Illinois governor signs tougher telecom bill

Illinois Gov. George Ryan signed into law yesterday a sweeping telecommunications reform bill that broadens the powers of the Illinois Commerce Commission (ICC) and increases the penalties against both incumbent and competitive local exchange carriers (CLECs) who fail to meet minimum expectations regarding service provisioning and adherence to the local competition requirements of the Telecommunications Act of 1996.

The most significant aspect of the new law, according to Bob Taylor, president and CEO of competitive local exchange carrier (CLEC) Focal Communications, is the increase in the fining authority given to the ICC concerning anti-competitive activity, to $250,000 per day from $2000 per day.

Taylor likened the previous situation to that of parking scofflaws, who have figured out that it’s less expensive to pay the fine than it is to pay the parking garage fee.

“We had a bunch of laws in the past that had very little enforcement mechanism associated with them,” he said. “If you don’t have good enforcement, nobody’s going to come to Illinois and invest in building competitive telecom networks, because they’re going to have no chance.”

According to Jim Howard, director of policy for the pro-CLEC Illinois Coalition for Competitive Telecommunications, “At 2000 bucks a day in fines and the ability of SBC/Ameritech to write checks and decide that it was cheaper to pay the parking ticket than to pay the meter, it was the equivalent of a corporate scofflaw.”

However, Howard was quick to add: “There is no one on our side of the issue that wants the ICC to have to pull the trigger because, if they do, that means one of our members has already been injured. But you do have to have a credible ability to modify their behavior.”

The new law is widely viewed as an attack on SBC subsidiary Ameritech, which serves the vast majority of the state’s customers, as it is the incumbent in most of Illinois’ largest population centers, including Chicago.

But Ameritech is generally pleased with the law, according to a company spokesman, primarily because it holds CLECs to the same standards to which it and Verizon (the state’s other incumbent, serving largely rural areas) have been held.

“The service-quality requirements now apply to everybody, and we think that’s a good thing,” the spokesman said. “We’ve been pushing for the past year that we need to update the laws to reflect today’s market. There are 134 companies licensed to serve Illinois residents for local phone service. Yet, only Ameritech and Verizon [before passage of the new bill] were regulated.”

The spokesman added that there is only one element of the new law--dealing with the unbundled network element platform--to which Ameritech objected.

“Under federal law, we have to provide whatever is ordinarily available,” he said. “This new law says we have to provide everything and anything at TELRIC pricing, which, in our view, is still below our cost in Illinois.”

Under the previous law, he added, a competitor that wished to tailor-build a system for a customer would have to research and engineer any elements that went beyond what would be considered ordinary in the region. Under the new law, a competitor could tailor-build a system and then force an incumbent to engineer and provision it.

“That’s blatantly unfair,” said the Ameritech spokesman.

Gov. Ryan apparently agrees. In a statement issued upon his signing of the bill into law, Ryan said, “If entering companies are led to believe that they can prosper simply by ‘picking off’ prime services from other carriers, perhaps at or below cost, then Illinois will have deprived itself of rational telecom regulations and discouraged, rather than encouraged, investment in technology and jobs in the state.”

The new law also penalizes carriers that don’t repair service outages promptly by requiring them to provide customer credits, ranging from a pro-rated portion of the customer’s monthly bill corresponding to the length of the outage to a $20 per day credit for outages exceeding five days.

They also will have to provide a $50 credit to customers each time a service-call appointment is missed (without 24-hour notification), and install service within five business days after receiving an order, or be forced to provide credits up to $20 per day (or alternative service, at the customer’s discretion) if the lag time is greater than 10 days.

In addition, the new law requires carriers to provide high-speed Internet access services to at least 80 percent of their customers by January 1, 2005, and establishes three basic flat-rate local calling packages.