Legislative Memo

Darren Suarez
Director of Government Affairs
T 518.465.7511


A.6609 (Scarborough)



Deferred Payment for Small Business



April 19, 2011


The Business Council opposes A.6609, which would require telephone and cable companies to provide small business customers with the option of deferred payment arrangements for installation, service initiation and non-recurring maintenance charges, for up to one year.  “Small business” is defined as a business with no more than 100 employees receiving up to 4 new phone lines. 

This legislation further regulates the fair business relationships that telecommunications companies enjoy with their residential and business customers; it adds costly administrative and regulatory burdens that will reduce investment in telecommunications networks; it unintentionally harms broadband deployment and expansion, which is critical to small business’ and our citizens’ development; and it will increase costs ultimately resulting in higher charges to customers.  Therefore, this bill should be rejected.

Subdivision 4 of section 94 of the Public Service Law currently requires telephone companies to offer a plan for deferred, installment payments of residential telephone line installation, service initiation and non-recurring maintenance charges, for up to one year. This legislation extends the existing residential telephone corporation deferred payment requirement to companies serving small businesses.  The legislation was recently amended to add cable companies to the existing residential and proposed small business requirements. 

The original law amended here was created decades ago, when the telecommunications industry lacked significant competition.  Since then, the Internet, cellular telephones and Voice over Internet Protocol (VoIP) voice services have dramatically altered the way residents and small businesses communicate.  The telecommunications marketplace is marked now by robust competition between traditional phone companies, cable telecommunications companies and other internet-based telecommunications providers. 

The existing law might have made some sense years ago, but it no longer does.  There are many service and payment options available to residential and business customers.  Extending residential legal and regulatory regimes to businesses arrangements is both unnecessary and is a dangerous precedent.  While merely ill advised in the past, it now makes no sense at all.  Extending all these requirements to yet another industry – cable telecommunications companies – drags a whole new industry into this regulatory structure at a time when we should be making it easier for businesses to grow; and it completely ignores other Internet-based voice service providers.

Installation, initiation and non-recurring maintenance charges are minimal, and are not an impediment to starting or operating a business or providing residential service.  Adding this substantial new mandate creates additional administrative burden, requires new investment in billing systems that detracts from investments in networks, and harms our ability to provide these competitive, low cost services to telecommunications customers.  This legislation will increase bad debt telecommunications companies carry for delinquent customers, and combined with these other costs, will ultimately increase overall install, maintenance and initiation fees for all customers.

Access to a high speed data connection is critical to the success of small business.  It is the great leveler and equalizer, providing these businesses opportunities to reach customers on a large scale, transact regular business in a fast and convenient way, and access products and services from one location.  New York’s telecommunications companies provide our independent businesses with the high speed data connections they need to compete with big businesses and competitors from around the world, and New York’s telecommunications companies engage small businesses across New York State in proper business relationships to provide this critical service.  Additional government regulation of these private business relationships will constrain investment in, and expansion of, telecommunications networks.

Furthermore, broadband access is nearly universally recognized as a key to give our residents access to information, employment opportunities and important public services.  Customers throughout NYS benefit tremendously from the highest broadband speeds in the country, a result of billions of dollars of investment in our networks over the past decade.  Requiring deferred payment plans are likely to have the effect of making less money available to improve and enhance broadband in the state for our residents. 

On behalf of its members’ residential and business cable customers, the Business Council of New York State opposes this legislation and urges the New York State Legislature to oppose its adoption.