Legislature(2017 - 2018)GRUENBERG 120
04/11/2018 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB230 | |
| SB205 | |
| HB387 | |
| HB351 | |
| HB336 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 230 | TELECONFERENCED | |
| + | SB 205 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 351 | TELECONFERENCED | |
| += | HB 336 | TELECONFERENCED | |
| += | HB 387 | TELECONFERENCED | |
SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS
2:48:51 PM
CHAIR CLAMAN announced that the next order of business would be
SENATE BILL NO. 205, "An Act relating to the Regulatory
Commission of Alaska; and relating to telecommunications
regulations, exemptions, charges, and rates."
2:49:24 PM
SENATOR KEVIN MEYER, Alaska State Legislature, advised that all
of the telecommunication companies support SB 205, which is rare
because this business is competitive with 15 different telephone
companies in Alaska. The intent of this legislation is to
modernize the state's telecommunication statutes because
technology has changed and consumer preferences for telephones
have changed extensively since the laws were written in 1990.
In fact, he advised, it is estimated that only 40 percent of
homes continue to maintain a landline. He explained that this
legislation removes the outdated regulation of long-distance
competition and remedies the current distortion that exists as
to which companies pay the regulatory costs charge. Under SB
205, he said, all of the companies will pay the RCC charges,
thereby spreading the cost amongst all of the carriers and not
to just a few as it is currently. He related that this bill
also removes the requirement for the RCA to designate carriers
of last resort (COLR) because it is unnecessary and results in
unfairly imposing burdens on one carrier in a market. All
carriers in a market should be treated equally unless there is a
compelling reason to do otherwise. Another reason the carrier
of last resort (COLR) is no longer necessary is because there
are state statutes and regulations in place at the state and
federal level that will remain and prohibit carriers from
discontinuing a service without the permission of the RCA.
2:51:36 PM
SENATOR MEYER reiterated that SB 205 simply removes obsolete
inequity regulatory burdens while maintaining the obligation to
provide landline service. The legislation provides efficiencies
for both the industry and RCA by allowing all parties to focus
on relevant regulatory activity, and it preserves the public
interest oversight role that RCA has today. He cautioned that
having been with this bill for a while, it is a technical bill
and experts are available to better answer questions.
2:52:24 PM
EDRA MORLEDGE, Staff, Senator Kevin Meyer, paraphrased the
sectional analysis as follows [original punctuation provided]:
Section 1 Municipal powers and duties. AS 29.35.070
Public Utilities. Section 11 repeals AS 42.05.810,
therefore it is removed from reference in this section
of the statute.
MS. MORLEDGE advised that Section 1 was necessary because Sec.
11, AS 42.05.810 is repealed; therefore, the reference to that
statute is in Section 1.
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
consumers.
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
version of the bill that eliminated the Regulatory
Cost Charge (RCC). This section maintains the current
RCC funding mechanism of calculating and assessing the
charge and applies it to all telecommunications
companies.
Sections 5 & 6 both relate to implementing the
Regulatory Cost Charge for all
telecommunications companies.
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 42.05.296 Requirements for providing
telephone services for certain impaired subscribers
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 association
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 services
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
service.
Section 10 Relates 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
obsolete:
AS 42.05.325 Registration and regulation of
alternate operator services
AS 42.05.800 Findings
AS 42.05.810 Competition unnecessary in
today's market
2:58:42 PM
REPRESENTATIVE LEDOUX acknowledged that it is unusual when all
of the telecommunication companies can actually agree on
anything, which obviously means the bill is great for the
telecommunication companies. She asked how great the bill is
for the consumer because when reviewing the bill and sectional
analysis, a person would have to be an expert in
telecommunications law in order to actually understand the
legislation. She opined that the telecommunication companies
receive subsidies from "someone, maybe it's the state or the
federal government" to make sure that the companies provide
services for areas which normally would not receive services.
It appears that this bill will take away the guarantee of
services because it is doing away with the carrier of last
resort, she said. In the event it is taking away the guarantee
for the services, she asked whether the telecommunication
companies will still receive the subsidies, and if so, why would
they continue receiving the subsidies if they are not
guaranteeing the service.
SENATOR MEYER responded that the committee will hear a
presentation from the Alaska Telephone Association, which
encompasses all 15 telephone companies in Alaska as to how those
subsidies work. There will be some savings to the consumer now
that the RCC charges are spread across all of the different
companies, and he could not say the amount of the savings.
