Voice-over-internet measure awaits Assembly action

Backed by major telecommunications companies, Senate-approved legislation to block the state Public Utilities Commission from regulating voice-over-internet services awaits action in the Assembly, where it easily passed its first committee hurdle.

Services such as internet-based telephones using VOiP, or Voice-over-Internet Protocol, are popular with the public because of their low cost. Many consumers are switching to VoIP service and dropping their traditional fixed telephone lines.

As a result, the PUC, which regulates land lines, recently hinted that it may start regulating VoIP. Under current law, there is nothing that explicitly allows or prohibits the PUC from regulating VoIP services. Proponents of the legislation, SB 1161 by Sen. Alex Padilla, D-Los Angeles, believe this measure will provide regulatory certainty in the tech sector, which they say is a “bright spot” in California’s tough economy.

“California ought not to be the first state to regulate the Internet,” said Padilla, the bill’s primary author and chair of the Senate Energy, Utilities and Communications Committee

Padilla and the bill’s communications industry sponsors, TechNet and TechAmerica, have spent months pushing hard for the measure, which easily emerged from the Senate on May 30 in a 30-6 vote. This week, the Assembly Utilities and Commerce Committee approved the bill in a 13-to-1 vote.

Critics have panned the bill as “deregulation” of phone service and have questioned the wisdom of government willingly giving up consumer-protection authority. Consumer groups, in particular, have lashed out.

“It’s a power play. It’s all about power and not about substance,” said Lenny Goldberg of The Utility Reform Network, a consumer group that opposes the legislation, in April, when the bill first made headlines.

SB 1161 is supported by a range of high-tech companies, from telecommunications behemoth AT&T to software giant Microsoft. They all believe that an unregulated Internet is the key to their current and future success. Recent talk from the state PUC of regulating VoIP service clearly touched a nerve.

Padilla has shot back at his critics, contending there has been a “mischaracterization” of his bill. He points out that the legislation will not force the PUC to give up its existing power over traditional telephone service and notes that 23 states have adopted similar laws. Padilla hopes that the legislation will provide regulatory certainty to an industry that he says is creating many California jobs.

“California should continue its leadership in tech policy and economic growth,” he said.

Jeff Hawley, a senior vice president for state policy at TechNet, called the bill “pro-innovation” and expressed concern if the measure is not passed that this would “chill investment” in California’s high-tech industry. Though VoIP has gained popularity in recent years, a 2010 survey indicated that over 25 percent of American households have gone “cell-phone only.”

Gov. Jerry Brown has given no indication of whether or not he would sign the bill if it reaches his desk.

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