States loosen restrictions on municipal utility telecom (excerpt)

By Martin Berman-Gorvine
UT Digest, July 26, 1999
For many U.S. municipal utilities wishing to offer telecommunications services, the years since the passage of the Telecommunications Act of 1996 have been frustrating. Incumbent telcos and cable TV companies have filed lawsuits and lobbied state legislatures to block what seems to be the clear intent of the federal law: to allow "any entity" to get into telecom. But Lea Yancey of Nortel Networks and Sean Stokes of the Baller Herbst Law Group, a Washington law firm which has represented municipal utilities, had encouraging news for the municipalities. Speaking at UTC Telecom 99 in Nashville, they indicated that the regulatory trend is clearly in the municipals' favor.
While state laws remain a patchwork, information provided by Yancey and Stokes and gathered from UT Digest's files indicates that 10 states expressly allow unrestricted municipal entry into telecommunications, and another 19 have no specific laws prohibiting it. Only three states currently maintain a total ban on municipal involvement in telecommunications: Virginia, Nebraska, and Nevada. Five others, Missouri, Texas, Tennessee, Arkansas, and Colorado, disallow some services but allow others. (Of the remaining 13 states, information is not available for 12, and Hawaii has no municipal utilities.)
City utilities have plunged into telecommunications with great enthusiasm in many of the states where they are not restricted, and have done the best they can within restrictions in the others. Yancey presented some results from an April 1998 survey of 88 municipal utilities by IGI Consulting which confirm a tendency noted in UT Digest: municipal and other public utilities seem to find retail telecom services more attractive than most investor-owned utilities do. The latter, with some notable exceptions, tend to prefer the wholesale "carrier's carrier" business.
Original article copyright © 1999, Pike & Fischer, Inc.
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