Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/02/2018 09:00 AM Senate LABOR & COMMERCE

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
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Moved CSSSSB 112(L&C) Out of Committee
Moved CSSB 38(L&C) Out of Committee
Scheduled but Not Heard
Heard & Held
Moved CSHB 79(FIN) Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
        SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS                                                                     
9:28:21 AM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of  SB  205.  She  noted  the  proposed  committee                                                               
substitute (CS).                                                                                                                
9:28:56 AM                                                                                                                    
SENATOR MEYER  moved to adopt the  work draft CS for  SB 205, 30-                                                               
LS1431\U, as the working document.                                                                                              
CHAIR COSTELLO objected for an explanation.                                                                                     
9:29:20 AM                                                                                                                    
EDRA  MORLEDGE,   Staff,  Senator   Kevin  Meyer,   Alaska  State                                                               
Legislature,  Juneau,   Alaska,  said  there  are   four  primary                                                               
        • Requires telecommunications utilities to continue                                                                     
          to pay an annual Regulatory Cost Charge to the                                                                        
          Regulatory Commission of Alaska.                                                                                      
        • Requires the Regulatory Commission of Alaska to                                                                       
          provide in their annual  report to the Legislature                                                                    
          details pertaining  to how much activity  is spent                                                                    
          on  each  area   of  telecommunication  regulatory                                                                    
        • Removes exemption for AS 42.05.145.                                                                                   
        • Removes transition language that is no longer                                                                         
9:30:20 AM                                                                                                                    
CHAIR COSTELLO removed her objection and version U was adopted.                                                                 
SENATOR GARDNER asked Ms. Morledge to repeat the third change.                                                                  
MS. MORLEDGE said it removes the exemption for AS 42.05.145, the                                                                
exemption   for   telecommunications    regulation   policy   and                                                               
restrictions on regulation of telephone directories.                                                                            
SENATOR MICCICHE asked what the new report might be because that                                                                
cost will be passed on to rate payers.                                                                                          
CHAIR COSTELLO said she'd like to defer the question until after                                                                
the sectional.                                                                                                                  
9:31:46 AM                                                                                                                    
MS. MORLEDGE read the following sectional analysis for SB 205,                                                                  
version U.                                                                                                                      
     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    Annual Report   This  section requires the                                                                
     RCA  to  submit an  annual  report  to the  Legislature                                                                    
     detailing the activity and  costs related to regulating                                                                    
     each type of telecommunications carrier.                                                                                   
     Section 4    Amends  AS 42.05.254(a) from  the previous                                                                  
     Committee  Substitute  that eliminated  the  Regulatory                                                                    
     Cost  Charge. This  section maintains  the current  RCC                                                                    
     funding  mechanism  of  calculating and  assessing  the                                                                    
     charge  and   applies  it  to   all  telecommunications                                                                    
     Sections  5  &  6   both  relate  to  implementing  the                                                                  
     Regulatory  Cost  Charge   for  all  telecommunications                                                                    
     Section 7 - 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 certificate                                                                       
          • 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 municipalities                                                                                          
          • 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 42.05296      Requirements   for  providing                                                                      
             telephone   services   for   certain   impaired                                                                    
          • 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 42.05.850   Relating to  the administration                                                                      
             of access charges by an exchange carrier                                                                           
          • 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 8    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.                                                                       
     Section  9    AS  42.05.890  Definitions. This  section                                                                  
     defines  "local   exchange  carrier,"   "long  distance                                                                    
     telephone  company,"   and  "long   distance  telephone                                                                    
     Section  10    Related to  implementing Section  4, the                                                                  
     Regulatory Cost Charge.                                                                                                    
     Section  11     Repealers.  This  section  repeals  the                                                                  
     following  provisions, as  the changing  nature of  the                                                                    
     industry  and  market  conditions  have  rendered  them                                                                    
          • AS 42.05.325   Registration and  regulation of                                                                      
             alternate operator services  also unnecessary                                                                      
             at this point                                                                                                      
          • AS 42.05.800  Findings                                                                                              
          • AS 42.05.810    Competition    unnecessary  in                                                                      
