In the last two months, AT&T’s announcement that it will convert its existing traditional phone system to an Internet Protocol (IP) based network and the aftermath of Hurricane Sandy have galvanized the telecom policy world. One would think the state of California would figure prominently in this discussion, and that people in California would have a huge vested interest in the outcome of these discussion. For example, given our newfound interest in disaster preparedness for IP networks in the wake of Hurricane Sandy, California (which, I’m told, has the occasional wildfire, deluge, mudslide or earthquake which causes power and telecom outages) might want to hold their own hearings and develop their own state plan and state standards. Similarly, with both AT&T and Verizon (both service providers in California) announcing they are replacing rural copper with wireless and converting their old-style phone networks to IP, you would think California would want to have some say in how these companies (and other IP network providers) serve the customers of their state.
Sadly for the people of California, you will not have that opportunity. All decisions on these matters relative to you will be left entirely to the private sector, or will take place in Washington D.C. Why? Because on September 28, Governor Jerry Brown signed into law S.B. 1161. This law, drafted by the fine people at the American Legislative Exchange Council (ALEC) and introduced by Senator Alex Padilla, prohibits any agency of the state of California from regulating “voice over IP” or “Internet enabled service” (text of law here) (More on ALEC and its role in drafting the law here, here, and here). While this primarily focuses on the California Public Utility Commission (CPUC), the law prohibits “any department, agency or political subdivision of the state” from doing anything to regulate VOIP or IP-based services.
How does this relate to Hurricane Sandy, emergency preparedness, and the conversion to all IP networks? I explain below . . .
Allow me to translate what S.B. 1161 means in practical terms, since apparently no one in California’s state legislature (where this passed with huge bipartisan support) seemed to understand it. It means that you, the state of California, have outsourced all authority for emergency preparedness and coordination of actual disaster response to the private sector. For example, suppose the City of Los Angeles (which has had phone outages triggered by torrential rains before) looks at what happened in Hurricane Sandy and says “crap, we better get some safety standards in place that would let us make sure providers get phone service working again after a disaster.” They are – to use a highly technical term – “screwed.” S.B. 1161 prevents them. as a “political subdivision” of the State of California, from making any kind of regulation — including a public safety or emergency preparedness regulation — for any kind of IP or IP-enabled service.
Sure, Los Angeles (or California generally) can can continue to regulate legacy telephone service. But because Verizon and AT&T, California’s largest providers of traditional telephone service, are converting to all IP networks, Californians are not going to have any kind of plain old telecom service (aka “POTS”) back up. In other words, California, all your current telecom-based emergency preparedness and coordinated disaster response is going to “bye bye!” What you will have in its place is whatever the private sector chooses to do, supplemented by whatever the Federal Communications Commission (FCC) adds to it.
You, California, the largest state by population, the third largest by geography, the home of Silicon Valley, the sixth largest economy in the world, will have absolutely zero control over one of the core functions of government – making sure people can communicate in a crisis and restoring communications after the crisis is over. You cannot set response time standards. You cannot mandate that your network providers inform consumers when service will be restored. You cannot even make these guys develop any actual emergency plans. And why? Because your good buddies at ALEC told you needed to do this to encourage investment in IP networks. IP networks, ALEC and an army of telecom lobbyists assured you, are bright, shiny magical things and that even the possibility of any kind of regulation might scare off the packet fairies and prancing unicorns that make the magic glowy boxes do their thing.
But here is the absolutely delicious part. Not only did it take a mere 6 weeks to make it clear to everyone what a crappy deal S.B. 1161 is, AT&T and Verizon announced they would switch to all IP networks without any dereg. Heck, Verizon is swapping out copper for fiber in New York even as we speak. Not because New York agreed to bribe them with regulatory goodies but because it makes economic sense for them to do so. Ditto AT&T. Although AT&T thinks deregulation would help it deploy, they made very clear in their most recent Petition to the FCC and in their analyst conference that investment and conversion to all IP networks was not a quid-pro-quo for deregulation.
Oh Senator Padilla, when will you ever learn that ALEC is not your friend? Well, maybe ALEC is your friend, but it is not really the friend of the People of California. Don’t you remember back in 2006 when ALEC came ‘round with the Digital Infrastructure and Video Competition Act of 2006, which eliminated local video franchising and deregulated most basic phone service rules? ALEC promised you all in Sacramento that eliminating all that nasty bad, bad regulation would free the packet fairy to work her magic to bring down prices and close the digital divide? And that cable rates would stop rising at 5% or so a year because competition would keep prices down. Remember?
What actually happened, of course, was that providers continued to build out in rich areas where they could get high rate of return. Also, while wealthier customers got bundles (which cost more but lower the price for each individual service), poor people dependent on basic service saw prices rise. And, as y’all may have noticed, cable rates kept going up anyway. In fact, a report by the California Senate in 2010 found that deregulation of basic phone service had produced significant problems for consumer protection and not the nirvana of happy packet fairies and unicorns ALEC and the telco lobbyists promised. But you trusted them again?
I know what you’re thinking. “What about those much vaunted consumer protections Governor Brown pointed to in his signing statement for S.B. 1161? Turns out most of them are backward looking “protect the status quo” kind of things. To the extent California has rules in place, it gets to keep them (including a limited back up power rule). But if California citizens discover they actually need something new, like say a Hurricane on the east coast underscores for everyone the need for a state coordinated disaster response or mandatory reporting on emergency preparedness or some such, the people of California are, to use that technical term again, “screwed.”
The only forward looking “protections” (and I use quotes for a reason here) are; (a) the ability of the CPUC to “monitor and track consumer complaints,” (b) the ability to write reports and convene discussions, and (c) the ability to implement anything the FCC might come up with in the future. Governor Brown considered these critical consumer protections. Apparently, the concept of “people of California actually having a say in their future and stuff” or “people of California, through their state and local government, making sure they have adequate emergency preparedness and coordinated emergency response” did not make the cut on things Governor Brown cared about for the people of California.
Who would imagine that within a mere two months of issuing this statement we would discover that Governor Brown had cut his own state out of the most critical telecom conversation in 15 years, and handed over decision making on this to the private sector and/or “Washington bureaucrats?” Heckuva job Governor Brownie! And you too, Senator Padilla! Oh, and lest you embarrass yourselves further with your very own “nobody could have predicted the levees would break” moment, I will point out that Susan Crawford told you this would happen.
It was Republican Presidential hopeful Mitt Romney who said we ought to delegate emergency response “to the states, or even better, to the private sector.” Who would have thought that California’s Democratic Governor and a Democratic State would have been the ones to put that plan in action? For or better or worse, California is now sidelined in the planning of its own digital future, and cannot even control emergency preparedness for its critical communications.
California’s only comfort, such as it is, is that it wasn’t the only sucker to fall for ALEC’s promise that deregulating critical infrastructure like IP networks is a sure-fire get-broadband scheme that can’t go wrong. More than 20 other states have passed laws that sideline themselves in the most important telecom discussion of the last 15 years, and outsourced their emergency preparedness to the private sector. Hopefully, other states considering similar ALEC-drafted bills will learn the lesson and think twice. As for the people of California – better hope the “Washington bureaucrats” have got your back.
Stay tuned . . . .