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Senate passes bill giving phone companies more freedom from oversight in Kansas

  • The Wichita Eagle
  • Published Wednesday, March 27, 2013, at 9:02 p.m.

A bill freeing AT&T and other Kansas phone companies from having to provide service to rural and poor customers easily passed the state Senate on Wednesday, virtually assuring that it will become Kansas law.

Supporters say House Bill 2201 is a necessary step on the road to changing AT&T from a regulated phone company to an unregulated provider of a variety of services, such as television and Internet access, and that competition in the telecommunications marketplace will protect consumers.

“I think we’re at the point where we can take one of our largest carriers (AT&T) and treat them as if they’re a wireless carrier or cable carrier,” said Sen. Pat Apple, R-Louisburg and chairman of the Senate Utilities Committee. “This legislation is trying to keep pace with changes in technology and changes in the marketplace.”

Opponents say the bill will allow AT&T and other companies to abandon less profitable rural customers and poor people on subsidized Lifeline service. In addition, the opponents are concerned that the bill guts the traditional consumer-protection function of the Kansas Corporation Commission.

“The current public policy of the state … is to ensure that every Kansan will have access to a first-class telecommunications infrastructure,” said Sen. Marci Francisco, D-Lawrence, who voted against the bill. She said HB 2201 is “starkly in contrast with some of that stated policy.”

The bill passed the Senate 36-4, following 118-1 approval by the House.

Because the Senate amended the bill, it now returns to the House, where representatives can either accept the Senate’s changes or request a House-Senate conference committee to meet and craft a final bill.

The bill was originally written by AT&T in consultation with other telecommunications providers around the state, who presented a unified front at the Legislature.

AT&T executives testified that they don’t plan to dump rural customers, although the company has acknowledged that some who live in areas that are difficult to serve with land lines could be “migrated” to wireless services.

“Just because the obligation (to provide service) is gone doesn’t mean if a customer called in and it made sense to deliver the service via plain old telephone service, we certainly would,” AT&T Kansas President Steve Hahn said in Senate committee testimony.

At the committee level, a few senators sought to preserve some of the consumer protections in current law, but it’s unclear whether they succeeded.

The Utilities Committee accepted AT&T’s rewrite of the proposed consumer-protection amendment to the bill.

The bill, as it stands, authorizes the KCC to “administer” consumer complaints and “investigate” potential fraud by phone companies.

It’s not clear whether the KCC could still order a company to cease an abusive practice or would have to refer the customer to the Attorney General’s Office or the Federal Communications Commission in Washington, said David Springe, chief consumer counsel for the Citizens’ Utility Ratepayer Board, the small state agency that represents residential and small-business consumers.

“On one hand, they gave the KCC back some authority, then they changed it from ‘prevent fraud’ to ‘investigate fraud,’ ” Springe said. “What if you investigate it and you find it? It seems to me with the words ‘administer’ and ‘investigate,’ it’s not clear they could tell AT&T to stop.”

He added that the FCC, a sprawling federal agency, is ineffective at handling individual consumer complaints.

“If the FCC is really the only option, then there’s no consumer protection in this bill,” Springe said.

Provisions in the bill affect different companies in different ways. But exemption from quality of service and Lifeline standards applies to AT&T, Cox, Sprint, Verizon, SKT, United, Wheat State and about 375 other companies.

“If given a choice whether we have a government-regulated industry or free markets that will work, I would choose free markets,” Apple said.

In addition to freeing the providers from state regulation, the bill also shrinks the Kansas Universal Service Fund, which helps offset phone companies’ costs of providing telecommunications to customers in hard-to-reach places. Shrinking the fund could ease the cost of monthly surcharges for Kansas consumers.

First-year reduction to the service fund would total about $9.4 million.

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

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