With the Illinois' economy still reeling from the national recession and the state deep in the red, some lawmakers are prioritizing cost-effective measures that encourage job growth this session. Already, the General Assembly passed a $50 million tax credit to spur small business hiring. Later this spring, members of the jobs task force will deliver a set of legislative recommendations to boost economic development. Folks connected to the telecommunications industry, meanwhile, say that an overhaul of Illinois' telecommunication regulations could generate loads of investment here at home.

Discussing telecom law can get very confusing very quickly, so we'll try to break it down.

The argument put forth by industry officials is relatively simple: the Illinois Telecommunications Act -- a law comprehensively rewritten in 1985, updated in 2001, and set to sunset on July 1 -- is functionally outdated.

For decades, AT&T (previously SBC) was the only game in town, providing local landline phone service to 90 percent of Illinois residents. In the last 10 years, new digital technologies like cell phones and Voice over Internet Protocol (VoIP) services have completely transformed how Illinoisans communicate. Today, 25 percent of Illinois households don't even own a landline. At the same time, cable companies like Comcast have jumped into the market, offering bundled services (phone, cable, and Internet) to households across the state.

The regulations on the books, however, still treat landline service as the state's primary form of communication.  According to AT&T, the Telecommunication Act's quality control standards require local phone carriers like themselves to make investments in older technologies when they would rather spend that money on new digital or wireless infrastructure.

These "legacy regulations" (as the Illinois Technology Partnership calls them) also deter burgeoning tech companies from entering the local market. A study commissioned by the Illinois Chamber of Commerce and some of its allies estimates that easing regulations across the board would create or save 105,622 jobs while boosting what ITP's Lindsay Mosher calls "consumer choice" and helping to ease the state's persistent digital divide.

Consumer groups are urging more caution. For starters, they argue that the landline quality control standards are in the public interest, particularly for vulnerable Illinois residents -- namely the poor and elderly -- who aren't yet linked into the digital world and still face a limited choice of providers.

The consumer advocates also challenge the notion that complete deregulation of the telecom network -- which ITP is basically pushing for (PDF) -- will automatically create jobs. "AT&T has tried to pitch this as a jobs bill," says Citizen Utility Board Executive Director David Kolata. "I think this is Orwellian at best." Indeed, during testimony yesterday at a joint hearing down in Springfield, AT&T Illinois President Paul LaSchiazza could not specify how many jobs would be created if his favored regulatory reforms were enacted.

On the issue of jobs, Kolata provides a contrary perspective. He says that when the General Assembly mandated that AT&T follow standards for their landline systems, the company was given a financial incentive to hire more workers to maintain that system.  Service improved, too.

So what should lawmakers do then?

Instead of eliminating service standards, price regulation abilities, and rate-filing requirements, consumer groups say that the rewrite of the Telecommunications Act should update existing regulations while also broadening the protections to include new technologies and players. "Once you give up that oversight," Kolata says, "you never get it back."

After taking feedback from a variety of stakeholders, members of the General Assembly are still putting together a comprehensive proposal. A shell bill (HB 6425) has been introduced with an April 30 final action deadline. Revamping the law is one of the top legislative priorities for State Sen. Michael Bond (D- Grayslake) and Rep. Kevin McCarthy (D-Orland Park), chairmen of their chamber's respective Telecommunications Committees.  Gov. Pat Quinn also discussed the importance of a rewrite at a press conference this week.

In an interview late last month, Bond told us "there was a significant agreement with the major parties on a substantial enhancement and changes to the framework of the bill." Safe harbor packages that guarantee low rates to vulnerable customers, he hints, have broad support. But updating some of the arcane rules without gutting the entire regulatory system is a tricky balance.

Over the next few weeks, we will see if they can pull it off.