Legislature(2017 - 2018)BELTZ 105 (TSBldg)

03/08/2018 01:30 PM Senate LABOR & COMMERCE

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Heard & Held
Heard & Held
Moved HB 86 Out of Committee
Heard & Held
        SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS                                                                     
1:39:07 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of  SB  205.  She  noted  the  proposed  committee                                                               
substitute (CS).                                                                                                                
1:39:28 PM                                                                                                                    
SENATOR  MEYER moved  to  adopt the  work draft  CS  for SB  205,                                                               
labeled 30-LS1431\D, as the working document.                                                                                   
CHAIR COSTELLO objected for discussion purposes.                                                                                
1:40:10 PM                                                                                                                    
NATASHA  MCCLANAHAN, Staff,  Senator Mia  Costello, Alaska  State                                                               
Legislature, Juneau, Alaska, reviewed  the following changes from                                                               
version A to version D of SB 205:                                                                                               
        • Sec. 5 was removed due to an open docket with the                                                                     
          Regulatory Commission of Alaska (R-18-001) in                                                                         
          relation to exchange access charges and the                                                                           
          administration of those charges.                                                                                      
        • The reference to AS 42.05.850 in sec. 7 was also                                                                      
          removed due to the open docket with the                                                                               
          Regulatory Commission of Alaska (R-18-001).                                                                           
        • Sections renumbered accordingly.                                                                                      
CHAIR  COSTELLO identified  the individuals  available to  answer                                                               
questions. She asked Ms. Morledge if she had anything to add.                                                                   
1:41:16 PM                                                                                                                    
EDRA  MORLEDGE,   Staff,  Senator   Kevin  Meyer,   Alaska  State                                                               
Legislature, Juneau, Alaska, said  the committee substitute makes                                                               
the relatively minor change of removing Section 5.                                                                              
CHAIR COSTELLO asked  if removing Section 5 and  the reference in                                                               
Section 7  due to  an open docket  would increase  the likelihood                                                               
that portions of the bill  would come back before the legislature                                                               
in the future.                                                                                                                  
MS. MORLEDGE said  she didn't believe so, but she  would defer to                                                               
the RCA commissioner who was on line.                                                                                           
1:42:08 PM                                                                                                                    
STEPHEN  MCALPINE,   Chair,  Regulatory  Commission   of  Alaska,                                                               
Anchorage,  Alaska,   said  he   can't  answer  that   until  the                                                               
commission has  the public  hearing which  is scheduled  for next                                                               
Wednesday.  Whether   a  matter   is  brought  back   before  the                                                               
legislature is dependent  upon who may disagree  with the outcome                                                               
of the commission's work. The  regulation itself is dealt with in                                                               
public.   Several  public   meetings  are   typically  held   and                                                               
interested parties are invited to comment.                                                                                      
1:43:38 PM                                                                                                                    
CHRISTINE   O'CONNER,   Executive    Director,   Alaska   Telecom                                                               
Association  (ATA), Anchorage,  Alaska,  said  she didn't  expect                                                               
that  Section 5  and  the corresponding  reference  in Section  7                                                               
would be brought back to the  legislature based on the outcome of                                                               
the docket. ATA  is working with the RCA  through docket R-18-001                                                               
to  create a  new version  and  updates to  the Alaska  Universal                                                               
Service Fund. This change will be involved in the resolution.                                                                   
1:44:25 PM                                                                                                                    
SENATOR  GARDNER  asked  Commissioner  McAlpine if  the  RCA  had                                                               
concerns about or had taken a position on SB 205.                                                                               
MR. MCALPINE said the RCA has  done a preliminary analysis of the                                                               
bill and  found it does a  tremendous amount of change  in a page                                                               
and a  half. Some  of the changes  would significantly  alter the                                                               
way the  RCA does  business at  the commission  and significantly                                                               
alter   the  relationship   between   the   commission  and   the                                                               
telecommunications  industry. Although  some have  said that  the                                                               
bill  does  not affect  the  Alaska  Universal Service  Fund,  he                                                               
believes the  completed analysis will  show that the  bill offers                                                               
significant  changes. He  anticipates that  the RCA  will take  a                                                               
position on the bill after the public meetings are complete.                                                                    
SENATOR  GARDNER asked  if  he believes  that  consumers will  be                                                               
better off or worse off with passage of SB 205.                                                                                 
MR. MCALPINE said he would answer  with an example. When he heard                                                               
the comment  that the bill  would result in  significant consumer                                                               
