Legislature(2019 - 2020)GRUENBERG 120
05/13/2019 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SB83 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 83 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 83-TELECOMMUNICATIONS REGULATION/EXEMPTIONS
1:18:45 PM
CHAIR CLAMAN announced that the only order of business would be
SENATE BILL NO. 83, "An Act relating to the Regulatory
Commission of Alaska; relating to the public utility regulatory
cost charge; relating to the regulation of telecommunications;
relating to exemptions, charges, and rates applicable to
telecommunications utilities; relating to regulation of
telephone services; and relating to alternate operator
services."
[Before the committee was the Committee Substitute (CS) for HB
83(L&C), version 31-LS0563\U.]
1:19:23 PM
SENATOR CHRIS BIRCH, Alaska State Legislature, introduced SB 83
as prime sponsor. He explained that SB 83 seeks to encourage
investment and innovation in the telecommunication industry by
updating the telecommunication statutes related to landlines and
long-distance services. He said rapid changes in technology and
in Federal Communications Commission (FCC) regulations have
rendered portions of the existing statutes obsolete and/or
inefficient. He said consumers prefer broadband and mobile
services, so the demand for landline services is decreasing. He
explained that SB 83 would place service providers on a more
level playing field and would encourage deployment of advanced
technologies and more efficient network design. He added that
SB 83 would create new protections for rural areas and would
require rural landline and long-distance rates, terms, and
conditions be treated the same as in larger communities. He
said the bill would also require all telecommunications
utilities to assess the regulatory cost charge (RCC) and submit
it to the Regulatory Commission of Alaska (RCA). Currently, he
said, the RCC is not being paid by utilities that are
municipally owned or are cooperatives, which he clarified is
about half the utilities in Alaska.
SENATOR BIRCH said SB 83 would also add utilities analyst
masters employed by RCA to the list of exempt services under AS
39.25.110. He said the bill would give the chair of RCA the
ability to hire up to five utilities analyst masters.
1:21:55 PM
CHRISTINE O'CONNOR, Executive Director, Alaska Telecom
Association, said SB 83 is an important bill that would
streamline regulations for both RCA and the industry. She
emphasized that SB 83 relates only to landline service and long-
distance service accessed through landlines.
MS. O'CONNOR began a PowerPoint presentation [hard copy included
in the committee packet]. She addressed slide 2, which listed
28 telecommunications providers. She said SB 83 has unanimous
support within the industry. She said the Alaska Telecom
Association's (ATA) members are the broadband, wireless, and
landline providers of Alaska.
MS. O'CONNOR addressed slide 3. She said the reason for SB 83
is that many of Alaska's telecommunications statutes are nearly
50 years old and not in line with changes in technology. She
explained that the federal Telecommunications Act of 1996
transformed the telecommunications industry by beginning a
process of deregulation and inserting competition into the
market. She noted that landline and long-distance use has
dramatically reduced since 1996. She compared ATA members' $64
million long-distance revenues from 2006 to $13 million revenues
in 2018. She remarked that landline service is still very
important and noted that SB 83 would not remove protections.
She noted that 48 percent of Alaska households have a landline.
She remarked that current regulations and statutes are driving
industry inefficiencies.
MS. O'CONNOR addressed slide 4, which featured a map of the
United States. She said 41 other states have reduced
regulation. She noted that SB 83 is not a deregulation bill.
She said it instead strips away wasteful provisions that use
scarce industry and RCA resources.
1:24:26 PM
MS. O'CONNOR addressed slide 5. She said, "Mechanically, the
bill is structured to exempt from AS 42.05. However, critical
sections are retained."
MS. O'CONNOR addressed slide 6. She described "rate regulation"
as a traditional monopoly function that RCA performs for "old
school" cost-based utilities, such as electricity, where there
is no competition and a heightened need for regulatory
oversight. "Telecommunications," she said, "is not that way
anymore." She stated that 99 percent of Alaskans have options
of where to purchase telecommunications. She explained that
these Alaskans are not limited solely to traditional landline
service. She noted that SB 83 has important protections for
landline rates. She said landline rates are annually capped by
federal rules. She added that companies must certify that they
have not gone above the federal cap for the landline rate.
MS. O'CONNOR stated that SB 83 would create AS 42.05.381(l)
which would require every company to provide a uniform rate,
service, and terms across its entire service area. She
explained that this is how the industry operates today and that
it is more efficient and less confusing for consumers. She said
putting that language in statute would protect rural customers.
