The Associated Press April 13, 2011, 7:17PM ET

Kan. gov. to sign bill loosening rules for AT&T

Kansas Gov. Sam Brownback announced Wednesday that he'll sign a bill loosening regulation of AT&T Inc., and his spokeswoman said the measure helping the state's largest provider of local telephone service also will improve the business climate.

Critics of the bill believe it could lead to higher monthly bills for thousands of Kansans who want only a single landline in their homes. The measure cleared the Legislature with large, bipartisan majorities, but some rural lawmakers were among its biggest critics.

The bill makes it easier for AT&T to avoid a state cap on rates for stand-alone, local landline service that still apply in many of the areas it serves. The measure still limits rates for poor families in a state "lifeline" program and says prices for basic local service in rural areas can't be higher than rates in urban areas.

Brownback scheduled a bill-signing ceremony for Thursday afternoon at an AT&T facility in the Kansas City-area suburb of Mission, with legislators and Steve Hahn, the president of the company's Kansas operations, expected to attend. The new telecommunications law will take effect July 1.

"This legislation will help modernize communication policies in our state, and we also believe also increase the opportunities for investment in broadband and in wireless at no expense to the taxpayer," Brownback spokeswoman Sherriene Jones-Sontag said Wednesday.

But David Springe, consumer counsel for the Citizens' Utility Ratepayers Board, a state agency representing which represents said the changes will hurt from 25 percent to 30 percent of consumers who want only basic landline service. He said many of them are elderly, and Kansas "has thrown these poor customers to the wolves."

"There's no question prices are going to go up. That's the only reason the bill is there," he said. "There is one area in telecommunications that is not completely deregulated."

A 2006 state law deregulated prices for bundles of services that include wireless, Internet access, cable television or other video. It also deregulated prices for local landline service in AT&T's biggest exchanges, for Kansas City, Topeka and Wichita.

The same law said the Kansas Corporation Commission, which regulates utilities, could deregulate prices for local service in an exchange at a provider's request, if the company showed competition existed.

A KCC report in February showed 59 of AT&T's exchanges have been deregulated and 75 remain under a price cap, most of which have fewer than 5,000 landlines. The cap limits annual rate increases for a single, stand-alone residential landline and up to four business landlines to the rate of inflation.

The new law says when a local service provider has a majority of landlines in deregulated exchanges, it can apply to have prices in all of them deregulated. So far, only AT&T qualifies.

AT&T officials have said the new law will make Kansas' regulation similar to that in other states -- and Kansas' regulation of cable companies and other potential competitors.

"The investment can go in areas consumers are increasingly in," said AT&T spokesman Aaron Catlin. "It allows the overall policy to encourage growth."

Supporters of the bill note that consumers are moving away from landlines, toward wireless.

The KCC report said the number of wireless subscribers in Kansas grew by 37 percent between December 2005 and December 2009, to almost 2.5 million. AT&T has about 560,000 landlines, down from nearly 900,000 in 2005.

Backers of the legislation also believe prices for basic local landline service aren't likely to rise quickly, arguing steep increases in urban areas will cost AT&T customers.

But Rep. Forrest Knox, an Altoona Republican who opposed the legislation, said many rural customers don't have the product choices that urban ones do. He said if AT&T wants to push customers toward buying bundled services, rates for stand-alone landlines could jump.

Knox called the legislation premature, suggesting the state should have waited for greater choices to develop in rural areas.

"Give it five or 10 years, and it won't be an issue, even in rural areas," he said.

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The telecommunications bill is Sub for SB 72.

Online:

Kansas Legislature: http://www.kslegislature.org

AT&T Inc.: http://www.att.com/

Citizens' Utility Ratepayers Board: http://curb.kansas.gov/


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