Legislature(1995 - 1996)
04/17/1996 03:10 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 501 - COMPETITIVE LOCAL PHONE SERVICES Number 1784 CHAIRMAN KOTT announced the next order of business would be HB 501, "An Act requiring competition in local exchange telephone service." He said HB 501 was before the committee about six weeks ago. Both HB 501 and HB 531 was put into a subcommittee. Both of those bills deal with telecommunications based on the revolutionary Congressional Act that was signed into law February, 1996. He said, "It was our impression that we should at least look at some of the provisions and reach some kind of a conclusion or compromise on what the state should be doing and based on that assumption, we sent both bills to the subcommittee." Chairman Kott said there has been a considerable amount of time spent in trying to reach some kind of conclusion or a compromise within the industry. It was the intent to bring some kind of consensus to the table and then move a bill out of committee if that consensus was acquired. Number 1835 REPRESENTATIVE SANDERS, chairman of the subcommittee, explained the subcommittee has spent a considerable amount of time on the issue in trying to reach a compromise that will maintain support for universal services while still paving a way for fair and open competition between the different factions. There are several factions and all of them have been cooperative but it is so complicated. You have the rural, urban, local and long-distance. When you get into long-distance, you've got the interstate and the intrastate. Representative Sanders said the committee worked on both of the bills. One bill was a one page very simple bill and the other was a 16 page very complicated bill. They were broken down into a four page very complicated bill that everybody likes a little bit, but nobody like very much. Nobody is anxious to pass the bill out of committee. People have expressed an interest to work on the bill more during the interim and perhaps get something done next year. Representative Sanders said with the possibility that the committee could make a breakthrough during the next week, it could be brought forward. He said there is still a possibility that something could be brought up that would satisfy everyone, but it could be very hard to do. There are some people that say there is a need for a bill but not this bill. There are some people who say there isn't a need for a bill at all, but this one would be O.K. if they had to have one. There are people who say there isn't a need for a bill, especially this bill and some say there is a need for the bill now. Representative Sanders said they have made progress and the committee could be maybe about 65 percent on the way to reaching a compromise. Number 1946 CHAIRMAN KOTT said it is his intent to take public testimony regarding the committee substitute, which is not before the committee. He said rather than to adopt it, he would like to leave it before the committee in order to listen to comments. Based on the comments, the committee will either adopt the committee substitute or refer it back to the subcommittee. The version is Version R, dated 4/9/96. TED MONINSKI, Director, Regulatory Affairs, AT&T Alascom, testified via teleconference from Anchorage. He said AT&T Alascom is one of the participants that have been following the bills. Mr. Moninski said there has been previous testimony from his company where the committee was told that the earlier version of HB 501 was confusing and they have some serious objections to HB 531. He pointed out that there is now CSHB 501(L&C) and AT&T Alascom still has concerns about the bill. Mr. Moninski indicated AT&T Alascom would enter objections to the bill as it is currently written. They are still very concerned that there is a great deal about this major change in structure that has not been fleshed out yet. MR. MONINSKI referred to the Telecom Act - the federal bill, which is on the books and said they know what it says but they aren't entirely sure yet what it all means. They know that the federal Communications Commission is undergoing numerous rule makings to help them understand what it means. There is a federal/state joint board that has been convened to deal with the significantly important issues such as universal service. He noted Alaska has a representative on the staff of that joint board. The Alaska Public Utilities Commission (APUC) has stated its intent to commence rule making to help interpret the federal law. Mr. Moninski said it seems to him that with all of this work to be done and with the complexities that have been noted, the legislature is probably not yet aware of which issues need to be resolved. While there may very well be the need for some legislative action in the future, to do it in advance of all of the work that needs to be done by the various expert in industry, government and other, might make it difficult for the legislature to undertake that task. Mr. Moninski urged the committee to take no action at this time and to revisit the issue, as necessary, in the future. He noted they stand ready to participate in any further discussions and work sessions. Number 2113 CHAIRMAN KOTT asked if there are any particular areas of the bill that are extremely objectionable to AT&T Alascom. MR. MONINSKI said there are certainly some issues that AT&T Alascom believes have not clearly resolved and compromises that have not yet really been achieved. There are areas where the playing field is not really as level as we would all like it to be. Mr. Moninski said Section 6 is incredibly complicated and has not been thoroughly developed yet. It is not at a point where good legislating can be done. Mr. Moninski said that is the section of the bill that would on (indisc.) appear to simply turnaround some rules that were