SBC endorsed by Indiana House Committee

INDIANAPOLIS -- An Indiana House committee on Wednesday endorsed legislation pushed by SBC Communications, despite warnings by the state's top utility regulator that it would stifle local phone competition and erode his agency's authority.\n"You will turn your back on competition. You will see companies dry up and go away," William McCarty, chairman of the Indiana Utility Regulatory Commission, told the House Commerce and Economic Development Committee.\nOther companies said SBC was trying to free itself of state regulation so it could crush competition early and retain a monopoly on local service.\nSBC said the bill would level the playing field for local service and protect company jobs, in part by allowing it to charge higher prices for leasing its network lines to competitors. The Texas-based telecom giant employs about 6,000 in Indiana.\n"We are for competition but we are not for subsidizing our competition," said SBC Indiana President George Fleetwood.\nThe committee endorsed the bill on an 11-3 vote and sent it to the full House, which Democrats control 51-49. The bill's sponsor, Rep. Ed Mahern, D-Indianapolis, promised ample time to consider proposed changes on the House floor.\nThe bill would dictate a new method for setting the wholesale rates that former monopoly providers such as SBC, Verizon and Sprint charge competitors for leasing their access lines. Lobbyists for Verizon and Sprint did not testify on the bill Wednesday.\nThe bill also would eliminate the IURC's ability to regulate the deployment of broadband services such as high-speed Internet and restrict its ability to regulate activities that companies use to attract back customers who have switched service.\nSBC has complained that under existing IURC orders, it has to rent out its local access lines to competitors at discounted prices, which it claims are 40 percent below costs. The rate is $12.19 per line now, and SBC said the actual cost of maintaining each line is close to $22.\nFleetwood said the rate is the lowest in the nation, and since it was set by the IURC last March, the company has lost about 10,000 customers per month.\n"It is driving jobs and investments out of Indiana," Fleetwood told lawmakers.\nSBC has eliminated nearly 20,000 positions, or 10 percent of its work force, since late 2001. It laid off about 270 employees in Indiana last year, and cited regulations in the state as part of the reason.\nMahern said current regulations favor out-of-state providers that employ few people in Indiana, and have forced incumbent providers such as SBC to scale-back deployment of broadband DSL technology that many communities are still clamoring to have.\nThe bill also is being backed by the Communications Workers of America, a union that represents about 4,000 SBC workers in Indiana, as well as the AFL-CIO. Many labor unions historically have been big financial supporters of Democrats.\nSeveral companies testified against the bill, saying it would result in higher phone prices by ending the small but growing competition for telephone customers. The IURC expects the current prices will spur competition.\nMcCarty said the IURC was not biased against any company, and had spent months poring over data and testimony before it set the current wholesale prices. To make his point, he brought in stacks and stacks of documents and records the commission considered.\nHe also said the bill would erode IURC authority and effectively sign some of its oversight powers to the Federal Communications Commission.\n"Are you willing to concede states' rights to the federal government, because that's what you're doing," he said. "I've never known an Indiana Legislature willing to do that"