Phone deregulation bill passed by Senate

BOISE – Controversial legislation deregulating telephone service in Idaho passed the Idaho Senate on Monday, when Lt. Gov. Jim Risch broke a tie vote.

The bill, HB 224, is now headed to Gov. Dirk Kempthorne, who long has been a backer of the deregulation plan. It would allow phone rates for companies that opt for deregulation to rise up to 10 percent a year for the next five years.

Proposed by Qwest Corp., the major telephone service provider in southern Idaho, the bill applies to any phone company in the state. Verizon, the main provider from Moscow to the Canadian border, backed the bill.

Schelly Jensen, Verizon regulatory and governmental affairs manager, said she didn’t know if the company would opt to use the bill, but said it gives Verizon “the flexibility to respond to the competitive marketplace.”

“They’ve linked the rates in rural communities, for us, to those in Coeur d’Alene,” Jensen said.

“So even if we were to opt into this, we couldn’t raise basic residential and small-business rates in rural areas higher than what they are in Coeur d’Alene. So I think that gives more of a protection and a feeling of comfort and security to some of those rural areas.”

That tie between urban and rural rates was among several changes Qwest made in its proposal since it died by one vote in the Senate last year.

HB 224 allows Qwest or other phone companies to operate outside the Idaho Public Utilities Commission’s price regulation.

Qwest officials said they needed that ability because they face increased competition from wireless and Internet-based communication services, which aren’t regulated by the Idaho PUC.

“What this bill basically does is recognize that the market we are in now is different,” said Sen. Curt McKenzie, R-Nampa, the bill’s Senate sponsor.

“If we pass this bill, we can have insurance that prices will continue to be affordable.”

But opponents of the bill questioned that.

“If it was really competition, why aren’t we talking about lowering prices instead of raising them?” asked Sen. Monty Pearce, R-New Plymouth.

Sen. Mike Burkett, D-Boise, said, “The debate is about allowing increases of as much as 50 percent over the next five years, and then the cap can come off. This doesn’t sound to me like Idahoans are about to get benefits from competition. Quite frankly, we are asked to grant rate increases to a public utility that they couldn’t get from the PUC.”

North Idaho senators split on the bill, though none spoke out during the debate.

Sen. Dick Compton, R-Coeur d’Alene, who voted in favor, said afterward, “My chamber of commerce was very supportive of it in my area. They’ve looked into it, and they felt it was a good bill for business.”

Compton said that during his 30-year career at IBM, “We believed very much in deregulation.”

Sen. Joyce Broadsword, R-Sagle, voted against the bill. “My constituents were pretty adamant that they didn’t like the word ‘deregulation,’ ” she said.

But, she said, “I’ve been assured by Verizon that it won’t make a difference to our ratepayers because it ties rates for rural areas to Coeur d’Alene.”

An array of citizens groups opposed the bill, including The Common Interest, a new bipartisan watchdog group whose members studied the issue in depth and concluded that there’s not yet sufficient competition in Idaho to warrant telephone deregulation.

If, as expected, Kempthorne signs it into law, the bill would take effect July 1.