Legislature(2017 - 2018)BELTZ 105 (TSBldg)

02/27/2018 01:30 PM Senate LABOR & COMMERCE

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        SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS                                                                     
1:34:09 PM                                                                                                                    
CHAIR COSTELLO announced the consideration of SB 205.                                                                           
1:34:21 PM                                                                                                                    
SENATOR KEVIN  MEYER, Alaska  State Legislature,  Juneau, Alaska,                                                               
sponsor  of  SB  205,  stated   that  the  legislation  seeks  to                                                               
modernize   the  telecommunication   statutes   and  adopts   the                                                               
cooperative  model for  tariffs. The  RCA will  assess regulatory                                                               
costs directly to the company,  rather that assessing individuals                                                               
monthly. He continued the introduction  speaking to the following                                                               
sponsor statement:                                                                                                              
     The telecommunication  statutes (AS 42.05) are  in need                                                                    
     of revision due  to rapid changes in  technology and in                                                                    
     FCC regulations, which render  portions of the existing                                                                    
     statutes  obsolete  and/or  inefficient in  the  modern                                                                    
     telecommunications world.                                                                                                  
     All  of Alaska's  telecommunications providers  through                                                                    
     the Alaska  Telephone Association have  worked together                                                                    
     to  offer these  suggested changes.  In doing  so, they                                                                    
     have   strived    to   maintain    important   consumer                                                                    
     protections,   appropriate    RCA   jurisdiction,   and                                                                    
     consistency  with FCC  regulations  while  at the  same                                                                    
     time allowing  for greater flexibility to  more rapidly                                                                    
     take advantage of new technology.                                                                                          
     Some  existing RCA  regulations are  over 25  years old                                                                    
     and  are largely  obsolete today.  Customer preferences                                                                    
     continue  to  grow  for broadband  and  mobile  service                                                                    
     while   the   demand   for   landlines   declines.   In                                                                    
     competitive   markets,    carrier   of    last   resort                                                                    
     requirements and  alternative operator services  are no                                                                    
     longer necessary.  Placing service providers on  a more                                                                    
     level  playing  field   will  encourage  deployment  of                                                                    
     advanced  technologies   and  more   efficient  network                                                                    
     Adoption  of these  recommended statutory  changes will                                                                    
     result reduced regulatory cost charges for consumers.                                                                      
1:36:35 PM                                                                                                                    
EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State                                                                         
Legislature, Juneau, Alaska, paraphrased the following sectional                                                                
analysis of SB 205.                                                                                                             
     Section 1    Municipal powers and  duties. AS 29.35.070                                                                  
     Public  Utilities.  Section  7  repeals  AS  42.05.810,                                                                    
     therefore it is removed  from reference in this section                                                                    
     of the statute.                                                                                                            
     Section 2   Alaska  Public Utilities Regulatory Act. AS                                                                  
     42.05.141 Adds two  new subsections (e) and  (f) to the                                                                    
     general   powers  and   duties   of   the  RCA.   These                                                                    
     subsections   state  that   the   Commission  may   not                                                                    
     designate a local exchange  carrier or an interexchange                                                                    
     carrier as  the carrier  of last  resort, and  that the                                                                    
     Commission      may      designate     an      eligible                                                                    
     telecommunications carrier consistent  with the federal                                                                    
     code  that  allows  for  federal  subsidies  under  the                                                                    
     Universal Service Fund.                                                                                                    
     A  carrier  of  last  resort  is  a  telecommunications                                                                  
     company  that  commits  (or  is  required  by  law)  to                                                                    
     provide service to any customer  in a service area that                                                                    
     requests it,  even if serving  that customer  would not                                                                    
     be economically viable at prevailing rates.                                                                                
     The   Universal   Service   Fund   is   a   system   of                                                                  
     telecommunications  subsidies and  fees managed  by the                                                                    
