Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/08/2018 01:30 PM Senate LABOR & COMMERCE
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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 landlines. 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 time." 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.]