First of all, he explained, all areas will still be covered as
required by the State of Alaska and the FCC, and he opined that
the subsidies would probably still continue to whoever is
providing that service in those remote areas.
3:01:22 PM
REPRESENTATIVE LEDOUX argued that if the RCA does not have the
authority to keep carriers in these remote communities, what
guarantee is there that the carriers will remain in the remote
communities because those communities probably are not much of a
profit sector.
SENATOR MEYER clarified that the RCA will continue to have
jurisdiction over the carriers and it will make certain the
remote communities are covered. Even if the RCA does not do it,
he said, the FCC will require that coverage, but the experts can
better answer the question.
3:02:14 PM
REPRESENTATIVE LEDOUX related that she knows there are various
consumer advocacy groups, for example advocacy airline groups
advising which is a good airline company, and asked whether
there is any such group with respect to telecommunication
service, and if so, she would like to hear from those groups.
SENATOR MEYER answered that he did not have the answer.
CHAIR CLAMAN noted that occasionally he does see consumer
reports giving advice about all of the Lower-48 telephone
companies, but they do not seem to mention Alaska's telephone
companies.
3:02:49 PM
REPRESENTATIVE LEDOUX stressed that this is an extremely
complicated statute and she was unsure whether, at the end of
the day, most of the 60 legislators will actually understand
what they are voting on in this particular statute. Clearly,
she said, it benefits the telecommunication companies but she
was unsure that it benefits, or at least does not harm, the
consumers, and she would like an answer.
SENATOR MEYER commented that that is a fair question because
legislators are elected to benefit their constituencies and not
the telecommunication industry. Letters are contained within
the committee packet from previous and current commissioners who
like where this bill is going, and other commissioners have
concerns. He opined that after hearing from the Alaska
Telecommunication Association (ATA) and the RCA, Representative
LeDoux will be better able to make that decision.
3:04:20 PM
REPRESENTATIVE REINBOLD pointed out that she is disappointed
about what took place on the Senate Floor with HB 140, "getting
rid of the regulation, and so you guys come and talk about
regulation and then you go and get rid of oversights." She
stressed that that is a huge contention for her currently,
(audio difficulties) analysis so people who do want just a quick
glance at what this bill does, it does basically de-regulate
telecommunication companies in this state according to the RCA.
However, (audio difficulties) with regard to the RCA, "I think
they are very expensive, it's a very big -- you know, I worked
with them as Reg Review Chair and I think they're expensive, and
I'm not sure that they always have the best interests of the
consumer at hand." She offered that she is on the fence with
regard "to some of this stuff right now," and asked about
subsidies without providing the service because she may not have
all of the details, but it sounds like "big government waste."
CHAIR CLAMAN noted that Senator Meyer had responded to the
subsidy question to the best of his ability.
3:06:17 PM
[CHAIR CLAMAN, in reference to Representative Eastman's question
regarding slide 2 of the PowerPoint yet to be presented, advised
Representative Eastman that the committee would not discuss the
PowerPoint presentation until it had been presented.]
3:07:02 PM
CHRISTINE O'CONNOR, Executive Director, Alaska
Telecommunications Association (ATA), pointed out that the
legislation is technical with many details and that many answers
to the questions offered today are contained within the
PowerPoint. She suggested the committee keep in mind that this
legislation is solely about landline service and long-distance
access through landline service. This legislation is about
modernizing the statutes adopted in 1990, the "in the pin drop
era where they were just starting to compete for long-distance."
She paraphrased the "SB 205 Telecommunications Statutes Simply &
Modernize" PowerPoint Presentation as follows:
3:08:13 PM
MS. O'CONNOR turned to slide 2, "Unanimous Support for SB 205"
and advised that the legislation is supported by all ATA
members, which include the following entities:
Adak Eagle Enterprises
Alaska Communications
Alaska Telephone Company
Arctic Slope Telephone
Association Cooperative
ASTAC Wireless
AT&T
Bettles Telephone
Bristol Bay Cellular Partnership
Bristol Bay Telephone
Cooperative
Bush-Tell
Copper Valley Telephone
Cooperative
Copper Valley Wireless
Cordova Telephone
Cooperative
Cordova Wireless
GCI
Interior Telephone
Mukluk Telephone
Ketchikan Public Utilities
Matanuska Telephone
Association
North Country Telephone
Nushagak Cooperative
OTZ Telephone Cooperative
OTZ Wireless
Summit Telephone Company
TelAlaska Cellular
United Utilities
Windy City Wireless
Yukon Telephone Company
MS. O'CONNOR said, (audio difficulties.) "I appreciate
Commissioner Pickett's frankness, and we agree wholeheartedly
with his characterization of this activity as without value."