     U.S.  Federal  Communications  Commission  intended  to                                                                    
     promote   universal    access   to   telecommunications                                                                    
     services  at reasonable  and affordable  rates for  all                                                                    
     Section 3 - Alaska  Public Utilities Regulatory Act. AS                                                                  
     42.05.711    Exemptions.     This    section    exempts                                                                    
     telecommunications  carriers from  the  Act except  for                                                                    
     the following provisions:                                                                                                  
          • AS 42.05.141(f)    New  section  in  the  bill                                                                      
             (Section 2 above)                                                                                                  
          • AS 42.05.221     Requiring  a  Certificate  of                                                                      
             Public Convenience and Necessity                                                                                   
          • AS 42.05.231   Provision for applying  for the                                                                      
          • AS 42.05.241  Conditions  of issuing/denial of                                                                      
             a certificate                                                                                                      
          • AS 42.05.251  Allow public utilities to obtain                                                                      
             a permit for the use of streets in                                                                                 
          • AS 42.05.254  Regulatory cost charge                                                                                
          • AS 42.05.261  Prohibits a  public utility from                                                                      
             discontinuing or abandoning service for which a                                                                    
             certificate has been issued                                                                                        
          • AS 42.05.271  Allows the RCA to amend, modify,                                                                      
             suspend or revoke a certificate                                                                                    
          • AS 42.05.281     Prohibiting  a  sale,  lease,                                                                      
             transfer or inheritance of certificate without                                                                     
             RCA permission                                                                                                     
          • AS 42.05.296     Requirements   for  providing                                                                      
             telephone   services   for   certain   impaired                                                                    
1:41:26 PM                                                                                                                    
At ease                                                                                                                         
1:44:34 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
MS. MORLEDGE continued the sectional analysis of SB 205.                                                                        
     Continuation of Section 3                                                                                                  
        • AS 42.05.306    Allows discounted rates for                                                                           
          customers   receiving  benefits   from  a   social                                                                    
          services  assistance program  administered by  the                                                                    
          state or federal government                                                                                           
        • AS 42.05.631    Allows a public utility to                                                                            
          exercise the power of eminent domain                                                                                  
        • AS 42.05.641   Extends RCA's jurisdiction to                                                                          
          public utilities operating in a municipality                                                                          
        • AS 42.05.830  Requires the RCA to establish                                                                           
          exchange  access  charges  to   be  paid  by  long                                                                    
          distance  carriers  to compensate  local  exchange                                                                    
          carriers   for  the   cost   of  originating   and                                                                    
          terminating long distance services                                                                                    
        • AS 42.05.840  Allows the RCA to establish a                                                                           
          universal service fund                                                                                                
        • AS 42.05.860     Prohibits a carrier from                                                                             
          restricting   the  resale   of  telecommunications                                                                    
     Section 4    AS  42.05.820 No Municipal  Regulation. In                                                                  
     addition  to a  long distance  telephone company,  this                                                                    
     section  amends AS  42.05.820  to  add 'local  exchange                                                                    
     carrier'  that is  exempted in  whole or  in part  from                                                                    
     this chapter from being regulated by a municipality.                                                                       
MS.  MORLEDGE said  Section  5 and  a  corresponding repealer  in                                                               
Section 7  will be  removed due  to an open  docket with  the RCA                                                               
that deals  with exchange access  charges and  the administration                                                               
of those charges.                                                                                                               
     Section  6    AS  42.05.890  Definitions. This  section                                                                  
     defines  "local   exchange  carrier,"   "long  distance                                                                    
     telephone  company,"   and  "long   distance  telephone                                                                    
