The Indiana General Assembly approved sweeping changes to the regulation of telecommunications in Indiana, including telephone rate deregulation and a new statewide video franchising system. Governor Mitch Daniels signed House Bill 1279 into law on March 14, 2006 .

Statewide video franchising will take away most of the authority that local governments have to make sure that cable and new video-over-internet service providers meet the needs of local communities. Basic cable television rates will no longer be regulated, providers cannot be required to serve all neighborhoods in a city or town, and there is no mention of enforcing even federal customer service standards. On July 1, 2006, cable companies will have the option to move from local cable franchising to minimal-obligation, state-level video franchising under the Indiana Utilities Regulatory Commission (IURC).

Under the bill, public, education and government (PEG) access television channels will continue to exist, and the IURC can impose additional PEG channels where needed and new channels where they do not exist. There are concerns, however, about the funding, especially for facilities and equipment, of those channels due to the provisions of the bill. In addition, the bill does not provide any of the other standards that help PEG channels thrive, such as placing PEG channels in affordable monthly packages, not changing PEG channel numbers at will, and allowing PEG programs to participate in online, printed, or on-screen program schedules.

On the telephone front, starting on March 28, 2006 and extending through June 30, 2009, telephone companies will be limited to raising monthly basic telephone rates a maximum of $1 in any 12-month period, not to exceed a total of $3. Within 18 months of their first rate increase, telephone companies must have broadband and internet service available to at least 50% of households in that local exchange area. In 2009, basic telephone rate regulation will end. However, for residential customers who have another service, such as long distance, in addition to basic telephone service, or who have a package of services, such as telephone service with call-waiting or caller ID, the IURC will no longer regulate rates or quality of service after March 28, 2006. The same is true for retail business customers.

The bill prohibits regulation of high-speed internet service or advanced services such as voice-over-internet-protocol (VoIP) telephone service. This would seem to preempt state legislation calling for internet neutrality requirements (see "Network Neutrality - Internet at the Crossroads").