(Audio difficulties) SB 205 to public comment, such as this,
given from the commission from the dais over the past two-to-
three years.
3:09:42 PM
MS. O'CONNOR turned to slide 3, "Transformation," and
paraphrased as follows:
Telecommunications have changed completely since
many of Alaska's telecom statutes were adopted in
1990.
The 1996 Telecom Act completely transformed the
marketplace and started an evolution toward light
touch regulation.
Landline and long-distance use is dramatically
reduced.
Long distance revenues reduced from $64M to $16M
between 2006-2016.
Only 48% of households still have a landline.
Landline services are still important, and will
continue under SB205.
MS. O'CONNOR (Audio difficulties.) She said she will "hit this
again and again today" because she has heard this question over
and over, which puzzles her because this legislation does not
degrade landline service. That, she explained, is not the
commitment of the companies in the Alaska Telecommunications
Association (ATA), many of which are rural cooperatives and some
are statewide providers. Simply because a person is talking on
a cell phone, they are only wireless to the tower, and then the
person is on the landline network; or if a person is using their
ISP, that is also on the landline networks. She stressed that
the landline network is critical and it will continue under SB
205, ATA is saying that there are a lot of resources that could
be saved by providers to let "us focus on better services" and
by the RCA to let it focus on more pressing matters.
3:11:50 PM
MS. O'CONNOR turned to slide 4, "Landline Service will Continue"
and advised that this is a list of some of the rules that
require it, and paraphrased as follows:
Certificate of Public Convenience & Necessity prevents
abandonment of service without permission from the RCA
and the FCC.
Eligible telecommunications carrier designations
require service.
Federal and state rules require provision of service
upon reasonable request.
April 6, 2018 DC Circuit Court affirmed FCC
requirement that companies continue to provide voice
services.
MS. O'CONNOR (audio difficulties) every utility must apply to
the RCA to obtain a certificate before it begins operation. The
RCA must find that a company is fit, willing, and able to
provide service. She explained that before a company can leave
service in an area, it must go to the RCA and request
permission, and the RCA must find that it is in the public
interest for the company to depart (audio difficulty) rarely, if
ever, granted. This legislation does not impact the certificate
of authority of the commission, the commission has authority
over the "eligible telecommunications carrier designation,"
which assigns a service area and authorizes a company to receive
federal funding. Last week, she related, a Federal D.C. Circuit
Court decision came down that companies must continue to provide
voice services even in the absence of support or a subsidy.
3:13:16 PM
MS. O'CONNOR turned to slide 5, "Universal Service Funds," noted
that questions came up this week regarding universal service
funds, and paraphrased as follows:
Due to both federal and state USF support, Alaskans
have remarkable access to communications across
Alaska, and deployment of improved infrastructure is
accelerating.
Without Universal Service Funds telecom networks in
Alaska would not exist in many areas.
Alaska's Universal Service Fund (AUSF) is a critical
component for sustaining voice service and improving
broadband service statewide.
The RCA has full jurisdiction over the Alaska
Universal Service Fund.
MS. O'CONNOR noted that a question was asked regarding what has
happened to those funds, (audio difficulties) without those
funds, there would not be communication networks in most of
Alaska, it is that expensive. Universal service is similar to
the original Rural Electrification Act created to make certain
everyone was connected to the electric grid, and she described
that it was very effective. Universal service is funded by a
sur charge on everyone's bills in the nation, and those funds
are targeted to the highest cost areas. Naturally, she advised,
with Alaska being 22 percent of the United States land mass,
remote and rugged, a lot of those funds do come to Alaska
proportionally, not a large amount of the whole pot, but it is
important funding. She related that it is reported on
extensively to both the federal and state commissions, "we're
very accountable," and the RCA has complete authority over the
state universal service fund and dictates what reporting and
information it wants from companies (audio difficulties).
3:15:02 PM
MS. O'CONNOR turned to slide 6, "COLR Designation vs. COLR
Support," (audio difficulties) in the weeds, but it is important
to explain the slide clearly, and paraphrased as follows:
Carrier of last resort (COLR) designation requires a
company to serve a certain area. (So do Certificate,
ETC and USF rules)
Carrier of last resort (COLR) designation is funded in
some areas of the state by a portion of the Alaska
Universal Service Fund.
The RCA is considering Docket R-18-001 "Consideration
for the Full Repeal of Alaska Universal Service Fund
Regulations."
