Legislature(2003 - 2004)

05/20/2003 10:38 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR HOUSE BILL NO. 106(JUD) am                                                                                          
     "An   Act  relating   to  retail  tariffing   standards   in  a                                                            
     competitive  local  exchange service  area;  and to  exemptions                                                            
     from  retail  tariff  filing  requirements  and  certain  other                                                            
     provisions  in competitive telecommunications  markets; setting                                                            
     a   policy  regarding   unbundled  network   elements   in  the                                                            
     telecommunications  market;  relating  to depreciation  expense                                                            
     rates for  certain telecommunications utilities;  requiring the                                                            
     Regulatory  Commission of Alaska  to conduct an investigation,                                                             
     take  certain actions,  withhold certain  actions, and  issue a                                                            
     report; and providing for an effective date."                                                                              
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Wilken  stated that  this  bill,  sponsored  by the  House                                                            
Judiciary  Committee, "provides  for changes  in telecommunications                                                             
utility  regulations  and  rates  and  policies  regarding   carrier                                                            
interconnection   agreements.  In  addition,  the  RCA  [Regulatory                                                             
Commission  of Alaska] of Alaska is  required to submit a  report to                                                            
the  Legislature  within  180  days  regarding  the  status  of  the                                                            
telecommunication  industry  in  Alaska."  He  noted  testimony  and                                                            
questions would be limited to 15 minutes per witness.                                                                           
REPRESENTATIVE  LESIL  MCGUIRE, Chair,  House  Judiciary  Committee,                                                            
spoke  to the  three  months of  bipartisan  work invested  in  this                                                            
legislation  by the House Labor and  Commerce Committee,  as well as                                                            
the  House  Judiciary  Committee.  She  admitted  the  limited  time                                                            
available  for  the Senate  to  consider  the complexities  of  this                                                            
substantive  bill, but remarked  that the  Senate Finance  Committee                                                            
"must put a certain  amount of trust in your colleagues"  serving in                                                            
the House of Representatives.  She asserted this bill is "absolutely                                                            
necessary   in   the   State   of   Alaska   right   now   to   keep                                                            
telecommunications  industry competitive."  She suggested  she could                                                            
realize   political   consequences  for   her   actions  with   this                                                            
legislation,  but considered this  to demonstrate her commitment  to                                                            
the issue. She stressed the Legislature's duty is to set policy.                                                                
Representative  McGuire  characterized  the RCA  as  similar to  the                                                            
judicial  branch, and as  a "quasi judicial  agency" is responsible                                                             
for issuing rulings  on issues.  She understood it  is difficult for                                                            
the RCA  to issue rulings  because these  rulings establish  policy.                                                            
She therefore concluded  that the legislature must intervene and set                                                            
policies.  She  surmised  that  the RCA  could  then  interpret  and                                                            
implement  those policies  in the  same manner as  the Alaska  Court                                                            
System implements laws passed by the Legislature.                                                                               
Representative  McGuire stated that the federal Telecom  Act of 1996                                                            
specifically   recognized  that  each  state  is  unique   and  must                                                            
establish  policies  to implement  the Act.  She  informed that  she                                                            
worked for  U.S. Senator Ted Stevens  at the time the Act  was under                                                            
consideration  and she recalled the Senator expressing  that the Act                                                            
was not  "crafted  with Alaska  in mind  in any  sense whatsoever."                                                             
Despite  this, she  opined,  "we have  been  able to  apply the  '96                                                            
Telecom Act  to Alaska in  a way that is  remarkable." She  asserted                                                            
that   Alaska   has    become   one   of   the   most   competitive                                                             
telecommunications market in the U.S.                                                                                           
Representative  McGuire  asserted  that,  whether  because  of  time                                                            
constraints or lack of  resources, the RCA has "failed to act timely                                                            
in  recognition   to   the  shifts   that  have   occurred  in   the                                                            
marketplace."  She said  this bill,  therefore requests  the RCA  to                                                            
consider  "certain  policies"   in  regard  to  tariff  filings  and                                                            
unbundled  network  elements,  which  she considered  the  two  most                                                            
important factors a monopoly must address.                                                                                      
Representative  McGuire spoke of assurances  in the bill's  language                                                            
