Supreme Court Hands Victory to Consumers
Friday, March 7th, 2008 By Marc KilmerThe Ohio Supreme Court ruled yesterday that telephone companies can have freedom to raise or lower prices without government approval. A few years ago Ohio legislators, recognizing the changing nature of telecommunications, partially deregulated traditional telephone companies to give them the ability to compete with new communication technology.
Of course, the mis-named Office of Ohio’s Consumer Counsel (OCC) fought this deregulation. Apparently thinking that consumers are worse off under competition and not recognizing that traditional phone companies compete with cell phones and other technology, the OCC filed suit when the Public Utilities Commission of Ohio granted AT&T and Cincinnati Bell regulatory relief.
The Ohio Supreme Court unanimously recognized the flaws in the OCC arguments, finding that its definition of “competition” was unrealistic. As I wrote about in the early stages of this case:
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.
Tags: Telecom
