Regulatory power grab
Since several phone firms exist, ACC lacks authority over wireless

Editorial
East Valley Tribune
August 2, 2003

The Arizona Corporation Commission continues to make a mockery of its own pledge for orderly deregulation of the state's increasingly competitive telecommunications industry.

The latest head-shaker comes in the form of commission rules on illegal "slamming" and "cramming" schemes by some wireless phone companies. When state Attorney General Terry Goddard correctly told the commissioners this week that it was his job, not theirs, to enforce Arizona's consumer-fraud laws, ACC Chairman Marc Spitzer called it a "very shocking development" and accused Goddard of being "in bed with the wireless lobbyists."

Give us a break!

No one disputes the need to go after unscrupulous companies that use deceptive marketing practices to "slam" unwitting consumers into their wireless plans or "cram" unwanted features into those plans to jack up rates. That's consumer fraud, and perpetrators should be prosecuted to the full extent of the law, which provides for steep fines and even prison time.

Consumer fraud is the bailiwick of the attorney general. But Spitzer and his colleagues rationalize that their authority under the state Constitution to regulate utilities gives them authority over the wireless firms.

The trouble with that argument is that the whole rationale for the corporation commission's regulatory authority over utilities stems from the monopoly status they once had. But there's no longer one phone company. The proliferation of cable and wireless competitors has effectively ended what once was the monopoly status of the local phone company.

But instead of recognizing the competitive nature of the industry and ramping down its regulatory authority, the Corporation Commission is expanding its authority to cover the entire growing industry.

That needs to be stopped. And clearly the commission, even though its Republican members claim to embrace deregulation and limited government, is not about to step back voluntarily. Evidence abounds.

While extending its authority to wireless companies, the commission has refused to loosen its grip on Qwest Communications and allow it to enter the long-distance market. While claiming to protect consumers, the commission's refusal to relinquish power is costing Arizona's long-distance customers millions of dollars.

More recently, the commission backed away from a plan to deregulate the state's electricity industry. The predictable result was an announcement by Arizona Public Service for a 9.8 percent rate increase - after 13 years of declining rates in anticipation of deregulation.

Far from being the champions of consumers they claim to be, the corporation commissioners are proving the old adage that the natural instinct of government bureaucracies is to grow in size and authority. That's why checks and balances are essential, and why Attorney General Goddard is to be commended for challenging the commission's latest power grab.

But stronger medicine may be in order, in the form of a constitutional amendment. The governor and legislative leaders should look into it.