Telecom firms fight over bill altering state powers

Telecommunications companies are required to interconnect their networks with one another. It's what makes, for instance, a cell phone call from a Verizon Wireless customer to a Sprint customer possible.

But a bill moving through the General Assembly would eliminate that requirement at the state level—making Indiana the first state to do so. It's a measure opponents say would give big companies more leverage in negotiating interconnection agreements with the smaller companies that pay for access.

Mike Leppert, an attorney lobbying against House Bill 1318 on behalf of broadband provider Level 3 Communications, said if companies have to pay more for access it could make them less competitive, and they might pass the costs to customers.

"The agreements don't last forever. They all have end dates," said Leppert, a former executive director at the Indiana Utility Regulatory Commission.

"At the time to negotiate a new deal, coming to an agreement on a new contract will be very different when one party needs to interconnect more than the other. The state requirement for interconnection levels that negotiation."

HB 1318, authored by State Rep. Eric Koch, R-Bedford, passed the House 84-14 on Tuesday. It is the latest in an effort to cut red tape in the telecom industry after the wide-sweeping 2006 Indiana Telecommunication Deregulation Bill. Among other things, the recent bill would standardize and streamline the process for building and repairing cell phone towers at the local level, potentially slashing months or years from the process.

Level 3 and others aren't opposed to that. They take issue, however, with the section that proposes striking language that currently allows the IURC to adjudicate interconnection disputes under state law. And it's not just related to wireless carriers, but cable companies, fiber providers and others.

Proponents of the bill say the opposition’s concerns are overblown. State Sen. Brandt Hershman, R-Buck Creek, said the IURC still has adjudication authority under federal law, and he said the measure is intended to reduce redundancy and simplify laws on the books by removing language written a century ago.

"We've engaged in an effort over the past several years to try and streamline our code," Hershman said. "In this case, these are just small legacy elements of the code that, although they're not normally a problem, could be viewed as anti-competitive towards new investment. So we're trying to make sure we've got the cleanest, most streamlined code in the country."

Leppert said while Indiana does designate the IURC to arbitrate disputes under federal law, it believes the federal law is insufficient. He questioned why the state would move to limit its powers just for the sake of simplification.

"No private-sector entity ever requests a change in Indiana law as a service to the state without benefit to itself," he said. "Ever."

The IURC didn't offer a stance on the bill, but officials acknowledged that there have been cases where it found state law governed aspects of an arrangement that federal law didn't cover. One such case in 2010 dealt with an E911 arrangement between INdigital/IWDN and AT&T Indiana.

AT&T Indiana supports HB 1318. President Bill Soards said removing the interconnection language as HB 1318 proposes “seeks to make sure that we don’t have separate state rules for interconnection.”

In a statement, IURC officials said: "Under HB 1318, the state requirement for interconnection between communications service providers would be discontinued. Since there would be no interconnection requirement for communications providers, the Commission would no longer have jurisdiction to resolve interconnection agreements.

"Federal statute 47 USC 251, 252, and 253 provides similar jurisdiction for states regarding interconnection and arbitration. However, this federal statute is currently under review and may change."

The next step for the bill is to be considered by the Senate's utilities committee. Its first hearing will be scheduled in coming weeks.