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Sunday, February 13, 2011

PRC's Jason Marks on Qwest Deregulation: State Senators Put Corporate Interests Ahead of Public Interest

JasonMarksCr This is a guest blog by New Mexico PRC Commissioner Jason Marks.

Legislation enabling deregulation of Qwest telephone services in New Mexico (SB 4) is set to pass the Senate Judiciary Committee (SJC) on Monday, having been temporarily halted last week on a tie vote.  Voting to support the legislation desired by Qwest were Democrats Linda Lopez and Richard Martinez, joined by the three Republicans present (Payne, Rue, Ryan). Standing up for consumers with a “no” vote were Democratic Senators Eichenberg, Wirth, McSorley, Michael Sanchez, and Eric Griego.  But unless Lopez or Martinez change their votes, Qwest looks to get its way when Republican Clint Harden returns Monday and breaks the tie.   

Both supporters and opponents of SB 4 predict that if it becomes law, Qwest will gain the power to raise rates without PRC review for almost all of its services and will be released from most PRC oversight of its infrastructure investments and quality of service.

Some background:  The telecommunications landscape has rapidly evolved over the past two decades and old regulatory models should be updated. In Albuquerque especially, but also in other areas of the state, many business and residential telephone consumers have choices other than Qwest for their telephone service. Senate Bill 4 directs the PRC to consider cell phone offerings, Voice over Internet Protocol (VoIP) services, cable company phone plans, and other relevant factors in determining whether a particular phone service in a particular geographic market has enough competition to justify deregulation. But then SB 4 goes too far -- it says that if Qwest proves competition in 50% of its territory (for example, Albuquerque and Las Cruces), the PRC must deregulate its services statewide. The PRC would be forced to stop regulating Qwest even in communities that were proven not to have adequate competitive alternatives.

Qwest says that if it’s deregulated, it will continue to charge the same prices across the state. Thus, in theory, their need to stay competitive in the Albuquerque market should prevent extreme price gouging. However, I believe that deregulation could result in significant price increases for currently low-cost basic residential services used by many senior citizens and others with fixed incomes. Moreover, while SB 4 puts statewide pricing for residential services into law, there is no similar protection for business phone lines. The only thing preventing Qwest from abusing its remaining monopoly market power in rural areas to raise rates to small businesses is their corporate management’s assertion that this is not what they intend.  

Another area where things would go from regulation by the PRC in the public interest to trusting Qwest to do the right thing, is quality of service and infrastructure investment. Without the PRC’s quality of service regulation, Qwest customers would not have any regulatory remedy if the company made them wait weeks for new service connections or they suffered frequent outages because of a poorly maintained network, or were forced to wait lengthy periods to have services restored because Qwest further reduced its ranks of technicians. These are all real quality of service issues with Qwest under the existing level of regulation. SB 4 poses a big risk is to customers in rural areas. Service and investment deficits could also affect parts of Albuquerque that are less affluent or harder to serve due to network geography.    

By the way, although I am focusing on Qwest, “sponsor” of the bill, SB 4 also paves the way to complete deregulation of Windstream, which provides phone service in some mid-sized New Mexico communities.

Consumers know the risk of removing PRC regulatory oversight from Qwest and Windstream, but unfortunately, too many of our state senators seem ready to hand over the keys to out-of-state corporate management that has shown in the past it will short-change New Mexico when left to its own choices.  (In a 2006 case, the PRC had to order Qwest to make up a $220 million investment shortfall, and we also ordered over $30 million in customer credits for service quality deficiencies during my first term on the PRC.)

In Senate Judiciary, Qwest supporters even rejected an amendment drafted by Tim Eichenberg with my assistance that would have allowed for the pricing freedom Qwest says it needs to respond to competition, while retaining critical consumer protections over quality in non-competitive markets and PRC oversight of basic residential service rates.

Earlier in the legislative session, SB 4 passed the Senate Corporations Committee (SCORC) with only Sen. Lynda Lovejoy having the courage to oppose this powerful corporation. Democrats voting for Qwest deregulation in Corps were Phil Griego, Munoz, Sapien, and Ulibarri.    

Take Action: New Mexicans who believe that our legislature should not compromise the public interest in order to increase the profits of a powerful corporation can help by emailing and calling their state senators -- especially key senators on Judiciary -- and asking them to oppose SB 4, Qwest Deregulation.

This is a guest blog by Jason Marks. To submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.

February 13, 2011 at 02:45 PM in Corporatism, Guest Blogger, NM Legislature 2011, Regulation, Telecommunications | Permalink


Thank you for bringing this to our attention, Jason.

Posted by: bg | Feb 13, 2011 3:01:57 PM

How can any Democrat support this horrible bill? They need to hear from us in force.

Posted by: Old Dem | Feb 13, 2011 4:42:01 PM

IMHO, they're not really Democrats, Old Dem.

Posted by: Proud Democrat | Feb 13, 2011 5:26:58 PM