The stated timeline to eliminate all funds, including
COLR support, is Jan. 1, 2019.
Industry has responded to the RCA invitation for
comment by proposing two different paths forward for
the AUSF both eliminating COLR support.
There is no disconnect between eliminating COLR
designation and corresponding COLR support. The RCA
has made it clear that any possible path forward for
the AUSF will have a new funding structure. We do not
expect the old structure to continue.
Regardless of the RCA's decision in the AUSF docket,
all rules requiring landline service will remain in
place.
MS. O'CONNOR advised that the carrier of last resort (COLR)
designation says that a company must serve, but ATA also has the
certificate, the Eligible Telecommunications Carrier (ETC), and
(audio difficulties) it is by far the only thing requiring a
company to serve. The designation is funded in some areas of
the state to some companies but not all, and that designation
allows them to receive a portion of the Alaska Universal Service
Fund. Currently, she offered, the RCA has a docket opened
titled, "Consideration of the Full Repeal of the Alaska
Universal Service Fund," this has been under discussion at the
RCA to eliminate this fund (audio difficulties). Particularly,
she offered, the focus has been the COLR support, which the
commission has been critical, and the ATA submitted two
different proposals for how this reform might take place, and in
both cases, there will not be explicit COLR support. Therefore,
when ATA was drafting SB 205, it knew that it was in the record
that COLR support would probably be completely revamped,
possibly done away with, and the commission has an active docket
wherein there was an eight-hour hearing last Monday. Naturally,
she related, if a company is not receiving the funding, ATA
thought the designation did not need to be there either.
Conversely, she said, there is no company that will give up
responsibility and still receive funding, in fact, even if this
funding goes away, the companies will still be obligated to
continue these duties. No subsidy is being given when no
responsibility is being performed, she advised.
3:17:07 PM
MS. O'CONNOR turned to slide 7, "41 States Have Reduced
Regulation," and advised that 41 other states have eliminated or
reduced telecommunication regulation. Although there is
variation in the details of what the other states have done, it
generally means that telecommunication companies manage their
own rates, as half of the companies in Alaska do today, she
said. Currently, approximately 90 percent of Alaska's
population is already served by a company that can raise its
local rates without permission from the RCA. However, she
commented, rates have not risen dramatically, and even if the
rates were to raise, there is a federal rule limiting that
increase and the maximum it could possibly go is $49 and change.
Most landline rates are in the $30-$35 range so it would
theoretically be an approximate $14 increase, but most companies
have not raised rates in five years. Part of the obligation
under the federal funding is for those rates to be reasonable,
and should the rates raise to the cap and someone cannot afford
it, there is a federal lifeline program that would support that
customer and they would probably qualify for a free phone.
3:18:24 PM
MS. O'CONNOR turned to slide 8, titled "Rate Regulation - It
Depends Who You Are," and paraphrased as follows:
Cooperatives, with the approval of their members, and
municipal telcos manage their own tariffs. All other
companies must maintain a tariff at the RCA.
90% of Alaskans are served by company which can manage
its own rates.
But for the remainder, review & approval for rate
changes varies, with timelines as long as 420 days.
This limits the introduction of new offerings due to
the expense of preparing and supporting tariff
filings.
SB205 adopts the cooperative model for tariffs and
rate changes.
MS. O'CONNOR explained that rate regulation is quite a patchwork
of obligation (audio difficulties) and the RCA has complained
that under existing regulation and statutory timelines, one
company might make an informational filing that has to be
drafted, reviewed, sent to the RCA, and the RCA must accept it
without any revision because it has no authority to make that
change. Or, she related, it could be a more traditional filing
which takes 30-45 days and in some cases a company might have to
create a Rate Case that is extremely detailed and it can take
over 420 days (audio difficulties) remember, only related to
landline and long-distance service. Instead of this, she said,
ATA is proposing that all companies be on the same basis as the
cooperatives today where they manage their own rates, are
answerable to their own customers, and the commission's consumer
protection division would still be there for quality complaints
and so forth. Co-ops have operated in this manner for many
years and approximately one-half of the companies in the state
already do this as it has been successful as it is much more
efficient, she said.
3:19:42 PM
MS. O'CONNOR turned to slide 9-10, titled "Burden of Rate
Regulation," and advised the following are two examples of
telephone companies, and paraphrased as follows:
Summit Telephone Company
Family-owned serving Dalton Highway and Chena Hot
Springs Road
Needs to replace obsolete technology
Tried to change the tariff to focus resources on
broadband.