1:26:11 PM
MS. O'CONNOR stated that SB 83 would also authorize RCA to
designate eligible telecommunications carriers (ETC). She noted
that the FCC has already delegated this role to RCA, but SB 83
would make it explicit by putting it in statute. She said the
reason this is important is because ETC designation allows a
company to participate in federal Universal Service Fund (USF)
programs, which are very important to service in Alaska.
MS. O'CONNOR said SB 83 would eliminate carrier of last resort
(COLR) designations. She explained that COLR regulations were
adopted when RCA "created an explicit funding stream to support
them." She clarified that these went into effect in 2010.
However, she said, the obligations to continue to serve a
designated area unless given permission to leave were already
contained in the Certificate of Public Convenience and Necessity
granted to each company by RCA. She said the COLR regulations
are duplicative to the duties laid out under a company's
certificate. She noted that a company's certificate allows it
to operate in the state. She said SB 83 would strip out the
COLR regulations and retain the stronger certificate statutes.
MS. O'CONNOR explained that SB 83 would also clean up the RCC,
which she explained funds RCA through a small charge on all
utility bills. She noted that there is an exception for
telecommunications cooperatives due to the age of Alaska's
telecommunications statutes. She said that because cooperatives
are not allowed to assess the fee, the customers of all other
telephone companies are paying for "the full weight of activity"
at RCA. She said SB 83 would make it so all telecommunications
utilities must participate in funding RCA oversight.
1:28:34 PM
MS. O'CONNOR addressed slide 7. She restated that local
landline rates are limited by federal rules. She also restated
that SB 83 would create AS 42.05.381(l) requiring rates, terms,
and conditions of service to be the same across defined service
areas. She said the federal Lifeline program supports low-
income subscribers, allowing them to get a landline or wireless
service, usually for a cost under $5.
MS. O'CONNOR addressed slide 8. She said the reason she and the
prime sponsor want to eliminate rate regulation is because it
creates an uneven playing field and wastes resources. She noted
that cooperatives do not have to file tariff filings and are not
obligated to report their rates to RCA. She said private
companies do not have a path to be relieved of those filing
obligations. She stated that it is misleading to say that rate
regulation exists because private companies can usually change
their rates at-will without RCA approval, though they still must
make a filing. She described the "paper-shuffle" process
between a private company and RCA. She noted that RCA has
called it "work without value" and "a blizzard of paper." She
said SB 83 would eliminate that. She noted that approximately
10 percent of Alaska's population is served in an area where the
company must file a more traditional tariff filing telling RCA
what the rate will be. She said the level of detail required in
these filings can take over 2 years to achieve. She stated that
SB 83 would eliminate that as well. She said the protection of
requiring uniform rates across those areas offers reassurance
that there will not be negative impacts in those areas.
1:31:28 PM
MS. O'CONNOR addressed slide 9. She relayed an anecdote from a
telecommunications industry senior manager about the
inefficiencies of composing multiple tariff filings. Ms.
O'Connor noted that the tariffs are laden with jargon and are at
times incomprehensible. She restated the intention to eliminate
the mandate to maintain the filings with RCA. She said
eliminating them would also allow RCA to focus on other more
important matters.
MS. O'CONNOR addressed slide 10. She explained that the ability
to designate an ETC is one of the important protections and
powers of RCA. She noted that there are significant funds that
flow into Alaska from USF. She said it is critical funding to
allow Alaska to have modern telecommunications networks. She
explained that a company may not participate in USF programs
without an ETC designation from RCA. She stated that SB 83
would make it explicit that RCA will continue to be the body
that authorizes initial designations and that it will continue
to report to the FCC that USF funds are being properly used.
MS. O'CONNOR addressed slide 11. She explained that COLR
regulations were implemented in 2010. Before 2010, she
explained, RCA evaluated service in areas using its authority
under the Certificate of Public Convenience and Necessity. She
said RCA decisions on such matters are based on its own
evaluation of whether service is in the public interest. She
stated that none of this would change under SB 83 and RCA would
continue to have that authority.
1:34:04 PM
MS. O'CONNOR addressed slide 12. She said SB 83 would fix the
outdated RCC. She noted that ATA members unanimously support
the provision to do so.