to require  that the RCA  must make the  initial determination  that                                                            
"the carrier is in a competitive  marketplace". She stated that this                                                            
bill further  clarifies that "a competitive  marketplace  isn't just                                                            
defined by the service  area." She expressed concerns over potential                                                            
allegations that  "if over 50 percent of the entire  service area is                                                            
competitive,  then  therefore   the company   is competitive."   She                                                            
remarked  this  argument  would  be  undesirable  and  exampled  the                                                            
community of Kodiak  as being competitive while Nome  is not and the                                                            
subsequent deregulation  of the provider of the entire service area,                                                            
allowing  it to operate  without regulatory  oversight in areas  for                                                            
which there is  no competition. Therefore, she pointed  out language                                                            
addresses  this in subsection  (d)(1) of  Sec. 42.05.433.  Exemption                                                            
from   retail  tariffs   for  telecommunications    services  in   a                                                            
competitive  market.,  in Section  2  of the  bill,  which reads  as                                                            
                (1) "competitive service area" means an area served                                                             
     by a  local exchange  carrier in which  at least 50 percent  of                                                            
     all retail customers  have a choice of facilities-based service                                                            
     providers; the area may be                                                                                                 
                     (A) the entire service area; or                                                                            
                     (B) if the entire service area is not                                                                      
          competitive, specifically identified communities within                                                               
          the service area that are competitive;                                                                                
Representative  McGuire emphasized the entire service  area could be                                                            
encompassed in a competitive  service area, and gave Anchorage as an                                                            
example.  She  considered  this  provision  as "giving  the  RCA  an                                                            
additional  set of  tools in  their tool  belt to  make decisions."                                                             
However, she asserted  this legislation requests the  RCA to utilize                                                            
certain tools  and make decisions  that have  not been addressed  by                                                            
the RCA.                                                                                                                        
Representative  McGuire pointed out  specific timelines are  imposed                                                            
in this bill.  She opined that it  would be in the best interest  of                                                            
all parties, especially  to the consumer, to resolve the issues in a                                                            
timely manner.                                                                                                                  
Representative  McGuire told the Committee  that representatives  of                                                            
companies would  testify to how this legislation would  or would not                                                            
benefit  them, but  stressed that  the consumers  are priority.  She                                                            
predicted  that if  the existing  situation  continues, competition                                                             
would be eliminated. She  explained that one company with "virtually                                                            
an equal  market  share in  certain areas  of Alaska"  could not  be                                                            
regulated  as  if it  were  a monopoly.  She  remarked  that such  a                                                            
company "with  its hands tied behind  its back, fighting  up against                                                            
its closest  competitor within  percentage  points, and expect  that                                                            
that  company would  continue  to succeed;  it is  an impossibility                                                             
economically and I think we all understand that."                                                                               
Representative McGuire  expected it to be determined that Anchorage,                                                            
Juneau  and Fairbanks  would  be deemed  to be  competitive  markets                                                            
under the provisions  of this legislation. She stated  that carriers                                                            
operating  in these  markets  would  not be  required  to undergo  a                                                            
"tariff   rate  filing  case"   because  it   is  not  required   of                                                            
competitors.   She  commented  that   this  is  a  "recognition   of                                                            
capitalism;  of  free  market;   of  the  invisible  hand;  this  is                                                            
Economics 101." She told of her college courses in economics.                                                                   
Representative  McGuire assured that if "elements"  were later found                                                            
to  indicate  that  the free  market  system  has  not  operated  as                                                            
intended with  regard to this matter, this bill would  allow the RCA                                                            
to revisit the issue and make a different determination.                                                                        
Representative  McGuire  next  pointed  out  that  the  Telecom  Act                                                            
requested  monopolies  to  lease out  portions  of  their  unbundled                                                            
network elements;  those portions necessary to allow  competition in                                                            
