Controversial telecom reform bill moves ahead

Paul F. P. Pogue

Sen. Brandt Hershman

Supporters are hailing an Indiana Senate bill designed to deregulate telephone companies that deploy broadband technology as a sweeping move to bring telecommunications investment to Indiana. Others aren't so sure.

Senate Bill 245 - the subject of an ongoing television commercial campaign - easily passed the Senate as expected last week, with a 40-6 vote. The proposal goes before a House committee today.

The bill, authored by Sen. Brandt Hershman, seems destined for a smooth February ride through the House as well, but critics and opponents are already gearing up for a final grassroots campaign.

Two of the most controversial elements of the bill were what some called the open-ended nature of the phone deregulation and hurdles to local municipalities providing broadband service on their own.

The new version bans local measured service - the practice of paying for local phone calls by the minute - and allows municipalities to offer broadband after a public hearing. Previously, municipalities could only offer broadband if they could show that no private provider was seriously considering offering broadband in the area.

Grant Smith, executive director of the Citizens Action Coalition, said the biggest concerns on the CAC's part were the possibility of local measured service being introduced to phone bills as a loophole under another name or process, and the specter of corporate consolidation.

"I've seen the senators write to their constituents and say, 'The phone companies need the rate increases so they can compete with wireless and DSL,' but AT&T already owns the wireless and DSL," Smith said. "We're not seeing competition, we're seeing consolidation. The problem we're seeing is divisions within a company competing with each other, not with outside companies."

Hershman pointed to other states that have deregulated as evidence to support estimates that the move could bring as much as $7 billion in technology investment and 20,000 jobs to Indiana, as well as lower prices.

"Texas passed a similar bill in September, and since then they've received commitments of video technology buildout in 121 communities around the state," Hershman said. "Last year, the number of wireless phones exceeded wired phones for the first time in history, and that number is only going to keep rising.

"The cell phone market is a completely deregulated market and, in the last 10 years, prices have dropped by 80 percent. We deregulated long distance, competition took hold and prices went down dramatically. What will happen is if a company tries to raise its prices, people are going to start using other choices."

Hershman added that since phone companies are only deregulated after they offer broadband to 50 percent of any given phone exchange - a process that repeats itself across the state in each exchange - that it doesn't allow phone companies to "cherry-pick" large cities. "This bill has the toughest hurdle for a phone company to jump in order to get that deregulation of any such bill in the country."