Testimony: Economic Development & Tourism Committee
February 11, 2013
Senate Bill 88 - Opposed
Good afternoon, Madam Chair and members of the committee. My name is Jim Kimbrough, and I am the AARP Kentucky State President. Thank you for this opportunity to express our comments on Senate Bill 88.
AARP opposes SB 88 because, if enacted, it would likely result in the loss of affordable basic phone service for Kentuckians living on low and fixed incomes and those living in rural exchanges. It will allow phone companies to raise rates for a vital service for which there is little competition and eliminate valuable consumer protections.
For many of our 460,000 AARP members in Kentucky, telephone communication is a basic necessity, allowing older people to maintain social contact, preserve health and safety, and gain assistance in an emergency. AARP’s national research has found that people age 65 and older are more likely than any other age group to have telephone service in their home. More importantly, AARP’s most recent survey found that AARP members age 50-plus in Kentucky maintain their landline telephone service while also subscribing to cell phone service. Only a mere 18% of those who use a cell phone have eliminated their landline telephone service. Fifty-plus AARP members in Kentucky also believe it is important that the Public Service Commission continue to oversee the rates charged and the quality of service provided by landline telephone service providers.
AARP’s policy on telecommunications services supports efficient, transparent, and fair markets, with established rights and protections that promote and safeguard the health, safety, and economic interests of consumers. Our policy recognizes that competition in the market for telecommunications services can give consumers real choices and promote their economic well-being. But competition that benefits consumers depends on the likelihood that they can and will actually switch service providers.
However, at the end of an existing rate cap period, Senate Bill 88 would eliminate the obligation of an electing incumbent carrier to provide service, even in small rural exchanges, regardless of whether an effectively competitive market exists. Please read the provisions of the bill closely.
Senate Bill 88 would allow an electing carrier to eliminate service to any areas that it does not wish to serve, potentially leaving areas of higher-cost and those in which low-income consumers reside without access to basic phone service.
Senate Bill 88 would eliminate the PSC’s obligation to resolve consumer complaints.
Senate Bill 88 would also eliminate carrier of last resort (COLR) obligations. It would allow providers to withdraw basic local exchange service, or charge any price for that service, in any service area where two or more service providers offer a voice service by whatever technology it chooses. No consideration would be given as to the service quality or reliability of any alternate service offerings or the rates that customers would be forced to pay.
As Kentucky moves toward a competitive marketplace, AARP strongly believes that carrier of last resort (COLR) policies will still be needed. Competition by itself cannot ensure broad-based access. AARP believes COLR policies are still needed to give regulators the tools to assure that at least one carrier is in place to provide essential, reliable, and affordable services in all areas. At the very least, the legislature should extend COLR responsibilities for a reasonable period of time based on empirical evidence that definitively supports elimination or curtailment of COLR responsibilities.
In fact, AARP urges the legislature to require the Public Service Commission to open a formal proceeding to determine the effects of deregulation of basic local service on Kentuckians.
Where effective competition exists, the marketplace yields reasonable rates and service quality. Where effective competition does not yet exist, Commission oversight yields reasonable rates and service quality and ensures that consumers can purchase “stand-alone” reliable phone service.
Where a public utility can certify and demonstrate that there is residential demand for alternative providers and supply of stand-alone basic local exchange service by alternative providers at or below the incumbent carrier’s rate, only then should a petitioning provider be allowed to offer voice services in a given exchange on a deregulated basis. Incumbent carriers must bear the burden of demonstrating that effective competition exists.
AARP calls on Kentucky’s policymakers to ensure that the citizens of this state have access to affordable and reliable basic local exchange service. For the reasons expressed in this testimony, AARP urges you to vote against Senate Bill 88.
Thank you for your consideration and I’m glad to answer any questions.