     Section  7     Repealers.   This  section  repeals  the                                                                  
     following provisions:                                                                                                      
        • AS 42.05.145    Telecommunications regulation                                                                         
          policy;  restriction  on regulation  of  telephone                                                                    
        • AS 42.05.325  Registration and regulation of                                                                          
          alternate operator services.                                                                                          
        • AS 42.05.810  Competition                                                                                             
        • AS 42.05.850   Exchange carrier association.                                                                          
          Allows the  RCA to require a  trade association to                                                                    
          assist  in administering  access  charges and  may                                                                    
          require the  association to file tariffs  and pool                                                                    
          costs  and revenue.  [This will  be  removed in  a                                                                    
          future version of the bill.]                                                                                          
     Section    8        Transition    language    requiring                                                                  
     telecommunications  utilities  to continue  paying  the                                                                    
     annual  regulatory  cost  charge (RCC)  until  July  1,                                                                    
1:48:46 PM                                                                                                                    
CHRISTINE   O'CONNOR,   Executive    Director,   Alaska   Telecom                                                               
Association, Anchorage,  Alaska, testified in support  of SB 205.                                                               
She  recognized   the  member  companies  in   the  audience  and                                                               
clarified that  all the  statutes addressed in  SB 205  relate to                                                               
local  landline   service  or  long-distance  access   through  a                                                               
MS. O'CONNOR presented a brief  PowerPoint to help explain how SB
205 simplifies and modernizes the telecommunications statutes.                                                                  
Slide 2 depicts  the roster of ATA members that  are unanimous in                                                               
support of SB  205. These are landline,  long distance, wireless,                                                               
and broadband companies.                                                                                                        
Slide 3  highlights the transformation of  the telecommunications                                                               
industry. Landlines  still exist and are  important, but consumer                                                               
preferences  are  focused  on  wireless  and  broadband  service.                                                               
Currently, 48  percent of  the population has  a landline  and 52                                                               
percent  of   adults  are  in   wireless  only   households.  The                                                               
underlying networks  are essential but the  landline service (the                                                               
piece regulated  by Alaska statutes)  is an  increasingly smaller                                                               
portion of the  market and resources are consumed  to monitor and                                                               
report on  the competition.  For example, in  1999 there  was $64                                                               
million in  long distance revenues  within the state and  in 2016                                                               
that had dropped to $16 million.                                                                                                
The national  trends are similar.  Forty-one states  have reduced                                                               
or  eliminated oversight  of  retail landline  telecommunications                                                               
services.  The  National  Regulatory  Research  Institute  (NRRI)                                                               
monitors  the  status  of regulations  throughout  the  U.S.  and                                                               
issues  annual reports.  They  recommend  that state  commissions                                                               
focus on  the quality of  the networks, consumer  complaints, and                                                               
interactions with providers and  consumers to identify needs. She                                                               
said  those  elements  and strong  consumer  protections  remain,                                                               
regardless of the changes in SB 205.                                                                                            
She displayed  slide 5 that  depicts a map  of the U.S.  from the                                                               
NRRI showing the states that have reduced regulation.                                                                           
1:52:35 PM                                                                                                                    
MR. O'CONNOR reviewed the obsolete  statutes addressed in SB 205.                                                               
She  explained that  the  long-distance  competition statutes  AS                                                               
42.05.800-810  require  the  RCA  to manage  competition  in  the                                                               
landline long  distance market.  This is left  over from  the era                                                               
when  long distance  competition  was developing.  It was  hugely                                                               
competitive,  and the  RCA played  a critical  role in  adopting,                                                               
monitoring,  and  managing  regulations.   The  statute  and  the                                                               
regulations are  still in  place and  require annual  reports and                                                               
tariff  filings. A  lot of  resources  are expended  for a  small                                                               
piece of  the market. SB  205 removes the outdated  regulation of                                                               
long distance retail competition.                                                                                               
She reviewed  tariff regulation. She  related that as  the market                                                               
