Bill: HB 1180
Short Title: Consumer Choice and Investment Act of 2009
Date: May 5, 2009
SUMMARY: A bill recently introduced in the North Carolina House would help ease the financial strains being felt in households across the state by making more affordable phone service options available.
House Bill 1180 would enable local phone service providers to set their own rates and conditions for the services they provide to consumers. Under the current system, local phone rates and service conditions are subject to approval by the North Carolina Utilities Commission.
Allowing Providers to Freely Set Rates Will Enhance Competition, Drive Down Prices
- By taking the utilities commission out of the mix, competition for local telecommunication consumers will increase substantially. Greater competition means more options for customers and a downward pressure on prices.
- The dynamic telecommunications industry is continuously developing and innovating new technologies and options. Forcing providers to subject new plans and prices to the approval process of the state utilities commission only serves to withhold more affordable options from consumers for a longer period of time.
Utilities Commission Outdated, No Longer Needed for Telecommunications
- The state’s utilities commission was created in response to the “public utility” model. This model was based on the assumption that utilities were “natural monopolies,” — industries with unique characteristics in which the entire output demanded could be provided at a total lower cost than by numerous competing firms.
- The public utility model is completely outdated and no longer applies to telecommunications. Several alternatives, such as wireless, cable and copper phone lines now exist to provide telecommunication services.
- Healthy competition – courtesy of new technology – eliminates any perceived need for the utilities commission to “protect” telecommunication customers by establishing “reasonable” rates for phone services.
- When government regulation is removed, markets do not become “unregulated”. The strict market discipline instilled by competition regulates the behavior of providers as they must efficiently meet consumer demands or risk losing customers.
Bill Allows Exceptions for Those Happy With Status Quo
- HB 1180 allows phone customers the option to continue with their traditional phone service with their rate increases being limited to inflation rates for 3 years.
- Traditional phone companies have the choice of whether or not to opt in to the new framework created by the bill.