Telecommunication bill hinges on single word

Thursday, April 7, 2005

JEFFERSON CITY, Mo. -- Sometimes the presence or absence of a single word can drastically alter a piece of legislation's impact.

During a two-hour hearing Tuesday on a bill to revise Missouri's telecommunications regulations, nearly the entire discussion focused on whether the word "existing" should be dropped from the 26-page measure.

Under current law, phone companies can offer special discounted rates to new customers or to former customers who have switched to another service provider. However, the law prohibits them from offering the discounted rates to existing customers in order to retain their business.

A bill being considered by the House Utilities Committee would allow companies to offer existing customers discounts before they switch to another provider.

Large phone companies say that single word would allow consumers more ability to shop around for the best deal. Cable operators, who are seeking to enter the voice-communication market, and small phone companies say the word would stifle competition and leave incumbent service providers no incentive to lower rates.

State Sen. David Klindt, the bill's sponsor, said even he isn't certain which option would best serve consumers. The Senate added the term before approving the measure last month.

'Toughest thing'

"That is probably the toughest thing I've wrestled with -- what to do with that word," Klindt said.

Paul Lane, a lobbyist for SBC of Missouri, said consumers aren't well served if they are forced to switch companies before they have an opportunity to get the best deal from their original provider.

"We have to tell you we can't offer you a special deal, but if you leave we can make you an offer to win you back," Lane said. "That doesn't make sense from a competition standpoint or a consumer perspective either."

Other major companies testifying in favor of the bill include Sprint and Century Tel.

The bill's opponents said if phone companies that currently are the sole provider in a particular area can lowball new companies trying to enter a market, it will prevent the new company from attracting customers. Therefore, few companies will be willing to make the investments necessary to enter those markets, allowing the original companies to retain monopolies.

SEMO Communications president Tyrone Garrett said the bill would virtually preclude competition for phone service in very small rural markets.

Enhancing competition

"If the goal of the committee is to enhance competition, that word needs to be taken out," Garret said.

Sikeston-based SEMO Communications serves about 2,000 cable customers and provides high-speed Internet connections to about 500 customers in small towns, such as Pocahontas and Delta, throughout Southeast Missouri. Garrett said the company intends to begins offering phone service through its cable lines in the near future.

Missouri Cable and Telecommunications Association president Greg Harrison said large phone companies are afraid of competition from cable providers. At present just two cable companies offer phone service in Missouri -- Time Warner in Kansas City and Charter Communications in St. Louis -- but many other eventually plan to do so.

"All we are trying to do is get a foothold in the market," Harrison said.

Others opposing the bill include Big River Telephone Co. of Cape Girardeau and Galaxy Cablevision, which has its corporate headquarters in Sikeston but primarily serves customers in northwest Missouri.

Most of the opponents said they would support the overall bill if the one word to which they object is deleted.

In general, the bill would allow more flexibility for companies to set rates in local phone exchanges that the Missouri Public Service Commission, which regulates the industry, deems competitive.

Klindt, the bill's sponsor, said that as conditions currently exist only 131 of the approximately 700 exchanges in Missouri would be declared competitive if the bill were to pass.

The bill is SB 237.

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