Almost, say executives in the telecom industry. But is the market ready for allowing the incentives, innovation and competition to let it happen? As evidenced by the lopsided telecommunications bill that barreled out of the Florida Legislature and was vetoed by the governor this last regular session -- not yet.
The bill was well-intentioned: Increase competition for local residential phone service by allowing the Public Service Commission to raise basic phone rates between $3 and $8 a month to provide an incentive for competitors to come to Florida. In return, regulators would allow local phone companies to compete with companies like AT&T and MCI in the long-distance voice communications market and the exploding data services market.
But in his three-page veto message, Gov. Jeb Bush says lawmakers went too far in protecting the interests of the phone companies and didn't go far enough in protecting consumers and guaranteeing competition.
The 1995 Florida Telecommunications Act and the federal deregulation laws of 1996 were supposed to increase local phone competition, but in virtually every state former Baby Bells still control most of the market. While the battle for commercial consumers is vigorous, few upstarts are willing to compete with the giants for the residential customers when they can make more money serving the office complexes.
Subsidizing basic service?
In Florida, BellSouth, Verizon and Sprint blame the temporary rate caps imposed by the 1995 deregulation for forcing artificially low prices on basic phone service. They say they subsidize the difference by raising the fees they charge long-distance companies to use their network and that keeps competitors away.
It's a claim that consumer groups dispute and AARP challenges in a detailed study. AARP found that local phone service does pay for itself when all the revenues collected from residential phone customers are counted, not just the basic service fee.
The subsidy argument was embraced by most of the 107 of 120 legislators who voted for the bill, amid heavy lobbying pressure and $1 million in checks to Democratic and Republican Party campaign coffers.
Bush didn't buy it. He says that while the bill's goal was admirable, there was no guarantee it would lead to competition. He also noted that by asking consumers to pay higher rates, lawmakers were locking in a source of revenue that, in a free market, would otherwise be declining.
The governor then took the unusual step of prescribing a solution to the absence of competition. He first assumed what the promoters of the bill had conceded: That deregulation had partially failed. He noted that consumers faced dropping prices for wireless and long-distance services because of competition and local phone customers deserved the same.
Then Bush called for what no one yet has suggested: The Public Service Commission, "our hired public utility professionals," should be given the "tools to assess every possible impact on consumers and markets to craft a resolution that creates the best environment for competition to occur."
Was the governor calling for re-regulation, at least temporarily? Legislators "ought to delegate that authority, as they have in other areas, to allow a more comprehensive review" of the local phone markets, Bush explained later. He wants the PSC to come up with "a set of recommendations about how to protect lower-income Floridians and how to create a more competitive environment so a lot of people benefit."
Greater authority
How Bush and legislators define what "comprehensive review" means could make a big difference in determining how far in the regulatory arena Bush wants the phone companies to be pulled. In the past, that kind of review included discovery hearings about a company's revenue stream and earnings, says Richard Tudor, PSC spokesman and veteran telecom analyst.
Prior to 1995, the PSC negotiated a series of rate reductions for consumers that took into account the drop in costs because of advancements in technology. Since then, BellSouth, Verizon and Sprint haven't had to share their earnings statements with regulators, and they like it that way.
"We've graduated from there," says Spero Canton, BellSouth spokesman, who believes the bill was sabotaged by half-truths and fear tactics of opponents and repeated by the media.
Bush admits greater PSC authority may be bitter but necessary medicine. "Although I know there is some discomfort with the PSC by the regulated industries, I firmly believe the Legislature should pronounce its policy and then grant the PSC broad discretion to implement change," he wrote in the veto message.
Sponsors of the failed bill, who are still smarting from the governor's veto, say that persuading lawmakers to resurrect the issue of phone competition will be a tough job.
"I can pretty much assure you the Legislature will not deal with this issue within the next four years," says Sen. Skip Campbell, D-Fort Lauderdale, the Senate sponsor. "The governor has pretty much put an end to it."
Consumer advocates are also skeptical the governor will get the phone companies to agree to let the PSC intervene in the name of competition.
"What's in it for them?" asks Mike Twomey, president of Florida Utility Watch, which joined with AARP in the grass-roots campaign to defeat the bill. "If they really succeed, they lose all their customers, and who wants that?"
Meanwhile, the circumstances may force the landscape to start changing anyway.
The Federal Communications Commission is reviewing whether to continue to require local phone companies to share pieces of their network with competitors and whether to give them greater flexibility to offer high-speed internet services. The Florida Public Service Commission also has begun a review of the wholesale prices Sprint and Verizon charge competitors to use their lines in Florida. Last year, it ordered BellSouth to lower its wholesale prices.