said his cellphone service is sporadic at best and if his cellphone rings at his house, he can usually only talk for a few seconds before it cuts off. “Cellphone (service) just isn’t 100 percent anywhere” in the area, he said.
The 1970s-vintage landline system works but requires a lot of maintenance, he said.
“I never knew about this bill (HB 2201) until the last minute, or I would have testified against it,” he said.
Apple said that as his committee considers the bill, he plans to raise several questions, including: Is the technology there? Does it make sense? Do people actually have other options?
He said he has previously favored keeping plain old telephone service for those who want it, especially seniors, because of a lack of senior-adapted equipment offered through wireless networks.
Now, he said, there are large-button cellphones and Internet/wireless communication devices that they can use as easily as a traditional phone.
“We need to make sure that there’s adequate consumer protections in there that deal with other areas of people’s lives besides telephones,” Apple said. “It’s on our radar; we’re going to fully vet that out.”