updated below
In the 2009, two bills sponsored by Qwest were narrowly defeated by pro-consumer legislators. Unfortunately, they're back. As discussed below, SB 37 is a fast-track to complete deregulation of Qwest prices, service quality, and in-state investments. HB 107 is a cleverly disguised, unjustified rate increase for Qwest, Windstream, and the rural monopoly telephone companies.
At a time when our Legislature faces tremendous challenges with the budget shortfall, and when far too many New Mexico citizens and business are suffering from unemployment and recession, it might be hard to believe that our legislators would have the nerve to do special favors for a large, out-of-state telecom corporation -- and to make you pay for it.. But that's the way it works in Santa Fe, where bills like this are shepherded through committees by well-paid and well-connected lobbyists, and kept out of the public's view. Both bills were supported by interim committees, and SB 37 has already passed it's first committee in the Senate. Let you state senator and representive know you are watching and that you oppose Qwest's anti-consumer bills.
SB 37 – Removing certain telecommunications rates from the PRC’s
jurisdiction - aka Qwest DEREGULATION (Sponsor: Carlos Cisneros)
This year’s version of Qwest’s deregulation bill will automatically
result in complete deregulation of Qwest throughout New Mexico if the company
demonstrates sufficient competition in just 50% of the state. Not only
would the PRC lose the ability to regulate Qwest’s prices, the Commission
would no longer be able to set or enforce ANY service quality or customer service
standards or require any Qwest investments in New Mexico infrastructure.
Even if Qwest couldn't prove effective competion in 50% of its "wire centers,"
it would still qualify for complete deregulation if it lost 33 % of its lines.
The biggest risk here is to rural areas, which are likely to stay Qwest monopolies, regardless of how competitive markets get in Albuquerque and other metro areas like Las Cruces. If SB 37 becomes law, there is nothing to stop the company from drastically reducing its commitment to service quality and investment in the non-competitive areas. Service and investment deficits could also affect many parts of Albuquerque that are less affluent or harder to serve due to network topography. The company’s past conduct unfortunately shows that it has short-changed New Mexico on service quality and investment when left to its own choices. (I am referring to the $220 million investment shortfall under the first AFOR plan, and over $30 million in customer credits the PRC ordered for service quality deficiencies during my first term on the PRC.)
Statewide pricing and competitive forces in Albuquerque should prevent extreme price gouging; however, my expectation is that deregulation will result in significant price increases for some services, such as basic residential service, and some small business services. Parts of SB 37 updating the criteria the Commission uses in determining the extent of competition to explicitly include an analysis cell phones and other technologies are reasonable changes to law, but even here, Qwest has also proposed a line-loss based trigger for deregulation that is unwarranted and could lead to significant harm to consumers.
Absent this bill, the PRC will continue to manage the evolution of the regulatory burdens on Qwest in a manner proportionate the actual competitive status of each geographic and service-based market. The PRC understands that Qwest faces growing competition and has already granted it significant flexibility to reduce prices.
Update (2/8) An amendment by Qwest that purports to keep the PRC's authority over customer protection and quality of service was adopted when SB 37 was passed forward by the Senate Corporations Committee (with only Sen Lovejoy voting against) Friday night. Having looked at the amendment more carefully, I have determined that the amendment is a sham as it relates to Quality of Service regulation. The amendment reads "the commission may impose consumer protection and quality of service rules on that provider consistent with the findings of effective competition and rules that are imposed on other providers offering service in the relevant market area." The key words here are "consistent with the ....rules that are imposed on other providers offering service." The "other providers," which would include wirelineCLECs, VoIP providers, and wireless, are NOT subject to most of the PRCs Quality of Service regulations. You can find the regs at 17.11.22 NMAC. The key QoS standards applicable to end-user customers that Qwest would be exempted from by SB 37, as amended, include provisioning new phone service w/in a 5 days in most circumstances, providing alternative services (i.e., a cell-phone) if the order can't be filled on time, the requirement that the ILEC have sufficient equipment to provide a dial-tone w/in 3 seconds for 98% of calls, the requirment to answer incoming customer service calls w/in a reasonable period, and the requirements to keep outages below a certain rate and to promptly restore service following a reported outage.
Thus, with the enactment of SB 37, Qwest customers would no longer 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 (inability to restore outages w/in the allowed time period has been their biggest problem and accounted for most of the millions of dollars in customer credits they've been forced to pay).
The Commission has separate Consumer Protection rules, at NMAC 17.11.16 that require telcos to disclose their rates, provide accurate information in a curteous manner to customers, provide readable bills, provide advance notice of disconnection for non-payment, and not disconnect a customer for non-payment of an amount that is being legitimately contested. All of these rules are applicable to CLECs, and some are even applicable to wireless carriers. Thus, I don't see that Qwest would be exempted from this group of regs under SB 37, just the Quality of Service regulations.
HB 107 – Recovery of Relocation Costs From Telephone Customers
(Sponsor: Bobby Gonzales)
This bill allows Qwest and other regulated telephone companies to impose a surcharge
on customers’ bills to recover costs of relocating lines and other infrastructure
due to road construction projects. While this sounds somewhat reasonable on
the surface, in fact this bill is nothing more than an unjustified rate
increase for Qwest, Windstream, and other monopoly telephone companies.
Basically, these costs are already reflected in Qwest’s current rates, as was acknowledged by a Qwest witness in in cross-examination under oath during a recent PRC hearing. (Case 09-00094, Transcript of July, 8, 2009 Public Hearing at p. 109.) Moreover, in 2000, Qwest and Windstream, chose to stop having their rates set based on their costs. Instead, we have “alternative forms of regulation” (AFOR) plans. Since 2000, Qwest has dramatically reduced many of its costs, for example, it has unfortunately laid off a huge part of its New Mexico workforce. Because we now have price regulation, not cost regulation, Qwest has not shared any of these cost reductions with customers – in fact, rates are going up. Now, they want to get a special surcharge so customers will (double) pay this one category of costs, without the PRC considering how their overall costs have changed.
The rate riders permitted by this bill are nothing more than an unjustified rate increase for Qwest, Windstream, and the smaller phone companies. For Windstream and the smaller companies, especially, the rate impacts could be significant even with the proposed annual cap. Although the PRC would be able to modify how the surcharge was imposed (for example, over how many months the costs were spread), if HB 107 is passed, the PRC will not be able to say no or reduce the amount of the telephone company’s request below the company’s actual cost. The PRC rejected the concept of a separate relocation cost recover rider for Qwest in its recent AFOR case based on the applicable facts and the law, now Qwest is trying to go around the Commission and get the Legislature to give a rate increase they don' t deserve.
HB 107 passed House Consumer and Public Affairs Committee Saturday morning, with Reps Al Park and Gail Chasey voting against, and Bill O'Neill, Tom Anderson, Moe Maestas, Duran, and one other in favor of Qwest.
An earlier version of this post indicated that AG Gary King opposed these two bill, which was the position he stated to me prior to the session. The AG has taken an neutral position in committee, and I've been told that he is attempting to negotiate a compromise with more consumer protections for SB 37.