We Cannot Afford to Deregulate 'VoIP'

Cable companies and Verizon are now trying to deregulate digital phone service, also known as VoIP, in Albany. If this proposal were to become law, all consumers would lose out.
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Nobody thinks that government can solve every problem, but we do know this: the tide of deregulation that has swept this country over the past several years has been incredibly harmful to the common-sense protections that consumers count on.

Deregulation has been particularly bad news for poorer communities, as it allows big corporations to take advantage of those with few resources and little recourse. We need look to no better example than the shameful predatory lending that ravaged low-income communities when the financial sector, through deregulation, was allowed to run wild.

We should have learned our lesson by now. Yet cable companies and Verizon are now trying to pull the same stunt in Albany, seeking to deregulate digital phone service, also known as "voice over Internet Protocol" (VoIP).

VoIP is an emerging technology that routes phone calls over Internet lines instead of traditional land lines. If you get your phone service through your cable company or through Verizon Fios, as increasing numbers of New Yorkers do, you are using VoIP. For the end user, the experience is identical to using a traditional phone. But VoIP is a relatively new innovation, and the federal government is still examining to what extent individual states should be permitted to regulate service, the way most states guarantee quality and coverage standards for traditional land line service.

New York State's final budget, which the legislature will vote on in the coming weeks, includes a proposal that would preemptively -- and permanently -- surrender New York's ability to regulate VoIP service. That is a bad call for consumers across the state.

If this proposal were to become law, all consumers would lose out. For starters, customers would not be able to bring service complaints to the Public Service Commission, as they currently can with traditional service. Additionally, there would be no way for the state to set standards for quality or for service in underserved regions -- meaning that customers could get stuck with exorbitantly high rates or be unable to obtain service at all in some areas of the state.

Verizon FiOS, one of the main options for VoIP coverage, has now been installed in many regions of the state, including most of downstate. However, Verizon has chosen not offer the service in upstate cities like Albany, Binghamton, Buffalo, Rochester, Syracuse and Utica. The result is both a virtual monopoly for the cable companies in those areas and another blow to lower-income working families who live in cities. That's precisely why the state should be able to guarantee common sense regulations for VoIP service.

The problems with deregulating VoIP service are multifold. While traditional phone companies pay into a fund that supports "lifeline" phone access for elderly and disadvantaged New Yorkers, VoIP providers would not have to. We do not have to guess at how things would look if the state gives up its right to regulate internet phone service -- we can just look at the states where traditional land line service has been deregulated. According to a recent survey of 20 states that have seen land line deregulation, 17 of those states have seen rate increases. We simply cannot afford that, particularly when our fragile national recovery is just beginning to take hold.

That's why other states have recognized that deregulating VoIP is the wrong thing to do. In Kansas and Missouri, for example, VoIP providers are required to pay into coverage for underserved areas. Colorado's governor vetoed a deregulation bill in his state. By contrast, New York State's final budget proposal, as it stands today, permanently leaves our state without power over or remedy for abuses by Verizon and the cable companies.

History shows us that this is not the time to strip away consumer protections. That's why I am urging our legislature to stand strong for the communities of this state, and ensure that New York State can continue to provide its citizens with strong oversight of this emerging public utility.

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