SB 1161: A Real-Life Telecommunications Horror Story

In horror movies, you always know the victims are in big trouble when they pick up the phone to call for help and the line is dead. When there’s no way to call for help, the audience knows that the victims better get out of there ASAP, or else all hell is going to break loose.  

Unfortunately, California is the hapless victim in a real-life horror movie going on right now. AT&T, Verizon, and their corporate cronies are the villains in this particular horror movie, and they’re cutting the phone lines with SB 1161 (Padilla)—a bill currently on the Assembly floor. We all know what happens next. California consumers and workers are in big trouble and are going to pay the price if this bill makes it into law.

Like many horror movies, the opening scenes seem peaceful, though there is always a sign that something is about to go horribly wrong. In this case, Senator Padilla’s opening scene touts his bill, SB 1161, as protecting the Internet and fostering innovation, while preserving existing consumer protections. But the fact that every major telecom corporation—from AT&T and Comcast to Verizon and Time Warner—has an army of lobbyists working on the bill should be the sign that all is not as it seems.    

What SB 1161 really does is deregulate the telephone service in California, striping the ability of the California Public Utilities Commission (CPUC) to enact and enforce consumer and worker protections. How does it do this? Simple– by explicitly prohibiting the CPUC from regulating Voice over Internet Protocol (VoIP) -enabled phone service.

VoIP may sound like something out of a sci-fi movie, but many of us use VoIP –enabled services every day; it’s the next big thing in telecommunications. If you have AT&T U-verse, Comcast Xfinity or Verizon FOIS, then you probably already use a VoIP service. Not that you would necessarily know—a VoIP-enabled telephone looks, sounds and works like any other landline—you plug the phone into the jack and make a call. Corporations like AT&T and Verizon are increasingly migrating consumers to VoIP services.

The CPUC regulates traditional phone lines, and has put in place key quality and service standards, as well as several important consumer and worker protections. As VoIP replaces copper phone lines as the predominate means of phone service, the CPUC should have a role in developing regulations that fit the new forms of communications. SB 1161 would take away that ability. You could have great consumer protections one day, and the next you could be switched to VoIP and have none of those protections.

The bill would eradicate standards for service quality and line maintenance for clear, reliable calls, as well as protections against unauthorized charges (cramming). The bill would also allow telecommunications companies to “cherry-pick” customers in high-profit areas, while abandoning low-income and rural communities. Right now, ‘Carrier of Last Resort’ regulations require companies to provide service to all customers, even if they aren’t profitable. CPUC also plays an important role in dealing with customer complaints, and this bill would reduce them to merely tracking the complaints of customers dissatisfied with their VoIP phone service.

Right now, the CPUC has only had a “light touch” in regulating VoIP, and, according to CPUC Commissioner Michael Florio, they have no plans to regulate the Internet, even if they could. In fact, four out of five members of the CPUC have criticized SB 1161, saying that the bill “has the potential to eliminate basic consumer protections for people who use traditional telephone land lines.”

So why are giant telecom companies so eager to pre-empt VoIP regulation? Well, it turns out that the Federal Communications Commission (FCC) is looking more closely at the industry, and may allow greater regulation of VoIP at the state level. Telecom corporations are trying to get ahead of the FCC in order to to beat the regulation and protect what could be a gold mine of profits.

California is just one is a series of states that have faced telephone deregulation bills sponsored by telecom companies and their corporate buddies. The right-wing, anti-union American Legislative Exchange Council (ALEC) has a model bill that they’ve been pushing in states across the country to deregulate the telephone industry and pave the way to huge paydays for telecom corporations. Some states have fought back, recognizing the danger to consumers and workers of deregulating such a vital service as communications. Governor Ritter of Colorado broke down the situation in his veto message of similar legislation:

Preemptively barring the State from regulating VoIP at this time is unwise, considering activity at the federal level concerning VoIP. The Federal Communications Commission (“FCC”) has not yet taken a position on whether VoIP is strictly an information technology or a telecommunications service, but the FCC is currently in the process of studying the technology to determine if greater regulation is prudent.….it is important to permit the FCC the time to make its decisions concerning VoIP.

As this progression from landlines to VoIP occurs, Colorado cannot be left without the power to regulate such an important technology. Should the need arise, regardless of movement at the federal level, the PUC must have the latitude and authority to regulate the price, quality of service, and availability of VoIP in order to prevent significant harm to the consumers of this State.

Given the fierce opposition by labor and consumer groups, and the fact that states like Colorado, New York and New Jersey have fought back similar legislation, why is a Democrat, Senator Padilla, moving SB 1161? One reason may be the corporate backers of the bill. An army of lobbyists for AT&T, Verizon, the Chamber of Commerce, Technet and other corporate giants invaded the Capitol to work to pass SB 1161. And their influence doesn’t stop there. Senator Padilla, who chairs the Senate committee that deals with telecommunications, has received close to $70,000 from the telecommunications industry from 2007-2010, with AT&T clocking in as his 5th largest donor. 

Like a horror movie, the phone lines are being cut in California. If SB 1161 passes out of the Assembly, telephone deregulation could become a reality in this state. This is our last chance to fight back. Call your Assemblymember now and tell them to protect consumers and workers and to vote NO on SB 1161!