Opinion Columns & Blogs - INACTIVE

PUC: Too big to succeed

Roslyn Layton
Roslyn Layton

The California Public Utilities Commission has its hands full, trying to stretch its limited resources to regulate a ridiculously broad spectrum of vital public services – everything from railroads to natural gas to water to Uber and even hot air balloons.

It has a $1 billion budget with over 1,000 employees. It’s even larger than the federal agencies in Washington that regulate these things. It’s no surprise that it can’t do any one thing well.

The commission has received deserved criticism, but what it really needs is support from the Legislature to downsize. Telecom should be the first order of business. Most states have closed down their telecom commissions.

Simply put, state regulators have done their job to create competition in telephony, and many states have used this as a political win-win to demonstrate the success of the commission. The true regulator aspires to do such a good job to create competition, that he puts himself out of a job.

With some 400 telephony providers in California and less than 10 percent of its residents still subscribing to landline telephony service, this is a golden opportunity for the CPUC and the Legislature for some good public relations and wind down the telecom function which even the CPUC leadership recognizes is overdue.

The CPUC – originally the railroad commission – was formed when railroads were high-tech. Then in 1912, the agency was tasked with overseeing transportation services, water, electricity, telegraphs and telephone – so-called “natural monopolies.”

Of course, back then technological changes occurred slowly, over decades, and allowed the CPUC to manage these very different industries. But that task is far from realistic today.

The modern, hyper-competitive world of voice and data communications has moved beyond simple “plain old telephone service” to a wide array of mobile and Internet-based communications services, text and video messaging and social media. Why impose stultifying regulatory control by the one-time railroad commission on dynamic information-age industries? We shouldn’t, as most other states, and many countries, have realized.

The Federal Communications Commission already regulates the telecommunications market, and the rapid rise in broadband and mobile innovation over the last decade has happened without state utility commission regulation.

The ability for customers to choose from the myriad competing technologies and providers that make up the telecom market today is a far better guarantor of customer service and fair pricing than any regulator.

The best thing that could happen to California communications customers is the opposite of state regulation. Communications is a vibrant, dynamic economic sector that needs room to innovate and grow, not micromanagement by the state bureaucracy.

Technologies and products evolve rapidly to meet the changing demands of consumers, when they are not encumbered with “help” from the government. As a former Golden State resident, I recall that CPUC fees added needless cost to my bill for things from which I never benefited.

California’s Silicon Valley created the revolution that broke the monopoly that federal and state regulators nourished for half a century. That there is still a telephone utility commission is an atavism that borders on embarrassment.

CPUC President Michael Picker appears to agree, recently testifying before the Legislature that, in his personal opinion, the commission doesn’t need to be involved in telecom anymore (or parts of transportation either, another valid notion).

Picker’s comment was right in line with what so many Californians are thinking – the CPUC has grown piecemeal over the years into an agency that tries to do too much. That he has the honesty and humility to say so makes him worthy of our support.

Unfortunately, President Picker’s comments are not in line with the actions of his own agency, which has devoted significant attention and resources on needless distractions, like whether the communications market is competitive. Restructuring is necessary to align the CPUC’s goals with its actions.

For that reason, Glendale Assemblyman Mike Gatto, the chairman of the Committee on Utilities and Commerce, has proposed a voter initiative that would break apart the CPUC, assigning many of its regulatory responsibilities to other state agencies. As he put it, “Our concern is that the CPUC is too big to succeed; it is time to hit the reset button.”

Californians will have to decide whether Gatto’s initiative is the right way to do it. But there is no denying that the status quo is simply not working. It is time to refocus and reboot the CPUC, clearing the way for progressive innovation that will ensure public safety, protect the environment and benefit consumers.

Roslyn Layton, former California resident, is a Visiting Fellow at the American Enterprise Institute in Washington. She can be reached at www.RoslynLayton.com or roslyn@layton.dk.

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