A pending bill would streamline the regulatory process large phone companies now undergo in order to merge with or buy competitors. Senate Bill 1389 removes what one telecom company referred to as an onerous checklist now required under state law before the Public Utilities Commission gives permission for mergers or buyouts to take place. San Fernando Valley State Sen. Alex Padilla sponsored the legislation at the request of Verizon, who along with AT & T;, would be a main beneficiary if it passes. The bill amending the Public Utilities Code goes before the senate Energy, Utilities, and Communications Committee for a hearing on April 15. Under current state law passed in 1989, the commission must consider whether a merger or buyout brings savings, is fair to the community and impacts competition. Removing the requirement streamlines a lengthy process, said Tim McCallion, West region president for Verizon. “From Verizon’s perspective, if we ever are involved in another merger we won’t have the months of delay in preparation in putting together all the material whether it is relevant or not to meet the checklist requirements,” McCallion said. One consumer-rights group, however, says not so fast. The Utility Reform Network opposes the bill and wants to see the review process stay in place. Companies justify mergers by saying they will result in greater efficiency, and with the mandatory showing of cost savings the PUC has the ability to say a savings exists, said Mark Toney, executive director of the organization. “Part of the benefit is to give back the consumers,” Toney said. When the legislation was originally passed, the business climate for telecommunications was different. The large phone companies and their land-line services were all that were available for consumers. Fast forward to 2008: Verizon and other telecom giants face competition from wireless carriers and internet-based and cable-based phone services. Many of those companies are not regulated by the commission and thus are not required to go through the same process when merging or buying another company. While the bill would remove the checklist requirements, it does not make the playing field completely level, McCallion said. The safeguard of PUC approval of a merger remains in place and the commission retails the ability to request information and data it considers to be appropriate and relevant, he added. While not supporting the specific bill, the Economic Alliance of the San Fernando Valley does favor its goals of deregulation and enhancing competition. Alliance President and CEO Bruce Ackerman also chairs the California Association of Local Economic Development, which does publicly endorse the bill. “Anytime you can loosen the regulations in place and make it easier for the business community to enter the marketplace, they can deliver a lower cost product by stimulating the market,” Ackerman said. The Regional Black Chamber of Commerce, San Fernando Valley; the Los Angeles Metro Chamber; the Long Beach Chamber of Commerce; and the U.S. Hispanic Chamber of Commerce are among the nearly 40 organizations that sent letters supporting the goals of the bill. TURN also sent a letter to the senate committee and Toney plans to testify at the hearing. Meetings have taken place between the organization and Padilla’s staff to discuss the bill. “He has a fine record of being consumer friendly and we hope he will reconsider once he sees the community sentiment on this,” Toney said. At-A-Glance California Senate Bill 1389 Sponsor: State Senator Alex Padilla What It Does: Exempts certain telephone companies from the requirement of providing certain information to the Public Utilities Commission when merging with or buying another company. That information includes the cost savings of the merger, impact on competition, and impact on local economies and small business.
PUC Amendment to Streamline Telecom Mergers Will Be Voted on by Senate