"This process of educating the RCA causes the
expenditure/depletion of Summit's already limited
resources while what I need to do with those funds is
extend FTTP (fiber to the premise) and wireless
Broadband/Middle Mile facilities to our subscribers.
Soon after I filed the Tariff Notice - I withdrew it
in that it immediately became apparent that the RCA
process was a Tar Baby that would deplete Summit of
funds needed for the extension of Broadband to its
subscribers."
Roger Shofstall, Owner of Summit Telephone Company
MS. O'CONNOR advised that the Summit Telephone Company is a
small company with a federal mandate to provide broadband along
the Dalton Highway and out toward Chena Hot Springs. The
company was trying to change its tariff to focus its resources
on broadband, and the above is a quote from its owner who
eventually decided to "muddle along with the obsolete
technology."
Alaska Communications
"We have 4 local exchange tariffs with a mixture of
tariff rules that apply?Each time we make a tariff
change we must do basically 5 times for the local
exchange since one study area has different rules to
follow. We also have an long-distance tariff which has
even different rules. When filing 5 different tariffs
plus a long-distance tariff, it simply is not an
efficient business practice especially when these
regulations do not apply across all other carriers."
-Lisa Phillips, Senior Manager, Regulatory Affairs and
Risk Management
MS. O'CONNOR offered that Alaska Communications is a large
company, it is under the same burden, and it is managing five
different tariffs with a range of rates all related to landline
service in different areas of the state.
3:20:36 PM
MS. O'CONNOR turned to slide 11, titled "Tariffs Filings 2017,"
and advised that the information is from the Regulatory
Commission's 2017 Annual Report, and paraphrased as follows:
Regulatory Commission of Alaska
Fiscal Year 2017 Annual Report
MS. O'CONNOR (audio difficulties) accept and review them, this
is a lot of expense by providers that could be better spent on
service, and a lot of expense by the commission when it could
better use its time on other issues. She opined that these may
be the filings Commissioner Robert Pickett may have been
referring when he said, "How is this doing anybody any good?"
3:21:08 PM
MS. O'CONNOR turned to slide 12, titled, "Obsolete Statutes,"
and advised that the legislation repeals obsolete statutes
related to long-distance companies, and paraphrased as follows:
Long distance competition statutes at 42.05.800-810
(adopted in 1990) require the RCA to manage
competition in the long-distance market.
Even though these statutes were made obsolete by the
1996 Telecom Act, they are still on the books in
Alaska.
They require tariff filings and reporting.
SB 205 removes outdated regulation of long
distance retail competition.
MS. O'CONNOR explained that these obsolete statutes date back to
before the 1996 Telecommunications Act and were actually pre-
empted by that Act, but they are still in the statute books so
they are generating filings and generating reports that are
wasting everyone's resources.
3:21:31 PM
MS. O'CONNOR turned to slide 13, titled "Consumer Protection,"
and offered that consumer protection still exists, and
paraphrased as follows:
Strong consumer protections exist today
Certificate of Public Convenience and Necessity (CPCN)
Eligible Telecommunications Carrier (ETC)
RCA Consumer Protection & Information Section
Attorney General Consumer Protection Unit
FCC Consumer Complaint Center
SB 205 maintains these protections.
MS. O'CONNOR offered that the Certificate of Public Convenience
and Necessity (CPCN) and the Eligible Telecommunications Carrier
(ETC) designation, both require a company to offer service
throughout its service area and to not withdraw service without
permission. There are FCC rules requiring the above and SB 205
does not change this rule. This legislation does not de-
regulate telecommunications, and companies are still required to
submit to RCA's authority about where they serve, and when, and
if they stop serving, she pointed out.
3:22:11 PM
MS. O'CONNOR turned to slide 14, titled "Benefits to Consumers,"
and paraphrased as follows:
Increases incentive for companies to offer new service
bundles
Focuses resources on consumer services
Spreads cost of regulation equitably, with support
from all companies.
SB 205 does not include new taxes, it corrects
existing unfair assessment of regulatory costs.
MS. O'CONNOR advised that it increases the incentive for
companies to offer new service bundles. The companies (audio
difficulties) serving areas where they have to make the most
extensive tariff filings, they just simply do not make changes
even if it is something their consumers desire because it is too
expensive to go through the process. The resources that ATA
could save would be better focused on consumer services. She
related that there is a change that corrects an existing problem
with the RCA's budget as the statutes have become outdated,
according to existing statute, the co-operatives are not paying
the regulatory cost charge of which is the RCA's self-funding
mechanism. She pointed out that that leaves the other one-half
of the companies paying the full burden of the RCA's oversight
authority. Telecommunication oversight is still taking place
and this bill would fix that problem because all companies would
access the regulatory cost charge, which would lower it for the
companies that are currently carrying the entire burden.
