The controversial 'AT&T bill' is back, and Kentucky legislators are rushing to approve it

jcheves@herald-leader.comJanuary 29, 2014 

FRANKFORT — A bill that would further reduce state regulation of telephone service in Kentucky could speed through Senate committee and floor votes Thursday.

Senate Bill 99 is the newest version of what many at the state Capitol call "the AT&T bill," because that company has played a key role in pushing the deregulation proposal for several years. Critics blocked it in the past, saying it could leave rural Kentuckians stranded without cheap and reliable land-line service while freeing the major phone companies to pursue more profitable high-tech customers.

However, the new bill addresses those concerns, Hood Harris, AT&T of Kentucky president, said Wednesday.

The bill would end most Public Service Commission oversight of phone service in the state's populous urban areas, including Louisville, Lexington, Richmond, Winchester, Georgetown, Frankfort and Corbin.

The major carriers — AT&T, Cincinnati Bell and Windstream — no longer would have to offer basic land-line phone service in their assigned territories in urban areas. Instead, they could provide phone service through a wireless plan or modern Internet Protocol-based technology, which converts voices into a digital signal that travels over the Internet and then coverts it back again at the other end.

In rural areas, residents could keep their land-line phone service, although the carriers would not be required to expand land-line infrastructure to new developments.

The bill would end PSC jurisdiction over consumer complaints about cellphone and broadband service, and it would end PSC and city government jurisdiction over phone carrier acquisitions, consolidations and mergers. Last month in Connecticut, AT&T announced it was exiting the land-line business entirely and selling its existing infrastructure in that state to a smaller company for $2 billion so it could focus on wireless services.

Kentucky's phone carriers want to invest more in high-speed broadband service, which relies on IP-based technology, by spending less on their outdated land-line infrastructure, Harris said. But nobody would be dropped or left without reliable phone service under SB 99, he said.

"We don't see any radical overnight change. It's about the transition as we go forward," Harris said. "We're living in a smartphone world that's still governed by rotary phone rules."

Sen. Paul Hornback, R-Shelbyville, the bill's sponsor, offered a hypothetical example Wednesday of how the bill would work.

Imagine that a developer builds a 60-unit apartment complex in Louisville and arranges for a bundled service through Time Warner Cable for Internet, phone and television, Hornback said. Under current law, if one tenant wants a land-line phone, then AT&T must spend the money to lay that line to the building and maintain it, he said. If SB 99 passes, that no longer would be true because an IP-based phone service already was available to the tenant, he said.

The Senate Economic Development, Tourism and Labor Committee is scheduled to vote on the bill Thursday, followed by a Senate floor vote hours later. Senate President Robert Stivers, R-Manchester, on Wednesday expressed support for speedy passage.

"We understand through the process that the House is receptive to getting it quickly," Stivers said.

Since 2011, AT&T's political action committee has given about $55,000 to state election campaigns in Kentucky, including $5,000 to the Senate Republican majority's chief fundraising committee and $5,000 more to the House Democratic majority's chief fundraising committee. The company spent $108,846 last year on legislative expenses related to its 22 Frankfort lobbyists.

Critics said Wednesday that they still have some of the same concerns they did with past versions of the AT&T bill, although now it looks as if cities, rather than rural areas, could lose their guaranteed access to basic, stand-alone phone service at affordable prices, they said.

Wireless phones are less reliable than traditional land lines, said Tom FitzGerald, director of the Kentucky Resources Council. Nothing in the bill protects city residents from getting downgraded to worse service that costs more, especially if the PSC loses what little oversight it has over phone carriers after deregulation bills that the legislature passed in 2004 and 2006, FitzGerald said.

"The uproar caused by Verizon's attempt to substitute wireless home service rather than repair land lines in some areas after Hurricane Sandy, and similar problems on Fire Island (in New York), underscore that, currently, the quality, functionality and reliability of wireless phones are not comparable to land lines," FitzGerald said.

The PSC, which regulates utilities, is studying the bill and has no immediate position on it, PSC spokesman Andrew Melnykovych said.

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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