Tag Archives: SB1161

California legislature looks at extending moratorium on Internet services regulation

by Steve Blum • , , , ,

Internet services, such as telephone service via voice over Internet protocol (VoIP) technology, are unregulated in California. For now. Federal preemptions, or attempted preemptions, aside, the California legislature approved a seven year moratorium on regulating Internet protocol (IP) enabled services in 2012. Senate bill 1161 said the California Public Utilities Commission and all state and local agencies could not…

Enact, adopt, or enforce any law, rule, regulation, ordinance, standard, order, or other provision having the force or effect of law, that regulates VoIP or other IP enabled service, unless required or expressly delegated by federal law or expressly authorized by statute.

That ban will expire at the end of the year, unless the legislature renews it. In a gut-and-amend move on Monday, assemblywoman Lorena Gonzalez (D – San Diego) turned an obscure bill regarding the San Diego airport into a perpetual extension of SB 1661. Assembly bill 1366 takes out the sunset clause and makes a few meaningless tweaks to the language.

It leaves in place a distinction that wasn’t so obvious in 2012, but has taken on greater significance as the debate over network neutrality and whether broadband is an information or telecommunications service has intensified. The CPUC can’t regulate VoIP or other services that are built on Internet protocol technology, but SB 1161 drew a clear line between those kinds of services and the “broadband connection from the user’s location” that they ride on.

Pausing regulatory action for seven years while technology and service models matured was a good idea at the time. Trying to regulate new online services that evolved rapidly in an open market could have been disastrous for California’s high tech economy. With the benefit of that experience, though, it’s time to consider whether a blanket ban on IP services regulation is still needed. Some of that work began last year, when the California legislature passed a ground breaking data privacy law and its own version of network neutrality rules.

In particular, the carve-out for VoIP needs to closely examined. Seven years ago, VoIP service providers were fringe players. But with AT&T’s embrace of VoIP technology, not least because it’s a path to decommissioning rural copper networks and escaping regulatory oversight, that exception needs another look. Traditional, plain old telephone service – POTS – and VoIP provide virtually identical telecommunications functionality. Keeping one under the CPUC’s umbrella and not the other makes little sense.

AB 1366 will now head to the assembly’s communications and conveyances committee, which does not a have a good track record when it comes to thoughtful consideration of telecoms policy. This one needs watching.

Update: Brown signs SB1161, no new Californian regulations for Internet services

by Steve Blum • , , , , , , ,
California governor Jerry Brown signed Senate Bill 1161, which prevents state agencies, particularly the California Public Utilities Commission, from extending regulations and oversight to “Internet Protocol enabled service”, including specifically VoIP, until at least 2020.

In his signing message, the governor said “this bill encourages the continued growth of these and other innovative services that have become a hallmark of our state.”

The language of the bill is broad, covering any service that “enables an end user to send or receive a communication in existing Internet Protocol format, or any successor Internet Protocol format through a broadband connection, regardless of whether the communication is voice, data, or video.”


The fear or hope, depending on your point of view, is that incumbent telecoms companies will use this loophole to largely escape regulation altogether.

When she’s good, she’s very good; when she’s bad, she’s better

by Steve Blum • , , , , , , ,

Governor Jerry Brown has until this Sunday, 30 September 2012, to approve or veto Senate Bill 1161, which would prohibit the California Public Utilities Commission or any other California state agency from regulating “Voice over Internet Protocol and Internet Protocol enabled services” until at least 2020.

The bill is controversial and the debate has been emotional. Advocates say it would clear the decks for continued high tech innovation in California, opponents say it would deregulate big cable and telephone companies and allow them to bully consumers and bury smaller competitors.

CNET has a good article telling the case for the bill, Wired has a good one on the case against. The actual bill is here.

From my perspective, any time you keep regulators out of a business, particularly one as fast moving and dependent on innovation as IP services, it’s a good thing. I am very much a free market advocate.

In the near term and the long, long term, keeping regulators out of Internet-enabled or other 21st Century sectors is a good thing. Limiting regulatory authority to legacy services and providers will prevent a lot of future political mischief. At all levels of government, there are good regulators and there are some that you would not want poking their noses into the business of an independent ISP or a new media start-up.

The downside comes if the big carriers move out of a regulated environment too soon – and like many who have written on this topic I believe that’s what they intend to do – it could create serious, maybe fatal, competitive issues for smaller companies that have to buy service from incumbents and compete against them.

Another possible effect – good or bad depending on your perspective – is that PG&E could get into the lit service business. They sell dark fiber now, when they have it to sell, but that’s all. They don’t put much in themselves because there’s not a lot of profit in dark fiber. When they do, it’s either because they need it to run their electric business or a telecoms utility has installed it for other purposes. But take away regulatory limitations, and the equation changes. PG&E and other private electric utilities might want to move up the value chain as far as full Internet connectivity.

Which do you trust more: the good intentions, judgement and restraint of regulators, or the ability of the market to keep legacy natural monopolies under control? If you see regulatory agencies as a benefit to your business, or at least don’t see them as a potential danger, then SB1161 looks like a bad idea. On the other hand, if you see government as a greater threat than AT&T, Comcast and friends, it’s a good idea.

AT&T wants to get out of the POTS business, particularly in rural areas. Anything that accelerates that trend – as SB1161 likely will – might be a good thing for an independent ISP in some areas. Or it could throw things into such a turmoil that everyone drowns.

For good or ill, SB1161 opens the door to unexplored territory. Personally, I agree with Mae West: when it comes to a choice between the lesser of two evils, pick the one you haven’t tried before.