Everyone agreed to this, she said, there was no objection and
she gave kudos to "my members" for recognizing the inequity. It
was mentioned that SB 205 is bringing a new tax, which she
described as a misunderstanding of this provision in that this
is not a new tax, it simply corrects an existing inequity.
3:23:39 PM
MS. O'CONNOR turned to slide 15, titled "Right-touch
Regulation," (audio difficulties) landline and long-distance
service, and paraphrased as follows:
SB 205 maintains RCA oversight
Removes obsolete statutes & exempts from many
provisions in 42.05 which are outdated or apply to
other industries
Adopts cooperative model for rates
Requires RCA and FCC approval before discontinuance of
service
Reduces cost and delay of regulation for RCA &
providers
Resolves existing inequity in the RCA's budget
process
MS. O'CONNOR advised that the legislation peels away obsolete
statutes and allows companies and the commission to operate more
efficiently, as many of the statutes under AS 42.05 apply
generally to the operation of the commission and those would
continue. She said that others apply to other industries so
they are not applicable to telecommunication. She related that
SB 205 will allow companies to focus on better service for
Alaskans, and allow the RCA to focus on the important work
before the RCA because it is also the regulatory commission for
the Trans-Alaska Pipeline (TAPS), electric issues, water, waste,
and natural gas industries. These are all fully regulated
utilities, she offered, which are structured (audio
difficulties) nation in order to function well. The 1996
Telecommunications Act changed telecommunications and put it on
a path toward competition, innovation, and right touch
regulation. She asked that the Alaska legislature tailor its
statutes to ensure service continues, but stops wasting
resources on work that is without value. When the RCA was asked
to provide its opinion on SB 205, it cited concerns about its
budget and those concerns have been completely resolved by
correcting the RCC mechanism. She related that it claimed
landline service will be threatened, but this is simply not
accurate because landline service will be required under multi-
state and federal rules unless it is found to not be in the
public interest by state and federal regulators. That, she
offered, is the situation today and it will not be changed under
SB 205. On the day that the RCA considered SB 205, Commissioner
Jan Wilson put it simply, "I think it's time for the legislature
in our state to address these issues. So, I'm hesitant to take
a position that the bill not pass because it might be
interpreted that this commission, as a body, believes that the
statutes as they are today are (audio difficulties) and I just
don't think they are. I think changes need to be made in the
statutes to conform to the industry the way it is today, rather
than the industry as it was in the 1970s, 1980s, and that's it.
It is entirely completely different than it was in 1990." Ms.
O'Connor said, "We couldn't agree more."
3:26:25 PM
REPRESENTATIVE STUTES noted that several times within the
presentation Ms. O'Connor said, "Landline service will be
continued. Landline service will be continued," and she asked
how this will affect landline service.
MS. O'CONNOR answered that it will affect landline service in
freeing up resources for the companies to help with maintenance
and operation. In the grand scope of what is spent on networks
in Alaska, it is a small amount but it is still useful in
avoiding waste. She advised that there is nothing here that
allows a company to let their landline service stop, to let it
deteriorate, and should a company do so, the RCA has
demonstrated its ability to call that company in front of it,
demand an explanation, and enforce its rules.
3:27:18 PM
REPRESENTATIVE STUTES asked that as far as Ms. O'Connor could
tell, whether this will affect rates on landlines.
MS. O'CONNOR answered "No," the biggest thing that could affect
rates is a loss of these supports, these universal service
supports. She said that in the event the AUSF was entirely
repealed, that could definitely cause rates to rise in some
areas. In the event of a disruption of the federal universal
service, which is not likely at this point because it was just
stabilized last year, those are the things that would drive
local rates higher, she explained.
3:27:54 PM
CHAIR CLAMAN advised that he thought Ms. O'Connor had said that
with the de-regulation, local rates could go up to $14 a line
increase.
MS. O'CONNOR answered (audio difficulties), but a couple of
things are going on there, with landline rates there is
competition in 99 percent of the state from either another
landline provider or wireless, which is why "we are down" to
only 42 percent of landlines. People are simply abandoning
their landline service (audio difficulties) increases.
