Consumer Federation of California

Beware of bills that claim to solve no problems.

One of those is in the Legislature right now, waiting patiently for the Assembly to pass it along to Gov. Jerry Brown. The text of the bill, SB1161, says that its intent is to "reaffirm California’s current policy" on Internet phone services like Skype and Google Voice by preventing the California Public Utilities Commission (CPUC) from regulating them.

Certainly Internet phone services deserve a light touch when it comes to governmental regulation. A rapidly growing number of Californians have come to depend on them, particularly for international communications, and for great reasons: They’re dirt cheap (or free), easy to use and at least as convenient as expensive landline calls. TeleGeography, a telecommunications market research firm, estimates that international Skype calls grew by an astounding 48 percent in 2011, to 145 billion minutes, while traditional telephone companies had growth of just 4 percent.

Given these numbers, we grew suspicious when we learned that some of SB1161’s biggest supporters were traditional telephone companies like AT&T and Comcast Communications. Why would these companies go out of their way to support the competition?

And given the way the CPUC has treated Internet phone companies thus far – there’s been very little regulation of these services, and commission members have indicated that they aren’t keen on regulating them – where’s the burning need for this bill?

"The hands-off strategy’s never been formalized, so it would give us certainty in a regulatory environment," state Sen. Alex Padilla, D-Pacoima (Los Angeles County), said. "It’s not costing the state a nickel, and I think there’s value in supporting one of the few bright spots in our economy right now."

Opponents say otherwise. The bill has a long list of those, too, ranging from labor groups like the Communications Workers of America to groups like Consumers Union. Their concerns are numerous and specific. Internet phone service is the next big thing in telecommunications, with even traditional service across the spectrum moving toward the new technology. Pretty soon, opponents believe, all regular phones will depend on the Internet for some services. SB1161 is a Trojan horse, in their opinion, to deregulate the entire telephone industry.

The truth is probably somewhere in between, but the bill’s opponents have enough good arguments on their side to give us pause. Foremost is the concern that this bill will tie the CPUC’s hands pre-emptively. If we don’t know yet how crucial Internet phone services are going to become to consumers, why would we outlaw the CPUC from ever stepping in to protect us?

The bill’s sponsor, Padilla, also gives us pause. The telecom industry has been one of his top campaign contributors for the past four years, and AT&T was his fourth-largest individual campaign contributor, according to Maplight California.

That’s no reason to disqualify a bill, of course, but it’s certainly a good reason to ask tough questions. And right now the toughest question is how SB1161 would affect the CPUC’s regulatory ability toward traditional services – the CPUC wrote in a memo in June that the bill is far too murky on this matter.

"We’ve had lengthy debates on this, and the commission has chosen to remain neutral on the bill," Padilla said. "We’ve gone to great lengths to make it abundantly clear that the CPUC’s ability to regulate traditional services remains in place."

That’s not what the commission told us. "This is one of the most ambiguous and unclear pieces of legislation I’ve ever seen," said Commissioner Mike Florio. "It’s not at all clear under this bill that we’d be able to touch anything having to do with quality-of-service problems. That’s very concerning, especially when there are natural disasters or problems that affect the phone lines."

Instead of offering more clarity, Florio said, the bill will provide less. As time goes on and more telephone services rely on the Internet, the commission will run into the limits of this law whenever it tries to carry out its traditional duties of consumer protection.

"This is being done without much thought," he said. "It’s going to mean lawyers and lawsuits and a lot of time and money and energy that doesn’t need to be spent. We’ve done nothing to regulate computer applications like Skype, have no desire to do so, and that’s not what this is about." The commission’s neutrality on the bill, he added, wasn’t because commission members felt neutrally about it.

"We wanted to ensure that we could continue addressing our concerns to the Legislature without being shut out as opponents," Florio said.

If there’s no reason for a bill like this, and so much confusion about how it’s going to affect the commission’s basic regulatory jurisdiction, then there’s no need for this bill. A bill about Internet phone service should be about Internet phone service – not about the commission’s basic right to protect the public.

The Legislature needs to vote down SB1161, and it needs to do so quickly. The bill passed the Senate after legislators added a long list of amendments that still aren’t enough. The Assembly is scheduled to vote on it next week.

The Assembly needs to shoot this bill down in order to send a strong message to the telecommunications industry that they can’t use a backdoor "status quo" bill to deregulate the basic services of the future.