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Internet Price Regulation

February 11, 2003
By: David Bryan
State Capital Bureau
Links: HB 142 & SB 221

JEFFERSON CITY - Internet service providers and a variety of telecommunications agencies came before legislative committees urging rejection of a plan to deregulate broadband Internet service by telephone companies.

Currently, companies that provide only Internet access are not regulated by the state. But the rates and practices of telephone companies are regulated by Missouri's Public Service Commission.

That brings Southwestern Bell Telephone Company (SBC) and its broadband Internet service under PSC authority.

Both House and Senate committees heard testimony Tuesday on bills that would exempt companies providing both Internet and telephone services from regulation of their prices for Internet service -- leaving state regulation only for telephone services.

But opponents of the bill claimed that technical wording of the legislation could also deregulate SBC's telephone services as well as allow SBC to monopolize the high-speed Internet industry in Missouri.

"What little competition we now have, which is virtually nothing for residential and local providers and also in rural areas where there is no competition, the promise would be totally eliminated as soon as this bill would pass," said John Coffman, acting public counsel for the PSC.

But representatives for SBC argued that allowing it equal access to the market for high-speed Internet access would allow it to provide Internet access to a number areas in Missouri where local companies are currently unable to because of costs.

In addition, SBC said that because they invest a great deal in Missouri's economy, their being regulated would decrease the amount they invest and ultimately would be detrimental to Missouri's already suffering economy.

"More investment means increased job opportunity, increased tax revenue and other economic boosts for our state. It also means greater availability, choice and innovation in high-speed Internet and business services for Missouri families and businesses," said Cindy Brinkley, president of SBC in Missouri.

The cost of providing high-speed Internet connection to rural areas of Missouri is expensive and often not feasible for small local providers, SBC argued.

The bill's Senate sponsor -- Sen. Sarah Steelman, R-Rolla -- said the bill will allow high- speed Internet service providers, such as SBC, to provide Missourians the service more areas of Missouri.

"I believe that consumers will be better off because they will have better access to broadband throughout Missouri," Steelman said.

"This will ensure that there are companies that will go out and actually lay the infrastructure that is necessary to provide that service; extend that service to areas in Missouri where we don't otherwise have it."

But representatives from several smaller Internet providers in Missouri voiced skepticism of SPC's promise to provide the service to these areas.

Brian Becker, president of Poplar Bluff Internet Inc., which provides Internet service for approximately 15,000 customers in southeast Missouri said he doubts that SPC would live up to its promises.

"I can not, with a good heart, believe that SBC will fulfill that promise," said Becker.