3:28:52 PM
REPRESENTATIVE REINBOLD asked whether Juneau, Anchorage, and
Fairbanks were basically subsidizing the smaller communities.
MS. O'CONNOR answered that it is a national sur charge. She
explained that there are two sur charges, as follows: the
federal sur charge (audio difficulties) so they pay and send
funds to support Alaska; and the state sur charge is not as much
(audio difficulties) every company in the state receives a
portion of it to support their operations.
3:29:57 PM
REPRESENTATIVE REINBOLD asked whether it was similar to Power
Cost Equalization (PCE).
MS. O'CONNOR responded (audio difficulties) different as she
understands PCE is a fund, an endowment, and that goes to lower
electric rates which is a more direct manner of lowering rates.
Whereas, she explained, the AUS (indisc.) fund, the state fund,
is a fund to help build and operate networks and it is not as
direct of an offset, she explained that it is not really an
offset to the rates because it has an indirect effect.
REPRESENTATIVE REINBOLD noted that there is the regulatory cost
charge, which is completely separate, and it funds the RCA.
3:30:46 PM
REPRESENTATIVE REINBOLD referred to slide 14, and asked Ms.
O'Connor to put the consumer benefits into more specific terms
and how consumers will directly benefit.
MS. O'CONNOR offered that the best example is the Summit
Telephone Company where it is trying to basically retire
obsolete services and build a fiber network to deliver
broadband. The Summit Telephone Company had to give up on
retiring that obsolete service due to the cost of that filing of
the commission. In the event the Summit Telephone Company did
not have to wrestle with those filings, it could put the money
it is saving toward the new fiber network that it has been
mandated to build by the federal funding.
3:31:54 PM
REPRESENTATIVE REINBOLD (audio difficulties) RCA is a massive
de-regulation bill which appears to be important. The fiscal
note read that the RCA will be a liaison with the FCC, it is a
significant de-regulation, but is still beneficial across
Alaska, she said. She related that she heard the Senate
presentation and she is contemplating offering the two
amendments Senator Bill Wielechowski offered on the floor of the
Senate. She said that, "If you have a docket that you've
already sent that says virtually the same thing to the RCA, ..."
CHAIR CLAMAN interjected that Representative Reinbold's question
is whether Ms. O'Connor has a response to the two amendments
offered by Senator Wielechowski on the floor of the Senate. He
commented that he did not hear the two amendments, and asked Ms.
O'Connor to tell the committee what the two amendments entailed,
whether or not she supported the amendments, and why.
CHAIR CLAMAN advised that the committee could come back to the
questions if she was not ready to address these questions.
3:34:16 PM
MS. O'CONNOR said she was ready and addressed Amendment 1, and
referred to Sec. 2, [AS 42.05.141(e)(f), page 2, lines 1-4],
which read as follows:
(e) The commission may not designate a local
exchange carrier or an interexchange carrier as the
carrier of last resort.
(f) The commission may designate an eligible
telecommunications carrier consistent with 47 U.S.C.
214(e).
MS. O'CONNOR explained that Amendment 1 would have struck
subsections (e) and (f). Subsection (e) is actually the point
of the amendment where the bill read, "the commission may not
designate a COLR" and the objection was "You are getting COLR
funding, how can you not accept the designation of a COLR?" She
said that as she had previously explained, that COLR funding is
being completely revamped and "our proposal" reduces all funding
by 49 percent. Therefore, that is going away in one form or the
other and "we are very strongly advocating" that some funding
continue because it is important. The explicit COLR funding has
been (audio difficulties) and "we have proposed" that the
explicit COLR funding go away, so it made sense that the
designation would not continue.
3:35:37 PM
CHAIR CLAMAN surmised that Amendment 1 would actually maintain
the COLR designation.
MS. O'CONNOR agreed that Amendment 1 would maintain the COLR
designation and the ATA does not support that issue. She
explained that subsection (f) simply codifies something the RCA
already does, and the ATA did not consider it controversial and
she explained that this is the designation that the FCC (audio
difficulties) in order for universal service funding to come
into the state. It is important funding, it builds
infrastructure, it operates networks, and that is almost a
housekeeping item just to say that the RCA will continue the
funding, she said.
3:36:21 PM
MS. O'CONNOR referred to Amendment 2 (audio difficulties) the
designation was not there and the subsidy should not be there
either. In effect, she reiterated, that is probably where
"we're" headed with the RCA and the "R Docket." The Alaska
Telecommunications Association (ATA) stressed in hundreds of
pages of testimony to the RCA, the importance of (audio
difficulties) universal service fund. She comment that
explicitly designated COLR does not appear to be the future
path, but there must be some support coming from the Alaska
Universal Service Fund in order that there is not negative
impacts on landline service or all services in Alaska.