created in the federal Act and apply them to interexchange carriers. But what happens is it become very much entangled in some regulatory policy that has been out in the state of Alaska for some time. That needs to be disentangled before we can really look at those questions about issues and determine what really is in the public's interest. The (indisc.) simple issue about whether or not it is appropriate and good policy making to allow one market segment, for example, the local exchange market that continues to enjoy interconnection exemptions under the federal bill to simply move into a market without its own market being open for competition at all. Mr. Moninski said he would echo Representative Sander's comments in that these are very difficult issues and they need further development before something is put before the legislature for resolution. Number 2202 JIMMY JACKSON, GCI, was next to testify via teleconference from Anchorage. He said he agrees with Representative Sanders regarding the bill. Mr. Jackson said GCI opposes the proposed draft of HB 501 and urged that the committee not pass the bill forward for further consideration. He said GCI had hoped that the various interested parties might be able to come to an agreement on a bill that everyone could support. An acceptable compromise has not been reached. He said GCI doesn't believe that it is feasible to work out an acceptable compromise during the remainder of the legislative session and they believe that the legislature's further attention to this matter is not desirable during the short time left in the session. Mr. Jackson said he would agree with Mr. Moninski that Section 6 is a problem. He referred to there being an amendment in Section 3 and said he thinks the committee tried hard to come to a compromise, but it is extremely hard to say how that compromise is going to be interpreted and they fear it wipes out the (indisc.) principle. He said there are things that aren't included in the bill which GCI feels are very important. One is a provision to remove the antitrust exemption that local exchange carriers presently enjoy. If they are going to be competing with GCI, they shouldn't be exempted from the antitrust law. Mr. Jackson referred to Section 5 regarding local exchange competition and said it isn't strong enough. Number 2324 BOB LOHR, Alaska Public Utilities Commission, testified via teleconference from Anchorage. He said, as the APUC has done in the past, they remain available to answer specific questions. He said as the bill is currently drafted, some specific provisions cause the staff concern. Section 2, for example, the notion of a fast turnaround on application for an unserved area is not a problem except in resource limitations. He referred to the last sentence in Section 2, "If the commission fails to act within the 90 days, the application is considered to be granted," and said he believes it is shaky public policy because it is a false grant of a certificate of public convenience and necessity which otherwise would require a finding of public needs and necessity and a finding of fit willing and able just doesn't seem appropriate. He said the commission has the message that things need to move more quickly and within the available resources, they will do the best job they can. He said he doesn't think a default provision for granting the certificate is necessarily appropriate. MR. LOHR referred to Section 3 and said the rather confusing compromise that does erode the used and useful standard as a consumer protection vehicle is a concern to the commission staff. He said he believes there has already been adequate comment about the IFC competition provisions and what those mean. He said this is an extremely complex provision. They do require a sifting out process which is actively underway at the Federal Communication Commission (FCC) level as well as within the APUC itself. It is very resource intensive and they are doing the best job they can with it. Probably the worst thing that could happen would be hastily crafted state legislation that doesn't add to the clarity rather than the confusion or the capacity. He said he would be happy to answer any question. Number 2427 JACK RHYNER, Representative, Alaska Telephone Association and Tel Alaska, Incorporated, came before the committee to give his testimony. He explained Tel Alaska, Incorporated, is a company which operates two telephone companies in the state of Alaska, Interior Telephone and Mukluk Telephone. Mr. Rhyner discussed the hard work done in the subcommittee meetings. He said the 17 page bill was supported by the local telephone companies of the state who are subject of the federal Act and who are now to face competition. He said there is a lot of confusion about the new version of the bill. TAPE 96-35, SIDE B Number 001 MR. RHYNER said while the current proposed committee substitute for HB 501 doesn't fully address all of the issues that were raised by the federal Telecom Act, it does address a number of outstanding problems and issues with the APUC and would provide a needed "jump start" to getting that agency moving. He said he is a little surprised and disappointed in that he participated in all the meetings of the subcommittee and at the end of the last meeting, he was under the impress that a compromise had been met. The chairman asked those present whether or not there were any other objections to the bill and at that time the answer was "no." Now there are objections to the compromise. MR. RHYNER referred to extending service areas and said the staff of the commission is concerned about the length of time. He said he feels that is a consumer issue. Historically, the people in the state of Alaska have been waiting a year and in many cases longer just to obtain service. They have been waiting for approval by the APUC