changes to RCC  [regulatory cost charges] payments,  he looked at                                                               
his own telephone bill. One bill  shows a $0.16 charge as opposed                                                               
to  the Alaska  Universal Service  Fund, where  the bill  shows a                                                               
$4.87 charge  plus a  $4.00 charge that  is billed  directly from                                                               
the  telephone company  and collected  by the  telephone company.                                                               
Then there is  the federal Universal Service Charge,  which is an                                                               
additional  $3.04.  Totaling  those   numbers  shows  the  Alaska                                                               
Universal  Service Fund  in many  instances surpasses  the amount                                                               
that is  collected at the federal  level. At the last  look, 19.1                                                               
percent  of an  individual's bill  was for  the Alaska  Universal                                                               
Service Fund and 19 percent was the federal amount.                                                                             
MR. MCALPINE  said one of the  things the regulation looks  at is                                                               
trying to  gain control  over the  ever-increasing charge  to the                                                               
consumer  on the  Alaska  Universal Service  Fund.  SB 205  would                                                               
cease the payment of the regulatory  cost charges   the $0.16, as                                                               
of June 30, 2019. The RCA  still has to maintain staff to perform                                                               
the federal services as well  as going through regulatory matters                                                               
and legislative matters. The staff  has been reduced from five to                                                               
two. But getting  rid of the regulatory cost  charges (RCCs) does                                                               
not  affect  the  amount  of  time  and  labor  these  staff  are                                                               
investing. It just eliminates the  telephony industry from having                                                               
to pay  their share  of that. In  addition, the  electric, water,                                                               
sewer, garbage,  all of the  other utilities, would have  to make                                                               
up  for that  because it's  basically pro-rata  on the  amount of                                                               
time the RCA spends with the various industries.                                                                                
He said  he imagines  after the  commission has  done a  full and                                                               
detailed  analysis  as  well  as   holding  public  meetings  and                                                               
comments the RCA will be better able to inform the committee.                                                                   
SENATOR GARDNER  said she  looks forward to  the report  once the                                                               
analysis is complete.                                                                                                           
SENATOR MEYER asked  when the committee could  expect the results                                                               
of the public meetings and comments and the full analysis.                                                                      
MR. MCALPINE said the commission  did the initial analysis in two                                                               
days and  staff is working  on it  now. The first  public meeting                                                               
for  this agenda  item is  scheduled for  next Wednesday  and the                                                               
analysis should be complete by March 19, 2018.                                                                                  
1:50:52 PM                                                                                                                    
At ease                                                                                                                         
1:51:57 PM                                                                                                                    
CHAIR COSTELLO  reconvened the meeting and  welcomed Ms. O'Connor                                                               
to respond to Mr. McAlpine's comments.                                                                                          
1:52:10 PM                                                                                                                    
MS.  O'CONNOR said  SB  205  does not  change  AS 42.05.254  that                                                               
authorizes the RCA  to self-fund. The transition  will allow time                                                               
to  adjust the  RCCs  to  actual cost.  The  bill does  eliminate                                                               
activity that  the telecommunications  industry generates  to the                                                               
RCA. These are things like  tariff filings and reports about long                                                               
distance competition.  She noted that she  described those things                                                               
when  she  testified  previously.  There  will  definitely  be  a                                                               
decrease  in activity  and the  transition will  provide time  to                                                               
develop a mechanism to assess actual costs per AS 42.05.254.                                                                    
1:53:19 PM                                                                                                                    
SENATOR GARDNER said she had  contact with concerned constituents                                                               
who had  misunderstood the  bill the  same way  she had.  Two who                                                               
cannot get good  cell phone reception worried  about losing their                                                               
landlines in outlying areas and Ms.  O'Connor was going to put on                                                               
the  record that  they would  not be  in danger  of losing  their                                                               
MS.  O'CONNER said  SB  205  does not  change  the obligation  to                                                               
provide  landline service.  That  obligation  exists through  the                                                               
certificate  of public  convenience  and necessity,  which is  AS                                                               
42.05.261 and  AS 42.05.271.  There must  be permission  from the                                                               
RCA  to  do  that.  A  provision in  regulation,  3  AAC  52.365,                                                               
prohibits  long  distance  carriers  from  discontinuing  service                                                               
without RCA permission.  There is another level  of federal rules                                                               
that require  companies to ask  permission. She noted  48 percent                                                               
of  households have  landlines. They  are committed  to providing                                                               
that service.  They are  just trying to  make the  paperwork less                                                               
