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TMCNet:  TELECOM IN TRANSITION

[January 13, 2013]

TELECOM IN TRANSITION

Jan 13, 2013 (Albuquerque Journal - McClatchy-Tribune Information Services via COMTEX) -- As wireless, digital and Internet-based phone services reshape today's telecommunications industry, CenturyLink Inc. says it's time for New Mexico's market regulations to catch up with 21st-century technology.

CenturyLink, which acquired Qwest International Communications in 2011, is still the state's largest provider of traditional land-line phone service. But its local customer base has fallen nearly 40 percent in the past decade as cellphones and other telecom technologies gain market share.

To better compete, the company wants the New Mexico Public Regulation Commission to relax PRC control over its pricing, as well as monitoring and enforcement of CenturyLink's service quality, to put the company on equal footing with growing competition from wireless and other providers that aren't regulated by the commission.

"We want a more level playing field, where the marketplace dictates things, not regulation," said Valerie Dodd, CenturyLink vice president and general manager for New Mexico.

Dodd said reforms would benefit consumers by allowing the company to offer more discounts and promotions. It would also permit CenturyLink to invest more capital in a broader range of telecommunications infrastructure and services, such as high-speed Internet, instead of pumping excessive amounts into aging land-line systems simply to comply with PRC regulations.

For example, CenturyLink provides a promotional offer in other states that provides three months of local service when packaged with other services to acquire new cusomters, said spokesman David Gonzales. Current regulation in New Mexico does not allow that type of promotion.

"(Regulatory reform) would offer pricing flexibility for certain promotional packages, and it would allow us to focus on broadband, which we feel is what consumers are most interested in," Dodd said. "Under current regulations, we do a lot of replace and repair work on traditional phone service rather than broadband to avoid PRC penalties, but we would like customers to tell us what their priorities are, not regulators." The company petitioned the PRC in fall 2011 to recognize that "effective competition" exists throughout New Mexico, which would pave the way for regulatory reform. The commission held an evidentiary hearing in October, and PRC hearing examiner Carolyn Glick said she expects to provide a recommended decision in February for review by the PRC.

The case reflects a growing trend nationwide as traditional phone companies seek more regulatory flexibility, and in some cases complete deregulation, to better compete with wireless carriers and other providers in states across the country, said Hesser G. McBride Jr., an attorney who heads the energy and telecommunications practice group of Wilentz, Goldman & Spitzer in New Jersey.

"It's being advocated by almost all the incumbent telephone companies throughout the country," McBride said.

Three states have completely eliminated regulations, including Wisconsin, Michigan and Indiana, McBride said.

That marks a radical break from the past, dating back to the 1984 breakup of the old AT&T, or "Ma Bell" monopoly, which divided the country's telephone industry into seven regional markets served by "Baby Bells." Since then, states have heavily regulated the Baby Bells and their successors, including Qwest and now CenturyLink, to limit their market domination so newcomers have a chance to build customer bases, and to make sure the traditional companies continue to provide adequate service in places where little if any competition exists.

But with the explosion of wireless communications, plus Internet-based phone service from businesses such as Vonage, and digital phone service from cable companies like Comcast, traditional land-line providers have lost market share.

From 2000 to 2010, the number of Qwest landline customers in New Mexico plummeted from 883,000 to 542,000. And, while Century-Link doesn't report customer totals by state, in November the company said its land-line accounts nationwide fell at an annualized rate of 5.1 percent in the third quarter of 2012.

In contrast, wireless phone numbers in New Mexico now outnumber land-line accounts by more than two to one. In addition, the Federal Communications Commission estimates that Internet phone businesses and land-line providers other than Qwest or CenturyLink controlled about 19 percent of the New Mexico market as of 2010.

Comcast, meanwhile, estimates at least 25 percent of its cable and high-speed Internet customers in New Mexico now subscribe to digital phone in places where it offers that service. The company provides digital phone in Albuquerque, Santa Fe, Las Cruces, Farmington, Taos, Portales, Deming and Gallup.

"We have competition in every corner of the state now from wireless, Internet and cable companies, even in small towns like Portales and Clovis," said CenturyLink Director of Legislative Affairs Leo Baca. "We feel strongly that there's effective competition in all four corners of the state, and in between." Critics, however, say there are many rural and semi-rural areas where competition is still lacking. The PRC's telecommunications staff and the Attorney General's Office, for example, want the commission to reject CenturyLink's request because the company has asked for a blanket declaration of effective competition throughout the state, rather than focus on targeted markets where competition may be strong enough to merit regulatory reform.

Former Commissioner Jason Marks, who stepped down from the PRC on Dec. 31, said there are clearly places where competition is still weak, and where quality of service and needed infrastructure investment may suffer if regulations to ensure those things are eliminated.

"Certainly there's a lot more competition now than there was 10, or even five years ago, but the reality lies somewhere in between," Marks said. "Many consumers may benefit if CenturyLink gains some of what it's seeking, but if it gets everything it wants, some people could get hurt. It's time for a change, but we shouldn't completely abandon regulations." Commissioner Pat Lyons, who chaired the PRC in 2012, said he will support regulatory reform when the issue comes up for a vote.

"Telecommunications have changed tremendously over the last 20 years," Lyons said. "I do think competition is now generally available, except in some of the most remote areas. Cellphones are just everywhere, so I do see some changes coming (at the PRC)." ___ (c)2013 the Albuquerque Journal (Albuquerque, N.M.) Visit the Albuquerque Journal (Albuquerque, N.M.) at www.abqjournal.com Distributed by MCT Information Services

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