for extension of service areas. That would have been remedied by the bill. MR. RHYNER referred to eligible telecommunications carriers and said this is something that relates directly to the federal Act. All telephone companies that are going to receive universal service funding have to be designed by the APUC as eligible. The final rules from the FCC, by law under the Act, are supposed to be completed in October which is between Alaska's legislative sessions. If the APUC doesn't move and designate these companies as eligible, the consumers and the local telephone companies will lose $4.2 million every month until they are designated as eligible. He said he couldn't say whether that go to direct losses for those companies or whether it would somehow passed through to the consumer. He referred to rate flexibility and said when these companies are faced with competition they would be allowed to compete rather than being an incumbent carrier that was held down by regulation and allowing someone else to come in and compete with them. MR. RHYNER referred to the long-distance section of the bill turns the rules in the federal bill around so that anyone else that wants to get into the long-distance market has exactly the same type of arrangement for utilizing their facilities and service as they will then have when they come in and use the local facilities. Both GCI and AT&T have already demonstrated their desire to get into that market and have both already filed to compete in the Anchorage telephone utility service area. Mr. Rhyner said he would answer questions the committee members may have. Number 159 STEPHEN CONN, Executive Director, Alaska Public Interest Research Group, was next to come before the committee. He stated, "I agree with the positions of the representative AT&T and GCI that the questions -- the forthcoming questions as the federal legislation is implemented - the factoring in of the 2001 telecommunications report, an inquiry that was completed only recently, chaired by the lieutenant governor, and ultimately the consumer's concerns - the consumer's involvement in these debates, all suggest that this matter - despite the hard work in energy undertaken to make a compromise of these two pieces of legislation - should mean that this matter is taken past the session perhaps into interim hearings and into the next legislative session. The issues are startling here as to universal service. Alaska Public Interest Research Group has prepared a two page statement on universal service. It is our strongly felt position that we would encourage the legislature to hold hearings that would involve the public to focus not on the technical side of regulation and competition, but rather on universal service as such. What does it mean to Alaskans? What do they anticipate both in urban and rural Alaska? How can we achieve improved penetration of telecommunication services in rural Alaska to improve the economic political and economic well being of the people out there. In other words, hearings held by the legislature with an end result, perhaps statutory and perhaps to even lay the basis for a constitutional amendment that would make of universal service an affirmative right. This may be necessary in order that the consumers and the public and their position in this receive equal statue to that of the service providers - the large service providers and the small service providers. So I find myself in agreement with these people. I certainly hope that the waters during the interim are not muddied by untoward pressure upon our candidates and our lawmakers in the form of lobbying and most especially in the form of campaign contributions. I want your heads clear to really evaluate this. This is a critical moment in Alaska's history and so perhaps, not to be precipitous is the smartest thing to do and I thank you very much for this opportunity." Number 279 CHAIRMAN KOTT closed public testimony as there were no further people to testify. Number 292 REPRESENTATIVE KUBINA indicated that he had thought they were closer to a resolution that they are. He said he hopes everything works out until a year from now and he hopes that if the legislature doesn't do something, he hopes it doesn't cause a problem. Number 300 REPRESENTATIVE PORTER said he would echo Representative Kubina's comments. Number 320 REPRESENTATIVE SANDERS said he would agree with both of his fellow subcommittee members. He said he also thought that at the end of the last subcommittee meeting that they were a lot closer to a solution than they obviously are. Representative Sanders pointed out that the parties involved did say they would have to review the new bill. They did and then they came back. Everybody said they felt like progress was made, but nobody felt like enough progress was made. Number 353 REPRESENTATIVE MASEK moved to hold the bill until there are further rulings from the FCC. Work should also be done on the bill during the interim. CHAIRMAN KOTT indicated he appreciated the work done by the subcommittee and all parties involved. He said when the matter was sent to the subcommittee, his remarks were to the extent that he wanted to ensure that the product that would come out of the subcommittee would be the very best product for Alaskans. Based on the testimony he heard today, he believes it would be in the best interest of all the parties involved to retain this matter in the subcommittee. There is a work draft appearing as HB 501. He said he would ask the chairman of the subcommittee to continue to evaluate and look for middle ground to bring the parties together during the interim and come up with a product that everyone can agree to. Chairman Kott said there was a motion by Representative Masek to retain the bill in the subcommittee. He asked if there was an objection. Hearing none, the motion carried.