Today’s Indy Star article is entitled Outdated rules stifle tech competition.
Federal and state regulators, however, need to revamp outmoded utility regulations based on an age when the telephone company provided only phone service and electric utilities focused on electricity. State lawmakers failed last session to enact a modest measure that would have leveled the playing field for traditional telephone companies competing with other phone service providers.
Far more vision is needed between now and next session in helping Indiana welcome the digital revolution.
I’m not positive which piece of legislation the Indy Star had in mind, but a quick search for “broadband” on this site suggests it may have been SB 381
Establishes the statewide broadband system. Establishes the statewide broadband account within the higher education statewide telecommunications fund. Establishes the Indiana broadband development program to be administered by the Indiana development finance authority. The broadband development program is established to encourage the development of affordable broadband services and networks in underserved areas in Indiana. The broadband development program coordinates the financing of broadband infrastructure development and otherwise facilitates the establishment of broadband service in underserved areas in Indiana.
In addition, the bill provides for increasing limitations of the Indiana Utility Regulatory Commission’s jurisdiction over telecommunications services. Starting on July 1, 2005, it doesn’t have jurisdiction over advanced, broadband, and information services. Starting on July 1, 2007, the IURC doesn’t have jurisdiction over any nonbasic telecommunication service. And, starting on July 1, 2010, it doesn’t have jurisdiction over basic telephone service.
As I recall, and I could well be misremembering, the utilities didn’t much care for the broadband development portion of the program. It called for the state to get involved in deploying broadband to underserved areas if the utilities didn’t get it done within a certain time period. And corporate governance types didn’t like the removal of oversight from telecommunications utilities. The oversight was put in place for a reason. Ignoring history dooms us to repetition.
But, then again, maybe the Star was talking about something else. The editorial talks about the ability of electric utilities to provide broadband over their lines. Then it talks about the fading distinctions between utilities.
The discussion has merit, but the very first thing the legislature has to do before allowing free reign in broadband and other nonbasic services is to separate the subsidized portion of the utility from the competitive portions. Traditional utilities have advantages and powers not enjoyed by newcomers. Coming to mind are, as I said, subsidies for things like plain old telephone service (POTS) and electric connections to rural utilities. They also have easements in the rights of way and eminent domain powers. All of these things are fine trade offs for making sure every Hoosier has access to basic telephone and electric services, but they create a problem when we allow the utilities to compete with other businesses. The utilities can leverage these advantages directly or indirectly to make sure they have a leg up when competing to provide nonbasic services. This screws up market forces — as all subsidies tend to do.
I’m not sure hamstringing utility leverage is what the Star had in mind when calling for visionary legislation to allow utilities to compete to provide non-basic services.
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