In August 2006 the California Public Utilities Commission (CPUC) found that the state's four largest telephone companies "no longer possess market power" based on "the demonstrated presence of competitors" throughout their service territories. As a result, the CPUC has proceeded to dismantle almost all aspects of telecommunications regulation in California. Most significantly, the CPUC granted the state's dominant incumbent local exchange carriers (AT&T, Verizon, SureWest, and Citizens/Frontier) "broad pricing freedoms concerning almost all telecommunications services, new telecommunications products bundles of services, promotion and contracts." However, instead of price competition, California consumers have experienced an ongoing stream of rate increases following the CPUC's decision to lift price caps, with the most recent increases for basic service likely to cost consumers over $100 million per year. "Pricing freedom" for telephone companies has turned into a travesty for consumers and the "competition" identified by the CPUC has turned out to be a myth. The CPUC's decision to remove the price cap framework that had previously protected consumers from market power was driven by the conclusion that "competition" would protect consumers. The CPUC relied heavily on their conclusion that wireless mobility services are a close substitute for wireline telephone service. California has one of the lowest rates of wireless-only households in the nation with many factors contributing to the wireless only use including presence of individuals with health problems or disabilities in the household. Many California consumers face a market with only one real alternative to their local telephone company - the cable company - this "choice" is not sufficient to provide consumer protection. Economists refer to this market structure as a duopoly. The performance of the duopoly in California's residential telephone service market -- an ongoing string of rate increases -- indicates another market failure. Observed pricing behavior on the part of local telephone companies and their cable rivals does not reveal evidence of price competition. Rather, pricing reflects the actions of firms that recognize that consumers have little choice, resulting in dramatic rate increases for many California consumers. The elimination of price caps is failing to protect California consumers. Market forces are failing to deliver the benefits of competition that the telephone companies promised the CPUC - lower prices and increased choices. It is time to reestablish an effective regulatory framework that will protect consumers and ensure that high-quality telecommunications services are available to all Californians at reasonable rates.