The state Public Utilities Commission has approved a new way of regulating Qwest telephone services that could leave consumers vulnerable unless key state watchdogs, including the PUC itself, remain vigilant.
The new system moves most of Qwest’s premium services from the PUC’s supervision to a new “market” regulation approach. The underlying (and questionable) assumption is that a company that still controls at least 85 percent of Colorado’s local phone market will voluntarily provide consumers with meaningful choices and clear information on which to make informed decisions.
Even as the PUC is loosening its regulatory grip on Qwest, it is also looking at rewriting parts of its own operating rule book. If the PUC doesn’t keep some key rules, then the promises Qwest made in the recent settlement will be meaningless because there will be no way to enforce them or even a standard by which to judge them.
How closely the PUC watches the telecommunication business thus could become a pressing consumer concern.
PUC settlement raises issues
In October, Qwest asked the PUC to almost completely deregulate the company, even regarding basic residential service. The Office of Consumer Counsel, the state’s official consumer watchdog on utility cases, strongly objected because Qwest dominates the market and could still hold consumers captive. The Consumer Counsel, Qwest, PUC staff and other interest groups spent seven months negotiating a settlement that is less radical than what Qwest originally sought, but that still raises troubling issues.
Qwest said the current regulations put costly, time-consuming requirements on it but didn’t impose the same burden on its rivals, leaving Qwest at a disadvantage. In this regard, some of Qwest’s requests were reasonable. For example, the old regulatory scheme made Qwest notify the PUC a month in advance of plans to change prices or marketing packages for competitive services such as voice mail. The long lead time let Qwest’s rivals match the deals before Qwest could even get its changes to market. The 30-day notification requirement will vanish when the new regulatory program goes into effect this summer.
The settlement preserves PUC oversight regarding price and service on the first line to a residence and for the first five lines to small businesses. But the deal, which the PUC approved this week with only a few changes, could still spell trouble down the road. In metro Denver and most of Colorado Springs, Qwest will be free to price additional services such as second residential lines, six or more business lines, voice mail, caller ID and call waiting. In other parts of the state, where few or no competitors offer local phone service, the PUC will retain its regulatory role.
The settlement says the PUC will continue to monitor service quality. Even on deregulated services, Qwest must clearly disclose price increases or changes to service packages. Those are good standards – if the PUC keeps an eye on Qwest’s compliance.
Open to interpretation
In addition, the settlement removes state supervision of in-state long distance. Not only has the PUC surrendered any say over prices; the settlement also doesn’t say that the state has retained the ability to enforce state laws against changing consumers’ long-distance service providers without their permission, so it leaves the issue open to interpretation.
While there are federal rules against “slamming,” it’s unclear if the feds would bother with problems that might arise inside one state. Unlike the deregulation of other services, the settlement has gone so far in deregulating in-state long distance that if problems arise, only the legislature could re-assert regulatory control.
The worries wouldn’t be so keen if not for the PUC’s ongoing review of its own rules – and for the blatant politicalization of state phone regulation. Some of Gov. Bill Owens’ appointees to the PUC have put the agency in the hands of advocates for the industry, not consumers. Chairman Greg Sopkin belongs to a group that’s pushing to deregulate the phone industry across the country, while staff chief Doug Dean carried deregulation bills when he was in the legislature. Even the Office of Consumer Counsel, which is supposedly an independent voice, has been reined in. Its people no longer can speak their own minds on consumer issues but must clear public statements with the head of the Department of Regulatory Agencies- another Owens appointee.
Qwest certainly should refrain from abusing its new market freedoms.
But in truth, even deregulated markets need watching. Prices must be clearly disclosed, bills must be understandable and consumers shouldn’t be pressured to buy services. Ironically, this week’s Qwest settlement means the legislature may need to pay more attention than ever to Colorado’s phone industry.