MS. O'CONNOR addressed slide 13. She said consumer protections
would remain under SB 83, as RCA would retain authorities under
the Certificate of Public Convenience and Necessity and as the
certifier of federal funds. She restated that SB 83 would
enshrine uniform rates in statute. She said additional
protections are provided by RCA's Regulatory Affairs and Public
Advocacy (RAPA) group, the Attorney General's Consumer
Protection Unit, and the FCC Consumer Complaint Center. She
described the Consumer Complaint Center as "distant, but active"
and explained that the FCC must respond within 10 days to a
consumer complaint.
MS. O'CONNOR addressed slide 14. She listed benefits of SB 83
to consumers, including the new mandate that rates in remote
areas match rates in larger areas. She said SB 83 would allow
the industry to be nimbler and respond quickly to consumer
preferences. She mentioned that the bill would allow companies
to focus additional resources on consumer services and that it
would fix the RCC.
MS. O'CONNOR addressed slide 15. She summarized her
presentation and emphasized that the updates proposed in SB 83
would apply only to landline-accessed services.
1:36:08 PM
REPRESENTATIVE EASTMAN asked what proportion of wireless
providers in Alaska belong to ATA.
MS. O'CONNOR said all the wireless providers are members.
REPRESENTATIVE EASTMAN referenced slide 12, which dealt with
proposed changes to the RCC. He asked what the impact of those
changes would be for cooperatives.
MS. O'CONNOR said the changes would spread the RCC across a
broader base. She mentioned that it would add a few cents to
every bill. She said the overall impact has not been
quantified. She explained how the RCC is calculated through
regulations. She added that the cooperatives support this
provision of SB 83.
REPRESENTATIVE EASTMAN asked if the "cooperative members
mentioned on slide 12 are members of ATA.
MS. O'CONNOR answered correct.
REPRESENTATIVE EASTMAN asked if ATA has discussed with the
cooperatives how they intend to deal with the increased costs.
He asked whether the costs will be absorbed internally or if
they are passed on to the consumers.
MS. O'CONNOR said it is written into statute that the RCC is a
charge assessed to the consumer.
1:38:31 PM
KIM SKIPPER, Staff, Senator Chris Birch, Alaska State
Legislature, summarized the changes made to SB 83 in the House
Labor and Commerce Standing Committee. She explained that HCS
SB 83(L&C) [Version U] has a different title from the original
bill, the phrase "relating to exempt employees" having been
added to conform to changes made to the bill. She said section
2 would now amend AS 39.25.110, the State Personnel Act, to add
"utilities analyst masters" to the list of Exempt Service
personnel. She noted that section 3 has also been changed to
amend AS 42.05.141 to provide authority to the RCA chair to
employ up to five utilities analyst masters. She mentioned that
the rest of the bill has been renumbered to conform to those
changes.
1:39:50 PM
REPRESENTATIVE EASTMAN asked if the five employees referenced in
the bill are existing employees whose positions will be changed
or if the positions themselves would be new.
MS. SKIPPER said she thinks they would be new positions. She
explained that RCA is currently suffering from a lack of skilled
professionals. She added that it is her understanding that the
addition of those positions is cost-neutral.
CHAIR CLAMAN clarified that the intention of the language is
that the changes be cost-neutral and said it may require a
"reshuffle." He said there is general recognition that RCA has
difficulty retaining the technical experts it trains because
they get hired by industry employers. He said the goal is to
require RCA to reshuffle its budget in order to raise salaries
for people who possess valuable expertise.
MS. O'CONNOR said she has observed that RCA has difficulties
recruiting and retaining talent. She explained that this is not
just a telecommunications problem. She remarked that ATA
appreciates and supports RCA possessing greater technical
expertise.
1:42:08 PM
CHAIR CLAMAN relayed Representative Eastman's question to
Commissioner Robert M. Pickett of RCA.
ROBERT M. PICKETT, Commissioner, Regulatory Commission of
Alaska, said RCA is pleased to have the ability to be more
flexible with totally exempt positions. He echoed previous
statements about the difficulty RCA faces in retaining talent.
He said the process through which the five new positions would
be allocated is not yet set though mentioned that it could
entail both the retention of existing employees and the
recruitment of outside talent.
1:43:40 PM
REPRESENTATIVE EASTMAN asked if the salaries for the five
positions would be set by RCA.
COMMISSIONER PICKETT said the salaries would have to be pegged
to the actual market rate. He noted that the amendment
containing this provision was adopted only a few days prior, so
RCA has not had time to look at job descriptions. He said RCA
would do that "in consultation" and assess "the benchmarks of
other state classified positions," though noted that thus far
RCA has not found "real good comparisons."
