Broadband Cable Association of Pennsylvania


February 19, 2013

Kansas would begin to phase out consumer-financed subsidies for universal landline service under a House-approved bill that also would lessen state regulation of telecommunications. The Kansas State House approved the measure 118-1 on Monday. The bill now moves to the Senate, where it is expected to have bipartisan support.

With more Kansans relying on wireless communication, the bill represents a significant shift away from state subsidies to companies so that the firms can bring adequate landlines to even the most remote and sparsely populated rural areas. The subsidies, in place since 1997, are financed with a charge on customers' monthly landline and wireless bills. The current universal service charge is 6.42 percent, which is expected to raise almost $63 million from March through February 2014. Under the bill, companies could choose to operate under lesser state regulation but would see their subsidies decline. Some supporters of the bill think the special charge could disappear altogether in four years. "We have this mentality, 'If I don't have a wire, I can't make a phone call.' That's not true," said Rep. Scott Schwab, an Olathe Republican who supports the bill. "That copper line is being replaced with an antenna, and it's more reliable."

The bill follows up on laws enacted in the last decade to move Kansas away from regulating rates for telephone service as consumers embrace wireless devices. The measure also results from an agreement involving AT&T Inc., the state's largest phone service provider, and other telecommunications companies. "It largely reflects what we're seeing in society - increased use of cellphones, decreased use of landlines," said Sen. Pat Apple, a Louisburg Republican and the chairman of the Senate Utilities Committee, which will take up the measure next. "There are more options, and with more options come competition."

A 2006 state law deregulated prices for bundles of services that included wireless, Internet access, cable TV or other video and moved toward deregulating rates for local service in exchanges where competition existed. A 2011 law went further, allowing companies to avoid most state price caps. This year's bill would allow those companies to avoid even the Kansas Corporation Commission's consumer protection regulations and minimum quality-of-service standards.

In the House, the only "no" vote came from freshman Rep. Larry Hibbard, a Toronto Republican. Hibbard said landlines are vital in some rural areas, and they could see their rates rise. He also suggested that many older Kansans find wireless devices too confusing to use. "This bill may come back to haunt rural Kansas," Hibbard said. Republican Gov. Sam Brownback would have to carefully review the measure if legislators pass it, spokeswoman Sherriene Jones-Sontag said. "However, he does have a long history of pushing for deregulation of telecommunications," she said. Kansas City (MO) Star

When she got a telemarketing pitch to combine her electric and gas bills into one, Susan Dorn became suspicious. "What really stumped me was how were they going to take my gas and electric into one bill," said Dorn, 42, of New Kensington. "That was kind of fishy. "I've never heard of anything such as that so right away, I thought it was a scam," she said.

Actually, that billing arrangement is possible, according to the Public Utility Commission and the Pennsylvania Consumer Advocate's office. It's another part of the brave new world of utility deregulation that state residents find themselves navigating amid seemingly endless calls from electric company telemarketers and even door-to-door marketers. "What they are talking about are things that are possible," said Tanya McCloskey, the acting consumer advocate. "These are the kinds of services that the companies would like to offer. A lot of folks would like to get an energy bill, get all of their services on one bill." She said there are one or two companies working in both the electric and gas markets, but she was not aware of any billing proposals being offered.

But McCloskey said that doesn't mean there aren't any offers out there or that such offers are illegal. "You'd have to be licensed as a natural gas supplier and as an electric supplier by the PUC," McCloskey said. If somebody had West Penn Power as their electric company and Peoples Natural Gas as their gas supplier, those companies would have agreements with the third party making the offer. "Allegheny would have to have an agreement with the supplier, and Peoples would have to have an agreement with that supplier to do the billing," McCloskey said. "We don't have anyone listed as marketing gas and electric," said Jennifer Kocher, PUC press secretary. "It doesn't mean it's not true, but it is OK to question it, and it is OK to call us to check this out. "Any time a consumer gets a call like that and they feel uneasy about it, they should call us," she said. "You should not use anybody who is not a licensed supplier in the state."

McCloskey said her office has not received any reports of anyone being scammed through the telemarketing campaigns aimed at luring business to new electric suppliers in the market. However, she said there have been some complaints about those efforts, particularly telemarketers being vague, leading consumers to think they are with the consumers' utility company. "That has been one of the concerns that people have expressed both with the telemarketing and with the door-to-door marketing: that they were not clear that they were not from their utility," McCloskey said. According to Kocher, the PUC has received consumer complaints about marketing campaigns. "The ones we have gotten are about aggressiveness in both telemarketing and in door-to-door marketing," she said. She said that there is one case pending against MX Energy for that kind of behavior by its marketing companies. Kocher thinks it's healthy for consumers to be wary of and question the offers being made.

While the information electric telemarketers are asking is not the same as identity thieves looking for credit card numbers, usually they ask for the consumer's account number as verification. But there is a danger in that, Kocher said. "Once they have your account number, that is all they need to 'slam' you and change your provider without your consent," she said. "Watch your next bill and make sure that you haven't been switched," Kocher said. "If you have been switched, we can work on getting you returned and go after the company that did the switching."

She said consumers should exercise caution. That includes making sure that the person is wearing the proper identification if it is door-to-door marketing. "Anytime anyone is uncomfortable with the marketing that is going on or anyone comes to their door and they are uncomfortable, we advise them to go with their instinct and don't give account numbers or information," Kocher said. Kocher and McCloskey said there are legitimate offers out there that could save utility customers money, but they need to be examined. McCloskey said residents need to look at the utility bills to compare their current utility rates with those offered by new suppliers. On electric bills, the price to compare is the price per kilowatt hour. On gas bills, it is the cost per cubic foot of gas. Pittsburgh Tribune-Review