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Consumer groups blast Texas telecom bill

By J. Lyn Carl,

Austin, TX –

"We're kinda' like the snowflake turning back the tide," said Rep. Harold Dutton (D-Houston) as he and representatives of three consumer groups spoke against the telecommunications bill (HB 13) that is scheduled to come to the House floor today.

The bill was heard in the House and Senate during the 79th Legislature's First Called Session, but passage did not make the midnight deadline on July 20 that ended the special session. As the Second Called Session opened last Thursday, Gov. Rick Perry expanded the call of the session to include telecommunications issues, and the bill was quickly voted out of committee and set for the House floor.

"I sometimes felt like the Lone Ranger in all this because I couldn't get enough people to listen to me," said Dutton, who has called the bill that benefits big telecommunications companies "absolutely the worst give-away" in the history of the Texas Legislature. But, he noted, the bill is back for yet another special session, and that gives Dutton some hope. "The more it comes back, the more people are likely to read it and become familiar with what this bill does."

Gus Cardenas, state president of the American Association of Retired Persons (AARP), said his organization that represents some 2 million Texans, is "not against competition," adding that "good, sound competition keeps inflation and prices in check."

However, he said AARP is opposed to HB 13 and its Senate companion bill, SB 5, because they will mean higher rates for basic service. "It's a matter of economics," said Cardenas. For many older Texans, telephone service is the "only line of communication" for emergencies and to keep up with family members and they depend on their telephones in their everyday lives. He said any change in that basic service will have implications for AARP members - in what they pay for, how they use it and what they use.

Cardenas argued that competition in Texas has not developed enough to "protect consumers from higher rates and lessened quality." He cited an example that showed that since the legislature allowed telecom companies to set their own prices for add-ons such as Caller ID, voice mail, etc., consumers saw prices increases of up to 400 percent. "Economically and historically, bundling of services is not in the best interest of consumers." The AARP official said these bills do not allow for the Public Utility Commission (PUC) to examine competition, and "denies consumers the protection they deserve." A similar study was performed by state utility regulatory agencies in Kansas and Oklahoma, said Cardenas, and when it was determined there was not enough competition in those states, a similar request by SBC was denied.

There has been no market test of the provisions of HB 13, said Cardenas, to ensure the services are sufficiently served with competitors to ensure that consumers get a "fair and equitable deal." Saying the sweeping changes of HB 13 will affect "so many consumers in our state," particularly older Texans on set income, AARP recommends "holding off until the 80th Legislature after a study has been done by PUC."

Saying the legislation "lifts the cap on stand-alone basic phone service," Tim Morstad of Consumer's Union said the basic phone service that costs approximately $11 per month before fees and taxes, serves some 600,000 to 800,000 SBC users. "Texas has never had real competition for basic phone service. That's why this rate has remained capped."

Incumbent phone companies such as SBC and Verizon dominate 84 percent of the state's residential phone service, said Morstad. While they argue that new technology provides competitive market pressure, he said, this competition is "for high dollar customers, not basic phone subscribers."

The bottom line, said Morstad, is that "deregulation works when competition is strong enough to hold prices down and push services up." He called HB 13 "risky" and said it represents an "unnecessary gift to SBC at the expense of hundreds of thousands of Texans."

Passage of HB 13 would provide a "veritable treasure trove" for the telecommunications industry giants, said Kenneth Hwang of the Texas Public Interest Research Group. He said the results would be higher prices, less competition and less local control. While saying SBC should be welcome to compete in Texas, Hwang added, "But competition is supposed to benefit people, not hurt them." He added that cities, too, would be hurt through the loss of revenues from lower franchise fees and the loss of hard-fought, in-kind services. There would also be a loss of control over public access channels, he said, with many eliminated altogether.

"Telecoms do not need the handouts that HB 13 gives them," said Hwang. "SBC already has the right and incentive to enter this market and they have been moving fast to do just that."

Dutton once again pointed out how the telecommunications lobby has been working the capitol for passage of this legislation. He said SBC has had more lobbyists in the capitol than any other organization and that passage of the bill would allow SBC to reach their hands even further into Texans' pocketbooks.

"We came here for one purpose," said Dutton, "to do something for public school finance. Why are we dealing with SBC issues?"

Dutton said anyone who doubts the lobbying effort of the telecommunications industry need only watch the gallery in the House and Senate to "look and see how many people exit the gallery" when the bill passes.