NASHVILLE - The Senate Commerce Committee on Tuesday approved a bill deregulating much of AT&T's Tennessee operations after compromises that include delaying rate hikes in rural areas by at least a year.
But two Tennessee Regulatory Agency directors warned lawmakers that, under the legislation, they likely can expect charges to consumers to rise based on similar experiences in other states.
"I'm telling you, rates will go up, and the better route is to leave the process we've got in place," said Regulatory Authority Director Sara Kyle. "I just think that's the best route for the citizens of Tennessee."
The agency was considering AT&T's request for deregulation until the company yanked the filing in February and began pushing legislation, she said.
Regulatory Authority Chairman Eddie Roberson said he was told by a Nebraska regulator that passage of similar legislation led to AT&T's imposition of a statewide rate that boosted charges to rural consumers.
However, Tennessee Sen. Dewayne Bunch, R-Cleveland, said it is "hard for anyone to know what's going to happen" and called the assertions "speculation."
State Commerce Committee Chairman Paul Stanley, R-Germantown and the bill's Senate sponsor, agreed.
"I want to remind the body, that is a decision made by the corporation or any other entity, and I don't think the TRA can speculate what someone can do," he said.
But Sen. Charlotte Burks, D-Monterey, called the regulatory authority directors "sort of the experts."
The bill passed on a 7-1 vote with Sen. Burks the lone lawmaker voting no. Sen. Stanley said he likely will not immediately bring the bill to the Senate floor.
Sen. Bunch, who raised a number of questions about the bill, said he decided to support it because much of what he thought was basic telephone service turned out to be "bundling" deregulated by the state back in 2005.
Committee action came after weeks of largely behind-the-scenes haggling as an army of at least 19 lobbyists pushed to remove what AT&T says are the obsolete legacy of regulations from its days as a monopoly phone service provider.
"The monopoly's gone," AT&T President Gregg Morton told the committee, noting the company has competition from cable, Internet providers and others, including Chattanooga's EPB, which have gotten into the telephone business.
"If I start raising rates willy-nilly, my competitors are going to love that," he said.
AT&T now is regulated by the Tennessee Regulatory Authority with a price cap on basic telephone service and other services such as call waiting, call forwarding and caller identification. Company officials say there is sufficient competition to do away with that.
But issues raised by the regulatory authority, the cable industry and others have led AT&T to agree to certain changes, including the year's delay in the ability to raise rates in rural areas. At the end of a year, AT&T can go before the authority and argue that there is sufficient competition in these areas to warrant a rate hike.
If the authority refuses, AT&T would be free in 2015 to act on its own.
Other major compromises include maintaining the regulatory authority's power to resolve consumer complaints and allegations by other carriers of anti-competitive behaviors by AT&T.
Earlier in the day, the House Commerce Committee adopted a number of the compromises but delayed action on the bill for a week.