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Wednesday, September 7, 2005

Fundamental Reform - Perry Signs Communications Law in Austin
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This afternoon Governor Perry signed into law a piece of legislation that should set the standard for state efforts at reform. The new law grants substantial price flexibility in the voice marketplace. The legislation calls for the state utility commission to report on alternatives to the current universal service system and eliminates technology-specific - read, old technologies like twisted copper - mandates for provider of last resort requirements. Under Chairman Paul Hudson, we can expect a thorough and sustentative study of universal service. Through testimony and in formal briefings during the legislative process, Hudson routinely introduced information about multiple modes of competition, new technologies and the pace of change in the marketplace. Each of these areas are integral to the next step of reform which must be getting a handle on the tax and subsidy regimes that act like a hidden break on the technology revolution.

Governor Perry should be congratulated for more than affixing his signature to the legislation. It is true that absent a veto, the bill would have become law tomorrow. But Perry is the person responsible for calling special sessions of the Texas legislature throughout this summer. In his role as the convener of these special sessions, it is his prerogative to determine the scope of work done in the statehouse. Perry conspicuously kept communications policy at the forefront of the special session(s) and kept House and Senate negotiators at the table. When the history of state communications reform is written, we must all nod toward the Texas Governor who put his signature on a hotly contested piece of legislation. Fortunately, he has set out Texas' Lone Star as a guide star for other states to emulate.

In this paper, my colleagues Ray Gifford and Adam Peters made recommendations way back in 2003 on how Texans could move the communications debate forward. They may be too modest to point out the obvious. It is remarkable how well their recommendations hold up compared to the new law. What do we find: A careful study of universal service as a step toward market-based reforms and price protection for a basic service package without hindering the deployment of new services, notably, broadband. A short review of the legislation is here including a couple of places where it could have been improved. Finally, the Texas legislation moves the ball forward for the video marketplace and for broadband. Franchises will transition from thousands of local authorities to a streamlined statewide franchise. In the latter case, power providers are now free to enter the broadband market.

What will likely be missing from the commentary on this legislation is how truly important it is for a state like Texas to repudiate command and control price and entry regulation. There is a huge market for communications technologies in Texas. Texas has a history - along with states such as Oklahoma, California, New York and Florida - as being a leader. This is true in the regulation of electricity markets as it was true in the 271 process. Finally, federal lawmakers with some measure of influence will no doubt be aware of what is happening in the home state. The Texas law will cast a market-oriented shadow all the way Capitol Hill.

Regulatory reform is a long, slow process and it took a big step forward today with the able hand of Rick Perry.

posted by @ 3:18 PM | State Policy

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