Policy Documents

The Year in Review: The Status of Telecommunications Deregulation in 2012

Sherry Lichtenberg –
June 12, 2012

Telecommunications services are regulated by a combination of rules from Congress, the Federal Communications Commission (FCC), state public utility commissions (PUCs), and state legislatures. State legislatures give PUCs the authority to develop and enforce rules about the way in which telecommunications companies behave, including whether they must file retail pricing information with the commission (tariffs), whether they must meet certain quality-of service standards, whether they must provide basic service or operate as carriers of last resort (COLRs), and whether they are eligible for high-cost or Lifeline2 support. As more companies have begun competing to provide customers with different kinds of telecommunications services (wired phones, wireless phones, and phone service provided by cable companies), many of these state legislatures have reevaluated the need for PUC oversight of these companies. 

Between 2010 and April 30, 2012, 21 state legislatures enacted laws that limit what PUCs can regulate. Nine of these states severely limited or completely eliminated COLR obligations and the requirement that carriers provide a tariffed basic local service product. All of these states eliminated PUC oversight of Voice over Internet Protocol (VoIP) or other IP-enabled services. As of the end of April 2012, deregulation legislation was pending in an additional 14 states. 

This paper reviews the state telecommunications deregulation bills enacted between 2010 and April 2012 in order to identify and characterize the limits they impose on PUC jurisdiction over telecommunications providers. It highlights the key points of these new laws and compares the ways in which different states have addressed this issue in markets where legislation has removed regulatory oversight. The paper also identifies key gaps caused by the new laws and suggests options for ways in which regulators may continue to have input into carrier-network monitoring and maintenance so that customers can continue to have access to emergency services and other critical telecommunications functionality. Finally, the paper provides regulators with options for working with state legislatures to craft new legislation, monitor the success of the regulations, and suggest modifications to legislation as required.