A Tech Advocate in the Governor’s Mansion

Published February 1, 2006

California Gov. Arnold Schwarzenegger rocked the political world in December with his appointment of California Public Utilities Commissioner (CPUC) Susan Kennedy, a Democrat, as his chief of staff. Republicans might feel snubbed, but Kennedy’s appointment is good for the technology sector.

A thriving technology sector is good for California, and key policy issues will affect both consumers and technology companies. These include the so-called “Consumer Bill of Rights,” cable franchise reform, and broadband deployment.

Although the Golden State is home to Silicon Valley, many legislators remain surprisingly unaware of how their actions affect innovation, economic growth, and consumer well being. Now that Kennedy is joining forces with the Governator, that ignorance should start to dissipate.

Blocking Growth

A hard-working and tough-talking Kennedy didn’t know much about telecommunications issues when she was appointed to the CPUC just under three years ago. But after a lot of reading, observing, and discussing, she came to the same conclusion any honest and informed person would: The sector is over-regulated.

Over-regulation not only stymies growth and discourages investment, but it harms consumers. As a Democrat who made it her mission to do what was best for consumers, Kennedy became a staunch advocate for serious regulatory reform at the CPUC. An example of this leadership was her opposition to the so-called “Consumer Bill of Rights” that would have done little else but raise mobile-phone bills and tie businesses in red tape. (See “Winds of Change in California?” IT&T News, March 2005. ) After the CPUC initially voted for the bill of rights, Kennedy called a spade a spade.

“It’s a good thing this Commission is not held to the same standards as the companies that do business in California,” Kennedy said, “because if we were, today’s decision would be an open and shut case of false and misleading advertising.”

Kennedy applied pressure to her colleagues, and the harmful regulations were put on hold. Sen. Martha Escutia then introduced consumer bill of rights legislation in Sacramento, but it did not make it to the governor’s desk. That doesn’t mean a similar bill next year won’t. From her new perch in Sacramento, Kennedy will be able to advise a veto on any future fake consumer rights bills, and she also will have input into who will replace her at the CPUC.

Aiming for Change

Fellow Commissioner Geoffrey Brown seems convinced Kennedy will not abandon efforts to reform the communications sector. He told the L.A. Times, “She’ll be our sixth commissioner.” One hopes he’s right, because Kennedy not only understood how regulations were damaging the sector, but she also saw the harm from power-seeking on the part of the CPUC.

Speaking at a telecommunications conference last year, Kennedy said of the commission, “There’s a plot in California to drive out all the small carriers [with burdensome rules], claim there’s an oligopoly, and then regulate.”

Economists have a name for what Commissioner Kennedy so adeptly described: government failure. And it’s clear government failure is something that really irks her. At a dinner event hosted by the Pacific Research Institute in Silicon Valley a few months ago, Kennedy revealed why she and Governor Schwarzenegger hit it off so well.

“We are both fighting for reform against people who eat reform people for breakfast,” Kennedy said. That’s a good way to look at it, and one should point out she has done much to protect broadband against hungry regulators who would like to sink their teeth into the high-speed medium.

Committed to Reform

“Broadband Deployment in California,” a report prepared by Kennedy and her staff, contains a wealth of facts and identifies key policy problems responsible for slowing broadband rollout and economic growth. It also stands strong against obsolete and misleading claims in a report by Commissioner Geoffrey Brown and his staff. Brown’s report said his recommendations should be followed because “it may develop into a framework in which California can regain regulatory authority from the FCC.” In other words, it’s all about power.

Susan Kennedy’s policy positions at the CPUC, on the other hand, were as free-market as one could hope for in California, and there’s no sign she’s giving up on reform. This should delight the technology industry and benefit consumers everywhere. Republicans horrified by Kennedy’s appointment might check their own commitment to reform, smaller government, and a strong business climate.

Sonia Arrison ([email protected]) is director of technology studies at the Pacific Research Institute. Reproduced with permission of TechNewsWorld and ECT News Network.