As Regulatory Power Wanes, State Crafts New Telecom Plan

Jan 6, 2014

The Vermont Public Service Department is planning a comprehensive update of the state’s telecommunications plan.

The original plan was created in the early 1990s.  In the days of land lines and Bakelite phones, telephone company rates and services were overseen by state regulators.

But wireless and broadband have revolutionized telecommunications and today the state has far less power to regulate the industry than it once did.

When the statute was put in place that originated the telecom plan, we were largely talking about telephone providers that were wholly regulated,” says James Porter, the Public Service Department’s telecommunications director.

“We have seen the explosion of cellular technologies, wireless technologies, to some extent cable providers and broadband in general, over which we do not have the same level of regulatory authority as we did over the old Bell [telephone] operating companies.”

Porter says nearly 30 percent of Vermont households are wireless only – with no land lines.

Cable, broadband and cellular phone prices and service are beyond the state’s regulatory reach, which means a telecommunications plan has less muscle than it once did.

“I think you set aspirational goals, but certainly the ability from a regulatory perspective to effectuate goals is somewhat diminished from the old days,” Porter says.

The diminished regulatory power means the state is taking a different approach to reach its telecommunications goals.

According to Porter, “We’re moving from the traditional paradigm to where we’re seeing more of an economic development-type partnership with these providers.”

The evidence lies in how Vermont has used grants to service providers to help bring broadband to areas the state felt it might not be economically feasible for companies to spend money.

Similarly the state has worked to create lower cost options for cell phone companies that need tower locations to expand service.

Porter says an updated telecommunications plan with be a guide to help the state decide how to use its resources. For example, he says the plan could outline minimum speeds that a company must provide to receive a broadband grant.

Former Public Service Commissioner Richard Sedano agrees that today the state has to use investments, not regulation, to influence how and where telecommunications services are provided in Vermont.

“The danger, of course, when government gets involved in these kinds of investment activities, is: Is government going to put money in the right places?” says Sedano, who now serves as a principal at a Montpelier based non-profit that advises public officials on energy policy.

He says the state will always find ways to play a role in the technology Vermonters have access to because even though it has less regulatory power now than in the past, expectations haven’t changed.

“Businesses and residential customers who want those services are going to demand them.  If some other place has them and we don’t, that can become a political issue. That’s why I think we’ll always see government keeping an eye on the next things and trying to deliver those in whatever ways it can,” he explains.

Sedano says in some ways regulation isn’t as necessary as it once was.  He says as markets have opened up to multiple providers, companies are investing more to remain competitive. In the past, companies had near monopolies on service and regulation helped drive investment.

He says a rural state like Vermont will still have to work to ensure service to those areas where there is little or no competition. 

Even regulation of land lines has been relaxed in recent years. Two and a half years ago the state recognized that FairPoint Communications landline business was competing against many wireless companies that the state had no regulatory power over, so it granted Fairpoint more leeway in pricing its services.

The Vermont Public Service Department plans to hold hearings early this year on the state’s new telecommunications plan. The dates have not yet been announced.