Missouri legislature dials in on phone competition

“We have crippled the market incentive,” said Republican Ed Emery, sponsor of the bill that passed 130-22 on March 6 in the House of Representatives. He said market competition could fuel the spread of services, such as broadband Internet, to underserved rural areas faster than government regulations.

Officials with AT&T Inc. and Mediacom Communications Corp. said they support HB 1779, but Matt Kohly, director of regulatory and legislative affairs for Columbia-based Socket Telecom LLC, voiced opposition.

“Your business out there with more than two phone lines is going to have the rate cap removed the minute this bill becomes effective,” said Kohly, whose company offers business phone service in Springfield. “I would think that some of the smaller businesses would be concerned about that.”

HB 1779 aims to ease regulations on phone carriers – both traditional and Voice-over-Internet Protocol, or VoIP. For example, the bill would remove the Missouri Public Service Commission requirement that phone companies answer customer calls to their business offices or repair bureaus within 15 seconds.

Phone bills could be most impacted by a proposed change in price-cap rules. Under HB 1779, if at least 55 percent of a carrier’s access lines are in markets deemed competitive – markets with at least two wired competitors and at least one wireless competitor – then that company could be considered competitive statewide, and rural price caps would be eased.

Socket’s Kohly said phone prices are sure to increase if HB 1779 becomes law. After state legislation passed in 2005 to establish the current definition of competitive markets, price caps were lifted, and basic phone service prices increased 25 percent in Kansas City and St. Louis and 43 percent in some smaller towns, such as Sedalia and Cape Girardeau, Kohly said.

Kohly predicts large incumbent carriers will exploit the pro-competition bill to squeeze out competition by picking-and-choosing where to undercut prices. He said smaller companies, such as Socket, wouldn’t be able to compete.

Mike Haynes, regional director of external affairs for AT&T in southwest Missouri, said AT&T only charges $7.15 a month for basic phone service in its smallest markets, which have less than 5,000 access lines and are deemed noncompetitive. The company can charge more in competitive urban markets, such as Springfield, which also have a lower cost of doing business due to density. For years, AT&T has been supplementing its loss in rural areas with its profits from urban areas, Haynes said.

HB 1779 would simply even the playing field and foster competition statewide, Haynes said.

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