(Published: May 9, 2003)

Telecom war, redux

Legislators shouldn't change rules of game to help former monopolist
Alaska Communications Systems is losing its dominant position in the market for local phone service in Alaska. ACS is composed of companies that used to have a monopoly on local service in various Alaska communities, including Anchorage. Federal law has forced local phone monopolies across the nation to open their markets to competition.

ACS doesn't like the way the Regulatory Commission of Alaska is enforcing the anti-monopoly rules and implementing the transition to competition. Last year, ACS tried to kill the commission outright. After a bloody fight that required a special session, lawmakers declined to sunset the agency, but they renewed it for just one year, so the battle is engaged again this year in Juneau.

This year, with a new governor who will replace a majority of commissioners, the RCA is not fighting an effort to kill the agency outright. However, the bill to renew the RCA has been saddled with complicated provisions that help ACS improve its competitive position. ACS and its legislative friends, notably Rep. Tom Anderson, R-Anchorage, are trying to tilt the rules of the telecommunications game.

What they're after is not as obvious as giving a baseball team one extra run each time it plays. The breaks the bill gives to ACS are more subtle and more arcane. They deal with complex issues, such as whether accelerated depreciation allowed by the IRS is also appropriate for calculating phone rates. The bill arbitrarily and prematurely declares local phone markets competitive, thus allowing unrestricted rate increases before real competition can take hold. Another provision would force a competitor to pay a huge termination fee when it stops serving a customer with a line leased from ACS.

These are technical issues best left to impartial experts at the regulatory commission. The commission operates under rules that guarantee all parties a full and fair hearing. That's not the case with legislators, who are bombarded by lobbyists and susceptible to influence by campaign contributors.

When the commission has heard all sides and issued its rulings, ACS has repeatedly lost. The company has had little luck convincing the courts to overturn those unfavorable rulings. That track record suggests the commission is not being unfair to ACS. It also helps explain why the company has turned to the Legislature for help.

On a couple of points, ACS has legitimate complaints. In the areas it serves, it must install phone lines to all new service hookups, even if the line will serve a customer already signed up by a competitor. ACS local phone rates in Anchorage are still regulated, even though the market is now unquestionably competitive.

ACS's main competitor, GCI, admits those problems should be fixed by the regulatory commission. The commission is already working on both issues. It is considering new rules for sharing the burden of installing new phone lines and for deciding when deregulation can occur because a local phone market is competitive.

Telecommunications issues are technologically complicated and legally complex. The place to handle them is the place that by law must hear from all sides and make an impartial decision, using staff with special expertise in the subject and a carefully constructed statutory framework developed by Congress. That place is the Regulatory Commission of Alaska. The Legislature should resist the temptation to march into in the telecommunications wars and instead pass a straightforward renewal of the regulatory commission.