             today's market, which experts can speak on.                                                                        
MS. MORLEDGE noted that Ms. O'Connor could answer detailed                                                                      
9:37:50 AM                                                                                                                    
CHAIR  COSTELLO  listed  the   individuals  available  to  answer                                                               
SENATOR GARDNER asked what kind of change Section 4 describes.                                                                  
9:39:05 AM                                                                                                                    
CHRISTINE   O'CONNOR,   Executive    Director,   Alaska   Telecom                                                               
Association,  Anchorage, Alaska,  said that  change is  spreading                                                               
the cost across a broader section.  About half of the telecoms in                                                               
Alaska don't  pay the RCC  [Regulatory Cost Charge]  because they                                                               
have  become exempt.  The committee  substitute  would cause  all                                                               
telecoms  to  resume  paying the  regulatory  cost  charge.  That                                                               
provides a broader  base to support the  Regulatory Commission of                                                               
Alaska (RCA).                                                                                                                   
SENATOR GARDNER  said she didn't  know if  that was good  or bad.                                                               
Noting  that Section  7 has  a  description of  the services  for                                                               
which the  utility that  provides telecommunications  services is                                                               
not exempt,  she asked what is  being exempted. She asked  for an                                                               
answer in  common language, not  numbers. All the  sections apply                                                               
to  telecommunications  services  and   now  a  bunch  are  being                                                               
exempted. She asked what they are.                                                                                              
CHAIR COSTELLO  asked the  drafter to  comment on  which sections                                                               
the exemptions are for.                                                                                                         
9:41:09 AM                                                                                                                    
EMILY  NAUMAN,  Deputy   Director,  Legislative  Legal  Services,                                                               
Legislative  Affairs  Agency,  Juneau,  Alaska,  said  she  would                                                               
submit  her  answer  in  writing  because  the  answer  isn't  as                                                               
straightforward  as it  might  seem. The  challenge  is that  she                                                               
wouldn't want to  misstate what statutes apply.  All the statutes                                                               
other than  the ones listed in  the RCA statutes will  apply with                                                               
the  exception  that  some  of those  statutes  are  specific  to                                                               
certain types  of utilities or  certain types of behavior  that a                                                               
telecommunications company might never engage in.                                                                               
SENATOR GARDNER  rephrased the  question. She  asked if  there is                                                               
any impact on  consumers in exempting any of  those provisions or                                                               
are they no longer relevant to the industry.                                                                                    
MS. NAUMAN suggested the RCA would  be better able to answer that                                                               
9:42:32 AM                                                                                                                    
DAVID   PARISH,   Common   Carrier  Specialist   IV,   Regulatory                                                               
Commission of  Alaska, Anchorage, Alaska,  said the RCA  would no                                                               
longer  be able  to assign  COLRs [Carrier  of Last  Resort]. The                                                               
primary  impacts  for  consumers  would be  the  RCA  would  lose                                                               
current   jurisdiction   over  interconnection   agreements,   so                                                               
disputes between carriers would no  longer come to the RCA. Also,                                                               
the  RCA would  have no  exercise of  economic jurisdiction  over                                                               
rate  making for  the  carriers  across the  state  that have  no                                                               
competition.  That  is for  both  left  market and  interexchange                                                               
markets.  He did  not know  if  there would  be negative  effects                                                               
immediately,  but should  a  carrier  want to  raise  rates in  a                                                               
monopoly market,  there would be  no obligation for  the increase                                                               
to be vetted and approved by the commission.                                                                                    
9:44:27 AM                                                                                                                    
SENATOR  MEYER   commented  that  this  bill   pertains  only  to                                                               
MR. PARISH agreed.                                                                                                              
SENATOR MEYER asked the percent of people who have landlines.                                                                   
MR. PARISH  estimated that it  was below  50 percent. There  is a                                                               
steady  decline with  residential  use. Businesses  tend to  keep                                                               
their landlines longer, but the erosion is steady.                                                                              
9:46:06 AM                                                                                                                    
STEPHEN  MCALPINE,   Chair,  Regulatory  Commission   of  Alaska,                                                               
Anchorage, Alaska,  said when  the power goes  down and  the cell                                                               
towers are  no longer  operable, someone  without a  landline can                                                               
come to his house and make a call. He has two landlines.                                                                        
SENATOR  MEYER  asked  if  the  CS  addresses  the  concerns  Mr.                                                               
McAlpine raised at a previous meeting.                                                                                          
MR.  MCALPINE  said,  as  Mr. Parish  indicated,  there  are  two                                                               
overriding issues.  The bill is  getting better, but this  is the                                                               
type of  bill that ought to  be developed over time.  The RCA has                                                               