has changed,  cooperatives are able  to manage their  own tariffs                                                               
if  their members  grant approval.  They  can post  the rates  on                                                               
their websites  and roll  out new  bundles and  different service                                                               
offerings  for  landlines.  Any  privately-owned  companies  must                                                               
still file some form of tariff  filing with the RCA. Depending on                                                               
the operating location, the filing  can be a simple informational                                                               
filing  or  one  that  takes  45   days  to  review.  That  is  a                                                               
considerable delay  for changing  services for  a customer  for a                                                               
new bundle.  A full rate  case has  a statutory timeline  of over                                                               
420 days.  SB 205 proposes  that all companies would  operate the                                                               
same   as   the   cooperatives.   With   membership   permission,                                                               
cooperatives  have  been  doing  this successfully  for  over  15                                                               
MS. O'CONNOR  displayed a  snapshot of  the telecom  filings that                                                               
still  must  go through  the  commission.  She  said this  is  an                                                               
inefficient  and  unnecessary  process  for both  sides.  SB  205                                                               
proposes moving these to the cooperative model.                                                                                 
1:55:29 PM                                                                                                                    
MS. O'CONNOR  said SB 205 also  proposes a change to  the carrier                                                               
of  last resort  designation. This  is a  duplicative designation                                                               
that  was  used in  the  past  to  guarantee  that at  least  one                                                               
provider  in an  area would  be available  to offer  service upon                                                               
request.  The  Certificate  of  Public  Convenience  &  Necessity                                                               
designates an  area where  service is  required and  prevents the                                                               
abandonment  of  service  without  permission from  the  RCA.  An                                                               
application to  discontinue service is rigorously  evaluated with                                                               
the  public interest  in  mind. Federal  rules  designate that  a                                                               
company must also apply through the  FCC to abandon service in an                                                               
She  said  she does  not  consider  SB  205 a  deregulation  bill                                                               
because the RCA  retains strong authority to  ensure that Alaskan                                                               
consumers continue  to have service.  The bill  adds efficiencies                                                               
and   saves  resources   while  maintaining   essential  consumer                                                               
protections. These include the  Certificate of Public Convenience                                                               
and Necessity, Eligible  Telecommunications Carrier, RCA Consumer                                                               
Protection  &  Information  Section,  Attorney  General  Consumer                                                               
Protection Unit, and FCC Consumer Complaint Center.                                                                             
1:58:50 PM                                                                                                                    
MS.  O'CONNOR  said  SB  205  is  structured  to  right-size  the                                                               
regulation.  SB 205  maintains essential  RCA oversight,  removes                                                               
obsolete  statutes, adopts  the  cooperative  model for  tariffs,                                                               
requires  RCA  and  FCC approval  before  discontinuing  service,                                                               
reduces costs  and delays  of regulation  for RCA  and providers,                                                               
eliminates regulatory  surcharges on  consumer bills,  and shifts                                                               
actual  costs  to  providers.  The   benefits  to  consumers  are                                                               
eliminating the regulatory cost charge.  Now the cost to regulate                                                               
telecommunication  companies   is  funded   by  a   surcharge  on                                                               
customers' bills.  After some transition,  the RCA will  bill the                                                               
cost of services directly to the companies.                                                                                     
2:00:14 PM                                                                                                                    
CHAIR  COSTELLO asked  if the  RCA has  taken a  position on  the                                                               
MS. O'CONNOR said  not yet; she will present the  bill to the RCA                                                               
tomorrow morning during the public meeting.                                                                                     
CHAIR COSTELLO  asked how SB 205  would impact SB 80,  a bill she                                                               
introduced  on behalf  of a  member  of the  RCA. SB  80 takes  a                                                               
portion of the surcharge from landline  fees and shifts it to the                                                               
cellphone environment  to help  pay for  the materials  that deaf                                                               
and hard of hearing Alaskans need for their devices.                                                                            
MS.  O'CONNOR said  SB  205 would  not affect  SB  80 and  Alaska                                                               
Telecom Association  supports the much-needed change  proposed by                                                               
that  bill.  TRS services  currently  are  funded by  a  separate                                                               
surcharge on a consumer's bill, not the regulatory cost charge.                                                                 
2:01:57 PM                                                                                                                    