expensive for themselves and the RCA.                                                                                           
1:55:33 PM                                                                                                                    
CHAIR COSTELLO  said it is  not her  intention to slow  the bill,                                                               
but in  the interest of the  public process it should  be held in                                                               
committee until they have the position of the RCA.                                                                              
SENATOR MEYER  asked for  a description  of the  Alaska Universal                                                               
Fund.  Chair McAlpine  expressed  concern about  not getting  the                                                               
money from  that anymore.  He did  not understand  the difference                                                               
between that and the RCC fund.                                                                                                  
MS. O'CONNER said the Alaska  Universal Service Fund comes from a                                                               
surcharge   on   customer   bills.   That   fund   supports   the                                                               
telecommunications networks in Alaska  and is distributed through                                                               
the  Alaska  Universal   Service  Administrative  Company,  which                                                               
reports  to  the  RCA.  The funds  support  voice  and  broadband                                                               
service because  the networks today support  all services. Docket                                                               
R-18-001  is open  at  the  RCA to  modernize  that.  Due to  the                                                               
declining  number of  landlines  that support  that  fund, it  is                                                               
funded by an  assessment on certain revenues.  That surcharge has                                                               
increased to 19  percent and they feel it's too  high. They filed                                                               
a comprehensive  proposal in the docket  last Monday to set  a 10                                                               
percent cap.  It will  have an impact  on companies'  support for                                                               
remote areas, but  they felt it needed to happen  in the consumer                                                               
interest. It is  not connected to this bill.  The regulatory cost                                                               
charge  that  is  allowed  to  the  RCA  under  AS  42.05.254  is                                                               
connected and it is much smaller.                                                                                               
SENATOR MEYER  said there  is talk  that this  bill would  have a                                                               
negative  impact on  rural households  and the  commissioner said                                                               
other utility companies.                                                                                                        
MS.  O'CONNER said  there  will  be no  adverse  effect on  rural                                                               
communities. Some  of the  companies that  will benefit  the most                                                               
from having  more efficiencies in  not having to do  filings that                                                               
are characterized  as unactionable  serve rural areas.  They will                                                               
devote any  resources they save  to operating their  networks. It                                                               
is not the  intent to impact other utility  companies. They fully                                                               
expect  to  pay   the  cost  of  any   continuing  oversight  and                                                               
regulations of  the telecommunications industry. It  will be much                                                               
reduced. Should  issues regarding telecommunications come  to the                                                               
RCA, that  self-funding statute allows  the assessment  of actual                                                               
cost. They are  open to proposals and suggestions.  The intent is                                                               
not  to  disrupt the  activities.  They  are  trying to  be  more                                                               
efficient for the industry and the RCA.                                                                                         
SENATOR MEYER  summarized that should  SB 205 pass,  there should                                                               
be less activity for the RCA  and there will also be less revenue                                                               
coming in.  He said,  "But the  two in  your mind  should balance                                                               
out. Is that fair?"                                                                                                             
MS. O'CONNER said yes and that  is why ATA proposed the year-long                                                               
extension of  the effective date. It  is to ensure that  there is                                                               
no disruption.                                                                                                                  
CHAIR COSTELLO asked  Mr. McAlpine if the RCA  will use testimony                                                               
from this committee in its review of the impact of the bill.                                                                    
MR. MCALPINE replied that's a definite yes.                                                                                     
CHAIR COSTELLO asked if the sponsor had anything to add.                                                                        
MS. MORLEDGE  pointed out  that the fiscal  note was  prepared by                                                               
the RCA  on February 23, 2018.  She added, "I think  perhaps they                                                               
have  been  continuing their  analysis  of  the bill  since  that                                                               
2:01:24 PM                                                                                                                    
CHAIR  COSTELLO   removed  her  objection.  Finding   no  further                                                               
objection, version D of SB 205 was adopted.                                                                                     
[SB 205 was held in committee.]                                                                                                 

Document Name Date/Time Subjects
SB 205 Ver. D.pdf SL&C 3/8/2018 1:30:00 PM
SB 205
SB 205 Sectional Analysis CS (LC) 3.8.18.pdf SL&C 3/8/2018 1:30:00 PM
SB 205
SB 205 ATA Letter to RCA.pdf SL&C 3/8/2018 1:30:00 PM
SB 205
CS SB 205 (L&C) Explanation of Changes Ver. A to D.pdf SL&C 3/8/2018 1:30:00 PM
SB 205
SB 62 Ver. D.pdf SL&C 3/8/2018 1:30:00 PM
SB 62
CS SB62 Explanation of Changes Ver. A to D.pdf SL&C 3/8/2018 1:30:00 PM
SB 62
SB 62 - DHSS Response to S LC.pdf SL&C 3/8/2018 1:30:00 PM
SB 62
SB 112 CS Draft version L.PDF SL&C 3/8/2018 1:30:00 PM
SB 112
CS SB112 (L&C ) Explanation of Changes Ver. R to L.pdf SL&C 3/8/2018 1:30:00 PM
SB 112
SB 112 Sectional version L.PDF SL&C 3/8/2018 1:30:00 PM
SB 112
SB 112 Quick Ref version L.PDF SL&C 3/8/2018 1:30:00 PM
SB 112
SB 112 Quick Ref version R revisions to L.PDF SL&C 3/8/2018 1:30:00 PM
SB 112
Support SB 112 - Samson Tug and Barge 03.07.18.pdf SL&C 3/8/2018 1:30:00 PM
SB 112
03.19.2018 AFL-CIO Letter of opposition SSSB 112.pdf SL&C 3/8/2018 1:30:00 PM
SB 112