had to deal  with carriers that decide to stop  service. He asked                                                               
where  customers go  to  complain  about that.  That  is what  is                                                               
happening in the  MatSu. Some of the customers have  been cut off                                                               
because  they  have  been  losing  the  better  system  that  MTA                                                               
[Matanuska  Telephone Association]  has decided  not to  provide.                                                               
Because MTA is deregulated, consumers  do not have the ability to                                                               
come to the RCA's consumer protection  arm. They are going to the                                                               
FCC [Federal  Communications Commission]. He cannot  say anything                                                               
further  because it  is on  the  RCA's public  meeting agenda  on                                                               
Wednesday.  Carriers  of  last   resort  are  receiving  tens  of                                                               
millions in subsidies in competitive  markets. He would like that                                                               
to go  to high-cost  areas or  to development  of other  kinds of                                                               
telecommunications  that could  better serve  the rural  areas of                                                               
Alaska.  The   second  concern  is   the  failure  to   agree  on                                                               
interconnection.  In  case of  a  dispute  between two  carriers,                                                               
current  statute provides  that the  utility would  apply to  the                                                               
commission to arbitrate.                                                                                                        
MR.  MCALPINE  said  he  didnt   know  when  those  changes  were                                                               
developed. This  bill appeared  without any  prior notice  and as                                                               
they work through  it, there are multiple  concerns and problems.                                                               
Many have  been addressed, but he  would like to see  a good bill                                                               
come out  at the end  of the pipe  rather than the  one currently                                                               
before the committee.                                                                                                           
SENATOR MEYER  asked if the  added year-end report was  a concern                                                               
for the RCA.                                                                                                                    
MR.  MCALPINE  said the  RCA  does  calculate time  dedicated  to                                                               
different  activities. He  isn't  sure what  "should provide  the                                                               
legislature  with  detailed  activity" means  exactly.  It  could                                                               
require more staff time, but they could do it.                                                                                  
SENATOR GARDNER  asked the impact  of the provision in  Section 8                                                               
that  adds  a  local  exchange  carrier  to  the  exemption  from                                                               
municipal regulation.                                                                                                           
MR. PARISH said  this already exists for  long distance carriers.                                                               
His understanding is that it  means a municipality cannot step in                                                               
and start  regulating since the  RCA, under this bill,  would not                                                               
have jurisdiction.                                                                                                              
9:53:49 AM                                                                                                                    
MS.  O'CONNOR agreed  with Mr.  Parrish. She  went on  to address                                                               
issues raised earlier. The latest  national figures indicate just                                                               
42  percent of  households have  landlines, but  those are  still                                                               
important  and they  are not  in any  way proposing  to eliminate                                                               
landlines  or to  degrade that  service. Local  rates are  capped                                                               
federally. If  they wish to  raise rates, which is  not happening                                                               
today,  they  would  be  limited by  the  federal  rate  ceiling.                                                               
Regarding  Chair McAlpines   comments  about the  COLR, she  said                                                               
that obligation  continues under  the certificate process.  It is                                                               
one  of  the  listings  not being  exempted.  The  commission  is                                                               
currently looking  into one situation.  This bill  doesn't change                                                               
that.  Regarding the  funds companies  are  receiving to  provide                                                               
service, there is a docket in  which the RCA is actively pursuing                                                               
how  to change  that.  The chair  and  commissioners have  stated                                                               
their  goal   is  to  reform   that  and  industry   is  actively                                                               
participating and has submitted  draft regulations, comments, and                                                               
proposals to implement those changes.                                                                                           
MS. O'CONNOR  clarified that  the bill  requires that  the annual                                                               
report  be   formatted  to  show   the  detail  of   the  telecom                                                               
activities. It  is intended  to use  the data  already collected.                                                               
The  RCA  annual report  format  changes  and  some years  it  is                                                               
difficult to see how much activity  is attributed to each form of                                                               
telecommunications. They were not  suggesting any additional data                                                               
be  collected,  just  that the  presentation  provide  a  similar                                                               
detail as was provided in the FY2017 report.                                                                                    
9:59:05 AM                                                                                                                    
SENATOR MICCICHE said  the fiscal note still  says the regulatory                                                               
cost  charge  (RCC)  would   be  removed  for  telecommunications                                                               
services, so  that needs  updating. Looking at  the last  line of                                                               
the fiscal note,  he asked that if in the  future the RCC funding                                                               
mechanism  is  removed  from telecommunications,  if  that  would                                                               