SENATOR MEYER said  his concern is whether the  bill would impact                                                               
RCA    budget.   He  offered  his  understanding   that  RCA  now                                                               
automatically  receives  the  $0.16   RCC  charge  on  consumers'                                                               
monthly bill, whereas  SB 205 provides that the RCA  will need to                                                               
bill the telephone companies directly.                                                                                          
MS. O'CONNOR  said that's  correct. She  explained that  the bill                                                               
provides a transition period for the  RCA to get the mechanism in                                                               
place  to bill  actual  charges. Because  fewer  filings will  be                                                               
necessary,  this  should  be  more equitable.  The  RCA  has  the                                                               
statutory  authority  to  bill  any  telecom  generated  activity                                                               
directly to the company, not the consumer.                                                                                      
SENATOR MEYER  asked if the  list on  slide two includes  all the                                                               
telephone providers in the state.                                                                                               
MS.  O'CONNOR replied  Circle Telephone  Company and  Verizon are                                                               
not  on the  list because  they  are not  official members.  Both                                                               
operate in  Alaska and ATA keeps  them updated. Circle is  a very                                                               
small  company  and Verizon  doesn't  offer  landline service  in                                                               
SENATOR MEYER  noted that the  rural providers are listed  so the                                                               
concerns  about future  development and  infrastructure in  rural                                                               
areas should be addressed.                                                                                                      
MS.  O'CONNOR advised  that the  federal funding  those companies                                                               
receive  has very  stringent requirements  for the  deployment of                                                               
2:04:36 PM                                                                                                                    
SENATOR MICCICHE asked  if consumer groups are aware  of the bill                                                               
and if any have voiced concern about the changes.                                                                               
MS. O'CONNOR said  she hasn't received any  comment from consumer                                                               
groups and  she doesn't expect  any objection because  the strong                                                               
RCA consumer protection role is unchanged.                                                                                      
2:05:25 PM                                                                                                                    
SENATOR STEVENS  asked if the  legislation has any  connection to                                                               
or effect on 911 service.                                                                                                       
MS.   CONNOR said no; that is  a separate surcharge that the bill                                                               
does not change.                                                                                                                
SENATOR GARDNER directed  attention to Section 7  that repeals AS                                                               
42.05.145  and asked  for an  explanation of  the restriction  on                                                               
regulation of telephone directories.                                                                                            
MS. O'CONNOR explained that the  provision removes the obligation                                                               
for companies to deliver a  phonebook to consumers. Companies are                                                               
adjusting  their  phonebooks  to  meet the  needs  of  consumers,                                                               
including online options.                                                                                                       
2:07:09 PM                                                                                                                    
CHAIR COSTELLO  found no  one who wished  to comment,  and closed                                                               
public testimony on SB 205.                                                                                                     
[SB 205 was held in committee.]                                                                                                 

Document Name Date/Time Subjects
SB 205.PDF SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Sponsor Statement 2.27.18.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Sectional Analysis.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB205-DCCED-RCA-02-23-18.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Modernization Act FAQ 2-15-2018 (003).pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Presentation SL&C 02.27.18.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Telecommunications Regulatory Modernization Act 1-page v2 (002).pdf SL&C 2/27/2018 1:30:00 PM
SB 205
AT&T Support Letter for SB205.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Suport - APT.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 205 Support Letter-Copper Valley Telecom.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB205 Support TelAlaska.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB205 Support-OTZ Telephone Cooperative.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SJR 7.pdf SL&C 2/27/2018 1:30:00 PM
SJR 7 Sponsor Statement.pdf SL&C 2/27/2018 1:30:00 PM
SJR7-LEG-LEG-02-26-18.pdf SL&C 2/27/2018 1:30:00 PM
SB 119.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 Sponsor Statement.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 Sectional Analysis.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Voters-Want-the-Right-to-Shop-1-22-18.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - RTS-SpreadingLogos-DRAFT2.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Right to Shop Brief on ME.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
MTA Support of SB 205.pdf SL&C 2/27/2018 1:30:00 PM
SB 205
SB 119 - Right to Shop FAQ.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Right to Shop One Pager (12-15-16).pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - RTS Healthcare Blue Book Alaska.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
SB 119 - Senate Labor and Commerce Presentation 02.27.18.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
Aetna Letter SB 119 2-27-17.pdf SL&C 2/27/2018 1:30:00 PM
SB 119
ASHNHA SB119 testimony 2-27-17.pdf SL&C 2/27/2018 1:30:00 PM
SB 119