Saturday, April 21, 2012

SB 1161 doesn't touch California's real telecom problem

There was a fair amount of mainstream media coverage this week of pending California legislation that would state public policy that the state's Public Utilities Commission does not have regulatory jurisdiction over Internet protocol (IP) services.  As this Sacramento Bee story reports, consumer groups fear SB 1161 would give monopoly incumbent telcos too much free reign as they migrate away from plain old telephone service (POTS) delivered over twisted pair copper.  The telcos and the bill's author, Sen. Alex Padilla, support the policy to remove regulatory uncertainty and allow unfettered expansion of the Internet and IP-delivered telecommunications services to homes, businesses and institutions.

SB 1161 would neither help nor hinder that goal.  California's real problem is incomplete Internet infrastructure that leaves millions of Californians disconnected from the Internet.  Since telecommunications services tend to be a natural monopoly market, the fears of consumer groups of any form of reduced regulatory oversight are understandable.  However, their concerns would make more sense if all Californians had fiber connections to the Internet via a monopolistic provider.  They don't.  California's telecommunications market suffers from market failure because the high cost business models of the incumbent telcos (and cable companies) don't allow them to achieve that level of service.  Accordingly, the CPUC should do a better job of assisting alternative, lower cost business models emerge -- such as consumer-owned telecom cooperatives -- take root and thrive.  So far, the CPUC has failed to do so.

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