NJ Spotlight

Telecom Deregulation: How Much Is Too Much?

Dueling Democratic bills differ as to how much protection they offer consumers

NJ Spotlight — Tuesday, November 22, 2011

By Patience Haggin

The recent weather-related outages and service interruptions have some Democratic legislators arguing that a bill to deregulate the state's telecom and cable industries goes too far, stripping away consumer protection.

They also say that the proposed legislation can leave seniors and people with disabilities at risk.

Chief among the critics is state Sen. Bob Smith (D-Middlesex). Joined by state Sen. Loretta Weinberg (D-Bergen), as well as representatives of the AARP and New Jersey Citizen Action, Smith yesterday introduced new legislation, S-3062, that he claims will remedy the shortcomings of a bill proposed this past spring and expected to be approved during the lame duck session.

For his part, state Sen. Raymond Lesniak (D-Union) is standing behind the original bill, A-3766, which he proposed.

Both measures aim to make the telecom industry more competitive in New Jersey by removing deregulations that are no longer necessary. Despite that common goal, the bills are very different.

The Lesniak bill does not require companies to provide special low-rate landline service or public access channels. It also eliminates the requirement that companies correct billing errors and provide a credit for cable outages over four hours. It does stipulate that providers continue to offer 911 service.

Backed by business interests around the state as well as Verizon and cable companies, the measure is touted as eliminating burdensome rules that stifle economic growth. Consumer advocates, however, say it will leave customers with no recourse if they encounter problems with service quality, billing, and other issues.

"This is not a matter of eliminating red tape or unnecessary regulation," said Stefanie Brand, director of the Division of Rate Counsel at a legislative hearing on the bill earlier this year. "If the legislature enacts this legislation, it will be leaving consumers on their own when dealing with telephone and cable companies."

Smith's bill, in contrast, requires telecom companies to provide specially priced landline service for low- and moderate-income customers. It also stipulates that companies repair any landline services damaged by extreme weather. Further, it calls for cable providers to continue to offer municipal public access channels. Finally, it preserves the BPU's oversight of the telecomm industry.

For its part, Verizon argues that some of the oversight written into Smith's bill is unnecessary.

Verizon Communications said the fears that deregulation would cause phone companies to raise their rates were unfounded.

What's more, even under Lesniak's plan, elderly and disabled citizens in need of subsidized utilities would still be eligible for the Lifeline program. Verizon indicated it was working to make its voice heard in the legislature about how the relevant legislation could be amended to move New Jersey in the right direction.

Verizon also said that predictions that cable companies would cancel public channels if not legally bound to continue them were unfounded, indicating that offering public channels helps make companies like Verizon be competitive.

AARP representatives spoke in support of the Smith bill, calling landline service a "lifeline" for elderly people and describing the bill as the perfect balanced approach to meet the needs of the elderly.

"We can have reasonable deregulation of both landline telephones and cable without striking a big hole in the safety net for our state's older citizens," AARP state director Jim Dieterle said at the conference.

Smith maintained that his plan would win support as the best protection for senior citizens, who often rely on landline phone service as their only reliable line of contact during an emergency.

"I think [Smith] struck the right balance between some deregulation that Verizon and other companies probably need to keep up into the twenty-first century, but enough protection for the consumers and the residents that we are all sworn to represent," said Weinberg. Weinberg is a co-prime sponsor of the legislation.

Meanwhile, Assembly Speaker Shelia Oliver (D-Essex) released a statement reaffirming her support for the Lesniak bill.

Lesniak's bill has been voted out of committee and is up for debate before the full senate. Ironically, Smith's legislation has just been introduced to the State Economic Growth Committee, which is chaired by Lesniak.

Smith predicted that, if his bill isn't passed, it may lead members of the committee to amend the original bill to address the concerns raised in his bill. "There are now, at least, two sides to the bill," Smith said.

Gov. Chris Christie, who initially backed the Lesniak bill but later reconsidered his support, declined to state a position on the Smith bill until the Democratic leadership had settled on a position.

"I have real concerns that there be ample protections for seniors in any deregulation that's proposed that will protect seniors' ability to have affordable landline coverage in their homes," Christie said in a press conference.

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