Viewpoint: Ohio Consumers' Counsel Wants to Put Consumers on Hold
Throughout January, the Public Utilities Commission of Ohio (PUCO) conducted hearings around the state on local telephone competition. These hearings were designed to collect consumer input on measures to grant pricing flexibility to local telephone providers. Unfortunately, the taxpayer-funded agency responsible for representing consumers -- the Office of the Ohio Consumers' Counsel (OCC) -- opposed the very reforms that will benefit consumers and help provide more choices for Ohioans.
The PUCO is developing regulations to implement a measure (House Bill 218) signed into law last year that would allow local telephone services some flexibility in setting their prices. The companies would first have to show that they face competition. As Kent Lassman, a technology analyst at the Progress & Freedom Foundation in Washington, D.C., said about the bill: "It was a necessary change to get communications regulation on the right path, toward markets and consumer choice and away from central planning for rates and services."
The history of telephone service shows that when regulations are decreased and flexibility increased, consumers benefit. It wasn't so long ago that long distance was heavily regulated. The result was poor service at a high price. Now that regulations on long distance have been reduced consumers are benefiting from better service at much lower rates. As recently as 1984 a long distance call cost fifty-two cents a minute. Under certain plans now, however, you can make the same call for one cent a minute.
Businesses did not develop these consumer-friendly prices because of government mandates. On the contrary, we enjoy them because government removed its mandates.
The Ohio General Assembly realized that the same principle should apply to local service. Currently local service is heavily regulated and telephone companies have little leeway in responding to the changing market. System infrastructure is underfunded because companies do not have the ability to price services according to market rates. Rural areas do not receive the same services as cities because there is no money to develop them. Innovative new services are not explored because of a lack of funds. The General Assembly recognized the need for change and gave local providers the ability to innovate.
Although the General Assembly recognized the benefits of competition, not all Ohioans have embraced it. The Office of the Ohio Consumers' Counsel is trying to thwart the will of the legislature by advocating a definition of "competition" that excludes new technologies such as cell phones or Voice over Internet Protocol (VoIP) service offered by Vonage and other companies. They know if they can successfully argue that the wireless technologies used by millions of Ohioans do not compete with traditional phone service then local companies cannot receive regulatory relief. As the OCC says, "Bundled packages, cell phones and Internet-based services which require broadband are not comparable substitutes for basic service and are more costly."
The facts simply do not support these claims. According to the Federal Communications Commission, in 2004 more people subscribed to wireless service than to traditional phone service. Young people -- the next generation of consumers, by definition -- are the most likely to ditch the landline; almost a quarter of them live in households with only wireless service. Obviously millions of Americans do think wireless service is a "comparable substitute." As to cost, any visit to your local mall will reveal that many wireless plans cost less than basic phone service.
Wireless communication was able to develop and gain widespread usage precisely because it is not hindered by the type of heavy-handed regulation the OCC supports. Local phone service, still under the thumb of regulators, cannot compete. The PUCO has the opportunity to grant a little flexibility to these local providers and let them begin experimenting in the marketplace. Consumers will benefit as these companies gain tools to compete with wireless networks for customers.
In their attempts to "protect" consumers, the Ohio Consumers' Counsel is in reality advocating a policy that will keep consumers stuck in a world of uncreative, uncompetitive local telephone service. If the OCC were truly interested in helping consumers, it would embrace PUCO's plans and the flexibility and reduced regulations that will truly benefit those it claims to represent.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
