This article originally appeared in the Dec. 2012 issue of INTERNET TELEPHONY.

The October issue of INTERNET TELEPHONY included our standing Regulation Watch column by William B. Wilhelm (News - Alert), a partner, and Jeffrey R. Strenkowski, counsel, from the global law firm of Bingham McCutchen LLP. The headline of the column in that particular issue was “California Considers VoIP Deregulation.”

It talked about how, in recent years, several states have enacted legislation deregulating VoIP services. And it noted that California was among the latest to do so with its SB 1161, which aimed to limit the state’s oversight of VoIP services. 

Well, as it turns out, California Gov. Gerry Brown signed the bill into law on Sept, 29, 2012. It remains in effect until Jan. 1, 2020.

Rachel Greenberg in her blog on VoIPReview.org, notes that the legislation, of which AT&T and Verizon (News - Alert) were strongly supportive, is intended to retain VoIP outfits’ ability to provide services from anywhere in the state and is consistent with the national trend away from Internet regulation.

Indeed. Whether we’re talking about the Internet at large or VoIP services in particular, a popular refrain over the years has been that too much or the wrong kind of regulation can quash budding businesses in this space ­– although there are now plenty of established businesses on both fronts.

But as we are all aware, businesses of all stripes tend to like to avoid regulation, which they frequently indicate can add costs and limit their growth prospects, and in the process limit benefits to the economy and workforce at large.

Strenkowski and Wilhelm in their INTERNET TELEPHONY column earlier this year suggested that if this bill were passed, as has now happened, it could become a model for other state legislation.

That may be good news to some readers of this magazine, but Susan Crawford in an opinion piece for WIRED magazine that appeared in late August (before the bill was signed into law), suggested the California legislation creates a state of emergency on par with the recent wildfires in the West.

Susan Crawford is the (Visiting) Stanton Professor of the First Amendment at Harvard's Kennedy School and a Visiting Professor at Harvard Law School. She was a board member of The Internet Corporation for Assigned Names and Numbers (ICANN) from 2005-2008, and served as Special Assistant to the President for Science, Technology, and Innovation Policy in 2009.

SB 1161, she wrote, “leaves Californians without a protector to keep watch on the cost, service quality, safety and availability of access to information, data and entertainment – everything on which modern life depends. Because just a few giant companies control the wires, they’ll be picking the economic and social winners and losers in America. Burning trees, burning up the state’s future – it’s all cataclysmic.

The problem, she goes on to write, “is that the bill covers all ‘IP-enabled services.’ Pursuant to some current Federal regulatory gymnastics, ‘IP-enabled services’ includes not only content and functions that use wires and airwaves but also the physical wires and towers themselves.”

The assumption is that competition between cablecos, wireline telcos and wireless service providers, among others, will protect consumers by making enough options available that they can vote with their feet. “But that confident prediction hasn’t come true,” she said. “There has been a tremendous amount of consolidation in California, and across the country, leading to a situation in which the wireless and wired providers have divided up the market: AT&T and Verizon are abandoning their residential wires and focusing entirely on wireless; Comcast (News - Alert) and Time Warner have a lock on local monopoly wired services.”

For their part, Strenkowski and Wilhelm point out that while the new California legislation removes state authority to regulate many aspects of VoIP services, it does allow for certain types of regulation.

“First, the law would not affect consumer universal service or E911 surcharges,” they wrote. “Nor would it affect video franchising requirements under the Digital Infrastructure and Video Competition Act of 2006. California PUC would retain authority to enforce interconnection under Sections 251/252 of the Federal Communications Act, as well as the authority ‘to require data and other information’ pursuant to the portion of the Utility Code governing ILEC forbearance petitions.”

“The PUC also would maintain the authority to address intercarrier compensation disputes, and to enforce backup power system requirements. The bill also makes clear that it would not affect the California PUC’s existing authority over other non-VoIP wireline or wireless services, and would not affect the enforcement of any state or federal criminal law or local ordinances of general applicability that apply to the conduct of business, the California Environmental Quality Act, or local utility user taxes.”