Well, the fireworks came as promised. The American Legislative Exchange Council’s Telecommunications and IT Task Force approved model legislation for state deregulation of Voice over Internet Protocol (VoIP) calling, battling back a controversial amendment that would have applied the current carrier-to-carrier access charge scheme to VoIP calls. The model “Advanced Voice Services Availability Act of 2007,” intended for use by state legislators, enjoins state public utility commissions from regulating rates, terms or conditions on interconnected VoIP services. While the measure had strong support among ALEC public and private sector members, rural telephone companies feared the legislation would result in their loss of payments from other carriers for the completion of calls on their network. Groups such as the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), the Independent Telephone & Telecommunications Alliance (IT&TA) and the Pennsylvania Telephone Association all asked task force members to oppose the model bill on grounds it would raise rates for rural users. During Thursday’s Task Force meeting at ALEC’s annual meeting in Philadelphia, David Bonsick, director of government and public affairs for Embarq, a telecommunications service provider with primarily rural operations areas, said, “flash-cutting to deregulation would likely cause irreparable harm to hundreds of rural telephone companies.” Bonsick touched off some emphatic give-and-take between task force members over VoIP deregulation. An amendment that acknowledged the access charge issue but remained neutral on mandating or prohibiting payments was offered, then withdrawn. In the end, Bonsick proposed a stronger amendment that would have mandated payment of access charges for completion of VoIP calls, but it failed when his motion to vote was not seconded. While rural companies do depend on access charges and intercarrier compensation for a substantial portion of their revenues, access rates are regulated by both federal and state mechanisms. Rates are not set by the market, but by complex formulas that, result in different carriers paying different access fees to the same rural company for the same connection. Some task force members argued that access payments thwart the development of competition from other technologies by keeping rural rates for conventional dial tone artificially low. State Rep. Phil Montgomery of Wisconsin, the author of the model bill, said it was his wish to keep the access charge issue separate.
Steven Titch served as a policy analyst at Reason Foundation from 2004 to 2013.