reduce the workload  of the RCA. He asked what  is the likelihood                                                               
that  the RCC  would  be  passed on  to  other regulated  utility                                                               
MR. PARRISH said  he assumed that the question  is referencing if                                                               
RCCs are eliminated for telecommunication  companies. He asked if                                                               
that was correct.                                                                                                               
SENATOR MICCICHE  said they haven't  had an updated  fiscal note.                                                               
Before  the  bill   was  amended,  it  eliminated   the  RCC  for                                                               
telecommunications services and the fiscal  note said it could be                                                               
shifted  to  the other  regulated  utilities,  which has  been  a                                                               
concern  of   his.  He   asked  if   the  RCA   doesn't  regulate                                                               
telecommunications, wouldn't  that reduce the  RCA work  load and                                                               
avoid a cost shift to the other regulated utilities.                                                                            
10:01:10 AM                                                                                                                   
KRISTIN   SCHUBERT,  Manager,   Commission  Section,   Regulatory                                                               
Commission  of  Alaska,  Anchorage,  Alaska, said  in  regard  to                                                               
shifting RCCs to other regulated  utilities, they are still going                                                               
to be doing work  on telecoms, and so that burden  is going to be                                                               
shifted to  the other utilities  because the RCCs  are calculated                                                               
using labor ratios. Since they  cannot charge telecoms RCCs, that                                                               
burden gets  put on  the other utilities,  so their  charges will                                                               
SENATOR MICCICHE  said since that  has been removed in  Section 4                                                               
now,  it maintains  the current  RCC  funding mechanism.  Nothing                                                               
will change, but he should be on  the lookout for a change in the                                                               
future  that  could  unfairly  distribute   that  cost  to  other                                                               
MS. SCHUBERT answered yes.                                                                                                      
MR. PARRISH said  this was something the  commission addressed at                                                               
the  public meeting.  The current  draft  is fairer.  One of  the                                                               
interesting  things is  that when  other  utility sectors  become                                                               
deregulated,  the commission  generally  does no  work for  them.                                                               
With telecommunications  it's a  strange beast because  they have                                                               
lots  of delegated  authority  from the  FCC  to provide  ongoing                                                               
regulation  even   of  deregulated  carriers.  Bringing   back  a                                                               
requirement for otherwise  economically deregulated entities that                                                               
they do  perform regulatory work for  to pay some of  those costs                                                               
would be an improvement over the current landscape.                                                                             
MS. O'CONNOR  said their legal  expert can speak to  the concerns                                                               
about interconnection disputes.                                                                                                 
10:04:21 AM                                                                                                                   
JAMES JACKSON, Legal Counsel, GCI,  Anchorage, Alaska, said he is                                                               
not  sure  what raised  the  concern  from  Mr. Parrish  and  Mr.                                                               
McAlpine regarding joint use and  interconnection. The statute is                                                               
confusing  on  this   issue.  The  sections  on   joint  use  and                                                               
interconnection  are AS  42.05.311 and  AS 42.05.321.  "It's true                                                               
that those are  not listed as sections which will  still apply to                                                               
us," he  said. That is  because the statute is  somewhat strange.                                                               
It  is stated  within those  sections  that they  still apply  to                                                               
utilities that  are exempt under  AS 42.05.711.  Specifically, AS                                                               
42.05.321 which  is entitled Failure  to Agree upon Joint  Use or                                                               
Interconnection, gives  the commission  the authority  to resolve                                                               
those disputes. Subsection (d) of  AS 42.05.321 says this section                                                               
and AS 42.05.311 apply to all  utilities, whether or not they are                                                               
exempt  from  other  regulation under  AS  42.05.711.  Since  the                                                               
exemption this bill grants is  under AS 42.05.711, the section on                                                               
joint use will still apply.                                                                                                     
10:07:01 AM                                                                                                                   
CHAIR COSTELLO  stated her intention  to hold SB 205  for further                                                               

Document Name Date/Time Subjects
CS SSSB112 (L&C) Ver. S.pdf SL&C 4/2/2018 9:00:00 AM
SB 112
CS SSSB112 (L&C) Explanation of Changes Ver. L to S.pdf SL&C 4/2/2018 9:00:00 AM
SB 112
CS SB38 (L&C) Ver. D.pdf SL&C 4/2/2018 9:00:00 AM
SB 38
CS SB38 (L&C) Explanation of Changes Ver. A to D.pdf SL&C 4/2/2018 9:00:00 AM
SB 38
CS SB205(L&C) Ver. U.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
CS SB205(L&C) Sectional Analysis 4.2.18.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
CS SB205(L&C) Explanation of Changes Ver. D to U.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
ACS Support Letter for SB 205.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
SB 205 RCA letter to Senator Kelly.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
SB 205 RCA Staff Analysis Public Meeting Memorandum and exhibits.pdf SL&C 4/2/2018 9:00:00 AM
SB 205
CS HB79(FIN) Ver. N.PDF SL&C 4/2/2018 9:00:00 AM
HB 79
CS HB79(FIN) Summary of Changes ver A to ver N.PDF SL&C 4/2/2018 9:00:00 AM
HB 79
CS HB79(FIN) Sectional Analysis ver N.PDF SL&C 4/2/2018 9:00:00 AM
HB 79
HB79CS(JUD)-DOLWD-SIF-02-14-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
HB79-OOG-OMB-02-13-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
HB079CS(FIN)-DOLWD-WC-02-16-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
HB079CS(JUD)-DOA-DRM-02-09-18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79
CS HB79(FIN) Ver. N DOLWD Presentation 3.29.18.pdf SL&C 4/2/2018 9:00:00 AM
HB 79