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.
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.