NRRI 14-07-Telecom-Regulation-2014

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Deregulation of retail wireline telecommunications continued to be a focus for state regulators and legislators during the 2014 legislative sessions. By the end of 2013, 30 states had reduced or eliminated retail telecommunications regulation. Two additional states, Colorado and Iowa, were added to the map in 2014, bringing that total to 32. Bills pending in another four states (Massachusetts, Pennsylvania, New York, and Oklahoma) could increase that number to 36, covering nearly 75% of the country. Legislation was proposed in all of the former ILEC regions, with the CenturyLink territory seeing the largest success. During 2014, legislators continued to focus on leveling the playing field between the Incumbent Local Exchange Carriers (ILECs) and their competitors by proposing bills that would eliminate or significantly reduce carrier of last resort obligations (COLR), reduce or eliminate the state commission's authority to resolve customer complaints for both wireline and IP-enabled services, and eliminate oversight of IP-enabled services. By the end of 2013, 15 states had eliminated or significantly reduced COLR obligations. By the middle of 2014, bills in Colorado and Michigan increased that total to 17, with additional legislation still pending in Pennsylvania and Massachusetts. State legislators also addressed issues concerning broadband deployment and wireline replacement. Maryland, Minnesota, New Jersey, New York, and West Virginia, considered bills that would continue commission oversight of critical retail services, ensure that the incumbents maintain copper-based wireline service rather than moving consumers to wireless alternatives, and apply consumer protections and commission oversight to IP-enabled services. States also addressed broadband deployment and municipal networks. 2014 saw legislation to provide incentives to increase broadband penetration in rural or hard to serve areas. Hawaii, Iowa, Kansas, and Mississippi proposed bills to increase broadband infrastructure deployment, while Tennessee, Minnesota, and Kansas introduced bills addressing the deployment of municipal broadband. The Tennessee legislature proposed that that municipal electric cooperatives be allowed to offer broadband using their internal telecommunications networks and rights of way, while Minnesota and Kansas took opposite sides in the debate over broadband services provided by cities/municipalities rather than more traditional competitors such as the ILECs and cable companies. In some states where legislation has not been proposed or where bills have mandated that the commission study how oversight may be adjusted in light of the changing telecommunications landscape, state commissions are reviewing their processes for overseeing telecommunications services. Maine, Montana, and New Mexico have opened dockets to study the needs of their citizens in order to determine the path their legislatures should take in light of the changing telecommunications infrastructure. These studies will include an evaluation of the requirements for revisions to consumer safety nets such as carrier of last resort obligations and the need for state-funded universal service programs. Maine will report to the legislature on - iv - potential changes to regulation, including the question of maintaining carrier of last resort and how this mandate should be funded. Montana will use its study to recommend changes to oversight. Telecommunications deregulation continues to be an important question for regulators, companies, and consumers. This paper updates the status of regulation across the country in 2014. It discusses the effects of relaxed regulation on commissions, consumers, and carriers, and recommends ways in which state commissions can continue to ensure that their constituents continue to be able to obtain the services they need even as the country transitions from wireline to IP-enabled service. The paper is directed to commissioners, legislators, and commission and legislative staff engaged in developing and implementing telecommunications legislation and evaluating its success. It provides insight into the process used by those states considering changes to or the elimination of regulation in order to assist them in crafting the proper structure for preserving core values while addressing the issues raised by new models for telecommunications services. The effects of deregulation are still difficult to gauge. Carriers continue to provide wireline service even in areas they consider difficult or costly to serve, although the transition to IP services may change this picture in the long run. Customers in rural areas continue to be able to obtain affordable wireline service, although questions about broadband deployment and the effects of the USF Transformation Order on the ability of rural companies to provide service with lowered USF dollars remain. By continuing to work together to understand the effects of deregulation, states will continue to ensure that the Telecommunications Act's promise of ubiquitous, reliable, and affordable service for all citizens, regardless of where they live or the type of service they choose, remains viable