REPRESENTATIVE EASTMAN asked what the timeline would be for
hiring/converting employees once SB 83 becomes law.
COMMISSIONER PICKETT said that is difficult to say right now.
He noted that there are currently other major proceedings before
RCA. He remarked that it is probably not realistic to commit to
doing it in the next 6 to 9 months. He said the process would
likely involve bringing employees on one at a time with an
initial focus on areas of greatest need.
REPRESENTATIVE EASTMAN asked him to briefly describe the roles
of the five prospective employees. He asked if they would be
advisors for RCA.
COMMISSIONER PICKETT said they would be technical policy
advisors to assist RCA decision-making and rule-making
processes. He noted that RCA does not receive general funds, so
it would have to assess RCC funding to determine how to fit the
positions into its budget. He noted that RCA has a statutory
cap on how much it can charge with RCCs. He explained that RCA
would likely focus initially on filling vacant positions. He
characterized the process as "very involved."
1:47:15 PM
CHAIR CLAMAN opened public testimony on SB 83.
1:47:49 PM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, Alaska State
Legislature, testified on behalf of some of his constituents.
He thanked Ms. O'Connor for providing information and answering
questions. He said he is convinced that many aspects of SB 83
are positive. He expressed apprehension that SB 83 is moving
quickly through the legislative process and relayed concerns
about the impact of SB 83 on landline service. He said it is
important to put on the record the difficulties faced by some
rural communities regarding landline services. He highlighted
three communities in his district - Edna Bay, Coffman Cove, and
Thorne Bay that have had difficulties sustaining landline
service. He noted that those communities for the most part do
not have wireless access, so landline service is their only
means of telephone communication. He said this makes landline
service a life safety issue and a commerce issue. He relayed
the following from the city clerk in Edna Bay:
[The phone company] provides service to select
households in our city via a limited group of hardline
phones and a 900-megahertz wireless system that they
installed around 2008. The new wireless system has
not performed as well as the system it replaced and
resulted in less availability of service restricted
only to select households. The hardline system only
reaches the first few households on the main road.
New residents have come to me and informed that the
phone company has declined them services, stating they
are no longer offering any new service to residents of
Edna Bay. However, after our city and residents have
made repeated attempts to reach out for improved
service availability and received no inclination that
they will work to help us, this felt like we're left
with a community running out of time. Without
critical phone infrastructure being available to new
and existing residents, it creates a safety issue
reaching out to residents during natural disaster
events like the tsunami warnings we just had and
impedes the future viability of our town.
REPRESENTATIVE KREISS-TOMKINS said there are similar anecdotes
from other communities he represents. He relayed his efforts to
communicate with the phone companies and ATA. He said that he
appreciates the responsiveness, but the situation has not
changed. He expressed that he realizes SB 83 may not directly
affect the ability of residents to obtain service but stressed
that there is a basic level of communication that residents
should have that is not presently being afforded. He clarified
that the issue affects residents moving to communities and not
existing residents having service discontinued, which he
explained is a nuanced but important distinction. He said he
feels compelled and obligated to put on the record that there is
a problem particularly in rural communities with landline
service.
1:51:56 PM
CHAIR CLAMAN encouraged Representative Kreiss-Tomkins's
constituents to e-mail written testimony to his office. He
asked Representative Kreiss-Tomkins to forward any testimony he
has received.
1:52:17 PM
CHAIR CLAMAN closed public testimony on SB 83.
1:52:38 PM
CHAIR CLAMAN expressed that it his intention to move the bill
today. He noted that some committee members are presently in
other meetings. He shared that he plans to recess the meeting
to the call of the chair.
1:53:23 PM
The committee took a brief at-ease at 1:53 p.m.
1:53:44 PM
CHAIR CLAMAN said he was assured during the at-ease that
additional committee members' votes would not be necessary to
report SB 83 out of committee, so the meeting will not be
recessed.
1:54:05 PM
REPRESENTATIVE SHAW moved to report version 31-LS0563\U of SB 83
out of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, HCS SB
83(L&C) was reported out of committee.
1:55:08 PM
SENATOR BIRCH thanked the committee for hearing and moving the
bill. In response to concerns about inadequate public
engagement, he noted that the bill has been two years in the
making and received four hearings in the previous committee.