3:37:18 PM
REPRESENTATIVE LEDOUX surmised that the impetus [audio
difficulties continued to timestamp 3:37:55.]
MS. O'CONNOR (audio difficulties) several years and it has not
yet been accomplished.
3:38:03 PM
REPRESENTATIVE LEDOUX asked whether that was something the
legislature could mandate.
MS. O'CONNOR answered that the RCA is a commission that reports
to the legislature.
3:38:20 PM
CHAIR CLAMAN asked whether anything in this legislation requires
legislative action, or is everything being requested something
that the RCA could perform entirely by regulation.
MS. O'CONNOR responded [audio difficulties continued to
timestamp 3:39:05].
3:39:08 PM
REPRESENTATIVE LEDOUX asked whether the statutes could be
changed in order to streamline the regulations without simply
exempting the carriers from the RCA jurisdiction, "which this
bill basically does."
MS. O'CONNOR replied that it exempts the remaining carriers that
are serving approximately 10 percent of Alaska's population that
are still under rate regulation. [Audio difficulties continued
to 3:40:00.] these service, and that has to be granted upon a
finding of the public interest. The Alaska Telecommunications
Association (ATA) considers that strong RCA jurisdiction.
3:40:12 PM
REPRESENTATIVE LEDOUX referred to the fiscal note analysis [page
2, paragraph 2,] which read in part:
The RCA would still be required to certificate
wireline telecommunications carriers and adjudicate
the relinquishment or transfer of those certificates.
REPRESENTATIVE LEDOUX surmised that the RCA still has the
authority to prevent a carrier from "leaving someplace."
MS. O'CONNOR answered that Representative LeDoux was correct.
(Audio difficulties) sectional, that is one of the exact
sections, a separate section, that is solely regarding the
requirement to request permission before a carrier deceases
service. (Audio difficulties) as well as regulations tied to
"your very substantial universal service funding."
3:41:16 PM
REPRESENTATIVE LEDOUX asked whether eliminating the carrier of
last resort impacts [audio difficulties continued to timestamp
3:41:58].
3:42:01 PM
REPRESENTATIVE LEDOUX asked the criteria for deceasing service.
MS. O'CONNOR answered [audio difficulties continued to timestamp
3:42:29] only has two people left, and ATA believes it is in the
public interest that it would stop [audio difficulties continued
to timestamp 3:42:47].
3:42:52 PM
REPRESENTATIVE LEDOUX surmised that it is a high hurdle
currently, and asked whether it would still be a high hurdle
under this legislation.
MS. O'CONNOR responded (audio difficulties.)
3:44:28 PM
REPRESENTATIVE EASTMAN moved that the committee decide that
hence forth it will let someone ask a question before "we decide
to cut them off."
CHAIR CLAMAN ruled that this committee is managed under the
rules of Mason's Manual and he will continue to follow Mason's
Manual. Chair Claman ruled Representative Eastman's motion out-
of-order.
3:45:08 PM
REPRESENTATIVE EASTMAN referred to Senator Meyer's opening
presentation regarding all of the telecommunication companies in
support of CSSB 205, and asked why Verizon is not listed on
slide 2.
SENATOR MEYER responded that Verizon does not offer landline
services in Alaska.
3:45:53 PM
REPRESENTATIVE EASTMAN asked whether Senator Meyer had reached
out to any of the other communications companies that might want
to service Alaska, that are not currently in the state, to
obtain their comments as to whether this legislation will make
their decision to move into Alaska more or less likely.
SENATOR MEYER advised that he had not reached out, and currently
there are 15 companies in Alaska so it is a competitive field.
3:46:49 PM
REPRESENTATIVE EASTMAN asked Senator Meyer's perspective as to
whether this legislation would make it less likely that new
companies would form in the future to compete in this
competitive market. He opined that one of the reasons all of
the current providers are supportive is because the bill might
make it less likely that they would have increased competition.
SENATOR MEYER answered that he does not believe this bill would
prohibit new companies from coming into Alaska, and reiterated
that this bill pertains to landlines, and landlines have
decreased to approximately 40 percent in Alaskan homes.
3:47:54 PM
CHAIR CLAMAN opened public testimony on CSSB 205. After
ascertaining no one wished to testify, closed public testimony
on CSSB 205.
[SB 205 was held over.]