On January 22 I attended the TISP Forum on Regulatory Reform Legislation. Sadly I was a little late – due an issue with cold weather and kids – but I tried to catch up and capture as much of the session as I could. Here’s a description of the agenda…

State telecommunications policy is the subject of the January 22 Forum. A proposal to realign some regulations regarding telephone and broadband regulation is intended to be discussed during the 2014 legislative session. Advocates of the bill regard the proposal as creating a more level playing field among service providers. At the same time there are concerns about the impact of proposed changes. There is little doubt that the profile of service usage is shifting. Please join us for this discussion which will provide information about the bill as well as clarify its possible impact.

Speakers:
Brent Christensen, President/CEO, Minnesota Telecom Alliance
Dennis Ahlers, Assistant Commissioner, Minnesota Department of Commerce
Dan Lipschultz, CLEC Coalition, Moss and Barnett 

Minnesota’s Legislative “Unsession” is coming up – an opportunity to suggest changes to legislation that “make government better, faster, simpler and more efficient for people.” Several people in the telecommunications/broadband industry have already been talking about recommendations they’d like to make. Senator Schmit (who attended the TISP forum) has talked about rewriting key provisions in telecom law that don’t translate into 21^st century life. The Minnesota Broadband Task Force suggested recommendations – such as reinstate the sales tax exemption for telecom providers – in the last iteration of their Task Force report (due out Jan 27 I believe). Last Spring MTA presented at a Hearing Session on telecommunications enforcement authority, which provided a glimpse into topics that are sure to come up this year. I assume some of these topics came up before I got to the meeting. I made it in time to capture some of the supporting comments – many of which revolve around the fact that broadband providers are regulated differently based on the transmission tool (cable, telecom, wireless) but that the services offered are similar. This leads to unintended consequences that results in potentially artificial market advantages and disadvantages.

Dan Lipschultz – Federal changes have not been announced yet. We need to be careful about massive changes to state law when we’re not sure yet of the federal law.

Brent Christensen – Land lines are going away as a standalone service. Voice has become an application – not a core service for telecom providers. Providers not provide the pipe more than the service.

Dennis Ahlers – There are no instances where state laws have impeded a company from adhering to federal law. DEED now has the Office of Broadband Development OBD. I suspect the TF will propose legislative measures to promote broadband to unserved areas. Something to anticipate.

Questions:

Want to make sure users can go to with complaints. Is there confusion?

DA: The issue goes to definition of basic service – which is one line no features. Virtually no one offers or wants that. So it doesn’t make sense to legislate to that service. Right now we have very few formal complaints at the PUC – partially because we can give a heads up to companies that a complaint is in the making and usually they fix that. If we lose that authority we lose leverage.

BC: The PUC only has oversight on wireline service now. We don’t want to take anything away from Commerce. This is a separate issue.

DL: Speaking from recollection of bill a year ago. The bill will relates to wholesale service – we thought it was too narrow. (section 251 telecom act) 237.09 – bias to partners repealed 06 – just and reasonable rates is repealed

We are working with Brent on some of these issues from a wholesale perspective.

CenturyLink as ILEC provides service to end customers and competitive carriers (as mandated by law). Usually cable is only competition in residential services. CLECs usually are in business because they can get wires from CenturyLink. We ought to be looking for ways to increase competition. Much of the discussion related to ILEC providing wholesale access to infrastructure to other providers. It is a deterrent to expansion and improvement when you know the enhancements you make support your competition as well as your own business.

I see nothing that delays ability to reduce rates – but there are to increase rates. Should a carrier have an incentive to raise rates? I’d say not. Who’s to say that caps on telecom won’t create a de facto cap on cable?

We depend on broadband for safety and economic stability.

BC: This is not new. 10 years ago the state deregulated business lines in some areas. Later they deregulated more. Prices did not skyrocket.

DL: Coming back to business market. You have 3-6 choices. The regulation of wholesale have made sure that residential haven’t suffered. My clients are concerned with business market.

BC: Wireless comes into play with residential markets. W/business it’s not our intention of changing anything on wholesale arrangement. Our complaint is that the PUC oversees us but not our competitors.

DL: Wireless isn’t an option in my home. I have CEnturylink or Comcast. I want more options.

DA: DO you look this bill with different eyes based on rural vs urban areas? In rural areas there aren’t any competitors. I was in a meeting last summer where no one could get cell coverage. We ned to protect customers in rural areas. They often don’t have a broadband option. It’s not economically feasible. So we need to protect what they do have – POTS.

IN rural areas there’s an isolation. Historically we’ve done things backwards. EAS areas – everyone is metro area can call all over metro area. In rural areas you are more likely to make toll calls.

DL: Some areas don’t have competition. With massive changes to state laws, we’re flying blind. The industry is important. We can’t say there’s no competition. It’s different in all areas. In a perfect world we need to look at this differently. We need to empower the experts (PUC) to research the options for deregulation. The FCC has forbearance. They create factual predicate. We deregulate when you think there’s adequate competition.

With broadband – the ILECS are in tough positions. We look to ILECs to build broadband but also want competition. We might need to look at monopoly networks. *** We need to find a common ground and talk about inconsistencies in policy that may be hindering broadband deployment.

Rep Johnson: We need to find agreement. The issue is too complicated for legislators to just kick this around. We need experts to point out nuances.

