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Sides are shaping up in what could be one of the more fierce battles to rock the state Legislature this year, over a bill to deregulate telecom companies. Wireless titans Verizon and Sprint supported deregulation efforts in the last legislative session but are opposing them this year, parting ways with AT&T and other telecom utilities, the legislation’s biggest supporters. Meanwhile, unions representing telecom workers in the state are mobilizing to fight the bill.

The state senate’s Committee on State and Federal Relations and Information Technology held a public hearing on it last week. The senate version is sponsored by State Sen. Rich Zipperer (R-Pewaukee) and would, like similar bills introduced in past sessions, greatly reduce state regulation of telecom utilities.

The utilities – the largest is AT&T Wisconsin – are still governed by state telecom law last revised in 1994. Zipperer says state rules are “long-neglected” and that “today’s smart phone world is governed by rotary phone regulations.”

His bill would eliminate state Public Service Commission regulation of rates and of the quality of service provided by AT&T and other companies. It would also, by 2013, remove all “universal service” requirements requiring them to maintain service in rural areas where they are the “provider of last resort,” the only company that can provide phone service.

Traditional telecom companies face stiff competition from newer service providers, such as Verizon, that have business models focused on wireless and “Voice over Internet Protocol” (VoIP) services. (VoIP is a digital phone service carried over a broadband network.)

AT&T and other telecom utilities offer the same services but are also required, under current Wisconsin law, to maintain their old copper phone networks. They say the deregulation bill would “level the playing field” and encourage investment in Wisconsin’s telecom infrastructure.

Scott VanderSanden, president of AT&T Wisconsin, told the committee the wireless market in Wisconsin has grown rapidly “with a very light regulatory touch … virtually no regulation.” He said the legislation, if passed, would lead AT&T to invest more in its broadband networks (including mobile ones) in Wisconsin.

Zipperer said current law requires companies like AT&T to subsidize “ancient technologies,” such as land line phone service, and reducing those requirements will enable them to invest more in wireless and broadband services.

Verizon and Sprint, although supportive of past attempts to limit telecom regulations in Wisconsin, are objecting strongly to provisions in the current bill that would require providers of VoIP services to pay more government fees. The bill would also subject VoIP providers to access fees for using other companies’ broadband networks to complete calls.

Other opponents, including the Communications Workers of America and the Citizen’s Utility Board, a nonprofit consumer group, say the state shouldn’t eliminate regulations that guarantee customers can receive quality phone service.

“Keeping pace with changing technology and with other states should not mean leaving people behind,” said Kira Loehr, general counsel for the Citizen’s Utility Board. She and other opponents say the legislation could prompt telecom companies to pull out of areas where they are providers of last resort.

Loehr says the bill “does hurt consumers, particularly older adults and those in rural communities,” who may have limited access to good cell phone coverage that could replace traditional phone service.

The Communications Workers of America union, which represents AT&T employees and those of other telecom companies, fears the legislation could cost its members jobs.

“Without customer service, we don’t have jobs,” said CWA representative Frank Matthews.

The union has supported similar bills altering telecom regulations passed in Illinois, Indiana, Michigan and Ohio but is opposing this one because it contains fewer consumer protections. “What’s in it for the citizens of Wisconsin?” Matthews said. “We all know what’s in it for the telco’s.”

George Walls, president of CWA Local 4603 based in Milwaukee, said he doubted industry claims the bill would stimulate infrastructure investment. “We believe it may do just the opposite and have a negative impact on availability and options,” he said.

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