California Telecom Competition

Also in California, the Public Utilities Commission has denied rehearing of a December decision in which it found that while not all segments of the telecommunications service industry within the state demonstrate full and robust competition, there is no need to reinstate full commission regulation of those services not subject to effective competition. In that December order, the commission admitted to some lingering doubts about the ability of deregulated telecom markets to deliver lower prices and greater choice.

Nevertheless, the commission had concluded that continuing to regularly monitor market developments was sufficient for preventing unjustifiably high telecom service rates from taking hold. Some parties, however, were not satisfied with the commission's findings and conclusions. In seeking reconsideration, they maintained that the commission had erred in neglecting to specifically address market failures in the stand-alone voice market. They also contended that the commission should have more closely reviewed alleged failures in the intermodal market. They further urged the commission to collect more information before declining to more actively oversee basic telecom service offerings.

According to the commission, however, the petitioners had not presented any evidence sufficient to constitute grounds for a showing of legal error on the part of the commission. That is, the commission clarified, while the movants had voiced a number of "sweeping allegations of market failures," they had not been able to actually prove any such failures.

The commission reiterated findings from its December order in which it conceded that some customers have fared better than others as a result of relaxed regulation and the introduction of competition into the telecom marketplace. The commission acknowledged as well that consolidation within the industry and numerous mergers and acquisitions have clearly diminished some of the promise of competition. Rapid and ongoing developments in telecom technologies likewise have had an impact, the commission said. In particular, the prevalence of wireless services versus traditional landline services has caused a significant "digital divide" between and among various economic and geographic subgroups.

At the same time, though, the commission told the petitioners that it remains convinced that competition can still drive rates closer to actual costs, while offering consumers a wider selection of service packages and enhancements. The commission said that the present scenario for telecom services indicates that while some customer sectors may not be benefitting as much from competition as others, they still benefit to some degree. The commission asserted that although some customers may be advantaged over others, there still is no evidence that there are any "clear and current customer harms" as a result of those disparities.

Thus, from the commission's perspective,  its existing plan of oversight, which regularly reviews the extent of competition, remains satisfactory, at least for the time being. Re State of Competition Among Telecommunications Providers in California, Decision 17-07-011, Investigation 15-11-007, July 13, 2017 (Cal.P.U.C.).