New tech, old rules: NY telecom laws haven't kept pace

When the Federal Communications Commission voted in favor of strong net neutrality rules in February, activists across the country hailed the decision as the beginning of what would hopefully be a sea change in the way government regulates telecommunications companies. 

But in New York, government officials are only just beginning to wade into the debate about changes to the industry. Telecommunication laws in the state have not seen any significant updates since the 20th century, and with the Public Service Commission, the state’s regulatory body, conducting its first study of the sector in a decade, advocates, companies and legislators are seeing attention being brought to what had seemed a forgotten issue.

“With the continuing evolution of the communications technology market and changing consumer demands, oversight of the telecommunications industry to promote core public interests remains paramount,” PSC Chairwoman Audrey Zibelman said in a press release announcing the study.

When the PSC deregulated the telecommunications industry in 1996 through what was known as the Competition II proceedings, cellphones and the Internet were just starting to become prevalent in the average American household. In the 20 years since, the products that rely on the networks of wires crisscrossing the state have been completely overhauled.

Smartphones reduced the need for landlines. Television sets increased in quality and variety. And most importantly, on-demand video and music services, just a small sliver of the products traditionally associated with phone and television services, began migrating to the Internet, making high-speed broadband access a necessity for most New Yorkers.

But few changes or additions have been made to the regulations or the Public Service Law governing the PSC since 1996, and today most New York municipalities face either a monopoly or duopoly in their telecommunications choices. When it comes to broadband, competition only exists in New York City and its suburbs, the Buffalo-Niagara, Syracuse and Albany metro areas, and a few counties in the North Country.

According to advocates, the lack of regulation has led to the industry excluding low income residents from basic services, neglecting infrastructure – including an aging copper wire network - and charging consumers too much for poor services. In New York City, for example, basic home phone bills have increased by 84 percent since 2006, while maintenance charges went up by 132 percent.

This is not the first time the PSC has looked into changes. The last study it conducted, in 2006, known as Competition III, concluded “that the residential market for non-basic service was effectively competitive,” and “the Commission expected to reduce regulation and rely more heavily on market forces to achieve just and reasonable rates.”

Advocates have said that the 2006 decision was, much like the 1996 study, based on predictions that emerging technologies would create more choices for New Yorkers who wanted affordable telecommunication services. Services such as satellite and broadband fiber phone cables, such as Verizon FiOS, were seen as emerging competitors to traditional cable providers, and any regulation could have hindered their development. But these services never reached a large enough market share to impact their competitors.

“It was a good idea to change some of these regulations,” said former Assemblyman Richard Brodsky. “But it’s clear now that a lot of this, which was based on predictions, isn’t working, and it is time for a real fundamental change to the regulations.”

A decade later, the PSC is taking public comments throughout the state as part of its study of the telecommunications field after receiving petitions from advocates such as the Connect New York Coalition, which consists of good government groups, state legislators and current and former local elected officials, including Brodsky, Syracuse Mayor Stephanie Miner and Albany Mayor Kathy Sheehan.

“It’s clear to me that the revolution in telecommunications is impacting us in every way,” Miner said. “Things like Common Core, which requires that parents have Internet access so their kids can use online materials, is just one example of how this affects people at all levels of our state.”

But in an assessment released in June, the PSC said that in its role as state regulator of the telecommunications industry, “the Commission has long supported competitive markets as the most effective approach to ensuring these core interests and consumers’ evolving needs are maintained.”

While significant overhauls to the PSC via legislative action seem unlikely, there have been some recent successes. Legislation increasing the standard of approval for the mergers and acquisitions of telecommunications companies, and another strengthening service quality standards and penalties, passed out of committee during this year’s session, and supporters hope to see a full vote next year.

Assemblyman James Brennan the sponsor of those two pieces of legislation, along with his colleagues on the Committee on Corporations, Authorities and Commissions, are also considering hosting hearings on the new PSC study.

“We are reviewing the study for the whole gamut of services and we’re considering conducting a hearing about possible legislation to address the issues associated with the study,” Brennan said, “including bringing in more competition into New York state, especially in areas where there is only one provider offering high-quality speed. The world has changed and access to high-speed broadband is becoming integral in the advanced communication society we are living in.”

An immediate family member of City & State Executive Editor Michael Johnson works for Time Warner Cable. He has recused himself from any reporting and editing for this article to avoid any conflicts of interest.