Sen Schmit: The way we regulate broadband differently (wireless, cable, telecom) indicates that we’re not keeping up. It’s a good topic for the unsession. It seems like you are asking for less regulation. Maybe with broadband we need to look at more. How do we treat broadband in a new way? Let’s quit using yesterday’s view.

Sen Whitman: I’m not on the committee – but I worked in telecom as an electric engineer. Ultimately any changes will come to the whole senate so helpful to get a view now.

Question – Mike lobbyist from telephone industry: Question for DA. We talk about leveling playing field. How Comcast is regulated?

DA: They are under commission rules. Their telephone services are.

Question – Did they retract CLEC certification? Is it fair to say they haven’t been actively regulated.

That’s a matter of internal discussion.

DL – all of my clients are regulated. Most of clients have soft switches. Even though we use VoIP. Comcast is a CLEC.

Question – Scott Bowlere (Frontier): 237 regulates prices, service et al – do those apply to telecom carriers?

DL: Yes.

Question – Have they ever pursued such regulation?

They do oversee pricing. I can’t think of a time where the PUC enforced quality issues. Often the business customer threatens to sue or find a new provider. That happens first before the PUC gets involved. But this again comes down to competition.

BC: But there haven’t been complaints even when there hasn’t been competition.

DL: Having the PUC in play is  a big deterrent!!

MH: I was involved with a case of quality of service. It got resolved – but having a PUC In place helped.

DL: Sometimes the threat of it becoming a public issue is also helpful. NO one wants to be the provider that cut off the nursing home, school or hospital.

BC: That won’t change with our proposal.

SB: The Commission has discussed pricing –

Question – Mike Reardon (MACTA): What’s the difference between VoIP and POTS? Physically does that make a difference? Isn’t it voice versus data and video.

BC: It’s really not. Providers bundle the triple play. Voice is regulated. Video is regulated via franchise from municipality. Data is not regulated. We are regulated based on POTS. But really it’s not POTS anymore; we deliver broadband pipes. I’m not saying POTS and VoIP are different – but the regulation is there to say that.

DL: We have nonsensical distinctions – you’ll end up with nonsense.

But technology has made the policy nonsensical.

But technology doesn’t really come in – it’s the application to keep consumers safe.

Jack Reese (State of MN): You say VoIP is another application. The State is working on ubiquity. DO you see a time when circuit switch technology will phase out?

BC: It’s not too expensive – but technology is migrating it. We have soft switches. NO one is installing switches right now. It’s going IP. It’s causing problems with call completion now – but the world is shifting that way. Anyone who’s done FTTP is all VoIP.

Question -Jackie (State of MN – but speaking of consumer): I’ve seen the deregulation. What’s frustrating as consumer – if I want to watch TV I have to get bundled service. We don’t really have options even though there’s more deregulation. There are more options for businesses – but it’s gotten worse for consumers. How do we provide competitive service? Maybe it’s not so bad in rural MN to have one option. I know people who get great service in rural areas. My problems have been video and data.

BC: But those are the services that aren’t regulated.

DL: So you want more competition. So let’s focus on broadband. When I lose service data I lose voice – because it’s VoIP. Most CLECs service business. The FCC took away ability to buy piecemeal – easier to get bundled service.

Chris VOtel(?): I use Internet to access video and talk to folks. When can we regulate the cloud?

Question – Craig Wilson: I use Vonage. Is it regulated? From video – we have more options. People are cutting cable. We are looking at people using all data. Net Neutrality might hurt my ability to access Vonage easily. The problem is there’s nowhere to go to with problems.

BC: I don’t think that will be the case  but cable might want to watch what happens. We’re not going to regulate your network. We want to sell you a bigger pipe.

MH: Comcast just bought part of Intel – for over the top video services.

BC: The state has no jurisdiction over broadband.

Question – Dennis Fazio (TIES) – I’ve never seen a level playing field. What is the cost of doing nothing for MTA members?

BC: The wholesale regulation might go away. VoIP may become a loop hole and that may happen sooner rather than later. I’m not sure what impact to members would be.

DL: When you talk about what should we do – the question is should we ratchet down? What in statues prevents you from competing in a way that you want to compete. We might need to drill down to that level to create an interim solution as the feds work on their regulation.

BC: But that’s not the only motivation to legislate. The motivation is that the regulation does not match technology.

Question – Andy Shriner: Wireless is another service you can get at home There is another option. We’re hitting 40 percent wireless coverage in MN.

We heard we have to go slow last time we discussed/change telecom legislation. We do need to be careful but we’ll never find the perfect environment to move forward. If not in 2008, if not 2012, if not now well then?

DL: Wireless doesn’t work for me. A cell phone is hard to hear. Bandwidth is not enough. To call it an option is an over-reach. I’m not waiting for a perfect world – but we need to research the options.

MH: It’s important to ask about what is the purpose of the device and application.

Question – Mark Overlander PUC staff: In broadband environment what is the appropriate – how can we deploy ubiquitous broadband?

BC: I wasn’t a big fan of OBD – because I thought it would be more bureaucracy without power. But their job is to be silo-busters. SO the only thing that will help is money.

DL: We could improve copper as broadband vehicle. But at the end of the day it will take money and that will take a lot of thought.

BC: The problem is that we have to maintain 2 neworks. There’s the copper network we wholesale and then we build fiber.

DL: There is a problem in wholesale market when folks can retire copper and don’t’ have to share access to fiber.

Mike Reardon – telegraph should be deregulated.