July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Charting Regulation in '95: Put on Your Lifejackets!
State and federal regulators and the industries we regulate have donned life jackets. It's as if we are boating down the unexplored Grand Canyon with John Wesley Powell1 in 1869. We share a vague vision of what lies at the mouth of the canyon, but the rapids are treacherous and uncharted.
On the river, boatmen and women often scout the tough rapids from the shore. Back on the river, they carefully set themselves up at the proper position and angle, then apply deft, sometimes powerful, strokes at crucial moments. Likewise, good regulators carefully prepare proceedings (increasingly legislative ones), provide stakeholders with fair process, then make discreet, sometimes strong, decisions at key times.
Today's regulators have many advantages over the intrepid, one-armed Powell. We have fine equipment, excellent training and experience, and an enormous support group (em each other, through the National Association of Regulatory Commissioners (NARUC). But, like Powell, we face tremendous uncertainty.
In 1995, the gas industry and its regulators, led by the Federal Energy Regulatory Commission (FERC), eddied out in the up-welling water behind Order 636. They'd run the Class Five rapids over the last few years and, although they took on some water, they'd kept their boats upright. The unbundling of the industry had largely been a success, but a couple of tail waves remain: making electronic trading productive instead of obstructive, and crafting a market for upstream capacity release. The water industry has avoided the big water and stuck to Class Three streams, such as reform of the Safe Drinking Water Act.
The roiling white water this year was found in the electric and telecommunications industries.
Despite the rhetoric of the 1994 election campaign, the 104th Congress has rowed away from "new Federalism." A comprehensive federal/state framework to address the transition to a more competitive environment would be a major step forward. But, in the important areas of universal service, unbundling and interconnection, and appropriate regulatory regime, the regulatory boatmen and women must have maximum flexibility to navigate the "stream" to ensure that competition moves ahead, while protecting remaining captive customers from rate shock or service-quality degradation.
NARUC's overriding goal is to shape a final telecommunications bill that restores the proper balance between state and federal authority with respect to opening the local loop to competition. To this end, we strongly believe that the applicability of section 152(b) of the 1934 Communications Act, which reserves state authority over intrastate telecommunications, should remain intact. Restoration of section 152(b), which both the House and Senate bills repealed, will provide states maximum flexibility to manage the transition to a competitive marketplace and will best ensure that the interests of consumers, competitors, and incumbents are met in a fair and timely manner.
Second, we are concerned that federal telecommunications legislation not turn back the procompetitive efforts already underway in the states. Many states are moving ahead on interconnection arrangements, the terms and conditions for new entrants, and intraLATA toll dialing parity. The introduction of a duplicative federal regulatory presence will impede competition and invite regulatory gridlock. We urge Congress to make it