Phone deregulation signed into law

By Kyle Stock, The Post and Courier

Published December 28, 2004

Dec. 28–Gov. Mark Sanford has quietly signed into law a controversial bill that deregulates rate-setting for phone companies and limits the ability of state regulators to field consumer complaints about their phone service.

Sanford signed the legislation Dec. 3, despite pressure from consumer- and business-interest groups which warned that the decrease in oversight would eventually lead to fewer phone companies and higher bills for telecommunication services.

Foes of the legislation said it was pushed into law by BellSouth Corp., the Atlanta-based Baby Bell that still holds most of the state’s local phone service market.

“This is just a power-play, pure special-interest legislation,” said Jack Pringle, an attorney who represents a number of phone companies that lease lines from “incumbents” in the business like BellSouth in South Carolina. “It really doesn’t make any sense to do something this broad and this sweeping this soon (after the Telecommunications Act of 1996).”

The law took effect immediately. Now, phone companies no longer need state approval to change rates on “bundles” of two or more services, such as a local phone line combined with call-waiting. The la also precludes the PSC from settling complaints from customers about bundled services and from handling antitrust allegations made by competing phone companies.

Elected officials who supported the legislation said it will lead to cheaper rates and wash uncompetitive companies out of the market.

“It’s good for economic development,” said Will Folks, a spokesman for the governor. “There are going to be a whole host of companies that will benefit from this.”

Ted Creech, BellSouth’s regional director in Charleston, said the legislation will allow his company to better compete through “price flexibility.” It has traditionally taken the PSC about two weeks to ratify a phone company’s request to change rates.

Phone companies that lease their lines from incumbents like BellSouth, however, have argued the opposite for months — that the law will let incumbents price out competition, “remonopolize” the market and eventually raise rates.

Public-interest groups like the state Department of Consumer Affairs and the AARP, which represents almost 500,000 South Carolina seniors, also urged lawmakers to kill the bill every step of the way.

South Carolina is still lagging most of the country in telecom competition. Some 90 percent of the state’s local phone customers are serviced by phone companies like BellSouth, compared with 82 percent nationwide, according to a report released last week by the Federal Communications Commission.

About 17 percent of the state by zip code is served only by incumbent carriers.

The state House passed the legislation by voice vote Feb. 19 and the Senate approved it by more than a 2-1 margin June 1. Without Sanford’s office did not make a public announcement when the governor signed the bill, as it typically does.

Frank Knapp, president of the Small Business Chamber of Commerce, said groups like this, which opposed the bill, were “outmanned and out moneyed” by BellSouth.

BellSouth is near the top of the list when it comes to SC political campaign contributions.


— Consumers and business groups say the new law will allow BellSouth to price competitors out of the market, lead to monopolies and usher in higher rates.

— Sanford and other lawmakers who voted in favor of the bill say prices will drop, uncompetitive firms will fold and fewer tax dollars will go to fund state regulatory efforts.


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