the marketplace.  She  noted this  has continued  in Alaska and  has                                                            
"worked  magnificently;  wonderful  for  all  of us."  However,  she                                                            
stated  that the  monopoly  company  is forced  to lease  out  their                                                            
facilities  for less than their costs.  She attributed this  in part                                                            
to project labor  agreements and to Alaska's "unique  landscape" and                                                            
existing  equipment. She stated  that the cost  in Fairbanks  to the                                                            
incumbent  carrier is  $32, yet it  can only  charge the  competitor                                                            
$19, resulting in a monthly loss of $500,000.                                                                                   
Representative  McGuire  asserted  she  presents  this bill  not  on                                                            
behalf of any company or lobbyist or individual.                                                                                
Senator Bunde  understood that while this legislation  would provide                                                            
the  RCA with  "more  tools"  it also  requires  the  Commission  to                                                            
utilize those tools.                                                                                                            
Representative McGuire affirmed.                                                                                                
Senator Bunde  spoke to the importance  of an independent  judiciary                                                            
and warned  that once  the legislature  begins to  intervene  in the                                                            
policy  of the  RCA,  the Commission  is  no longer  an independent                                                             
Representative McGuire  replied that the RCA should be maintained as                                                            
a quasi-judicial body in  that the legislature should not be setting                                                            
rates or determining  dominant carriers. However she  asserted it is                                                            
"absolutely appropriate"  for the legislature to set  policy for the                                                            
RCA.  She stated  that  evidence  exists  that the  legislature  has                                                            
provided inadequate direction to the RCA.                                                                                       
Senator Taylor  noted receipt  of an e-mail  from Commissioner  Dave                                                            
Harbour  of the RCA  to Senator Bunde  dated May  20, 2003 [copy  on                                                            
file], indicating  that because Co-Chair Wilken had  excused himself                                                            
from Committee  action regarding other  legislation relating  to the                                                            
RCA, due  to a conflict  of interest, Mr.  Harbour assumed  Co-Chair                                                            
Wilken would do the same with respect to this bill.                                                                             
Co-Chair Wilken clarified  he has a conflict on interest with HB 111                                                            
due to  his involvement with  a regulated  water and sewer  utility;                                                            
however, this  legislation relates to telecommunications  and he has                                                            
no conflict.                                                                                                                    
LEONARD STENBERG, General  Counsel, Alaska Communication Service, in                                                            
support of the  House Judiciary committee substitute  for this bill.                                                            
He  expressed that  if  "Alaska is  to remain  on  the forefront  of                                                            
telecommunication  policy, passage  of this  bill is essential."  He                                                            
opined that  Alaska has the most competitive  local exchange  market                                                            
in the  nation; however,  State laws still  reflect the "old  era of                                                            
monopoly  regulation."  He  furthered that  this  bill  would be  an                                                            
important "first step" in "modernizing State law in Alaska."                                                                    
Mr.  Stenberg   stated   that  this   bill  addresses   "two   major                                                            
deficiencies in Alaska  policy; first, fully consistent with federal                                                            
law,  it provides  policy  guidance to  State regulators  that  will                                                            
ensure fair pricing  of facilities leased by one carrier  to another                                                            
carrier;  second,  it  delivers  on  the  promises  of  the  federal                                                            
Telecommunications  Act  of  1996  by  deregulating  local  exchange                                                            
markets once they have become competitive."                                                                                     
Mr. Stenberg recommended passage of the bill.                                                                                   
Senator Bunde  relayed he  has received differing  reports  that ACS                                                            
has substantial assets  and is financially strong, but also that the                                                            
company  is near bankruptcy.  He asked  the witness  to clarify  the                                                            
solvency of the company.                                                                                                        
Mr. Stenberg replied  that ACS is a multi-faceted  business with the                                                            
local exchange operations  a significant portion. He stated that the                                                            
local exchange  business is largely  regulated and this is  the area                                                            
of greatest concern.  He noted that other operations  of ACS are not                                                            
regulated and the financial  status of those functions is irrelevant                                                            
to this discussion.  He told of a  recent analysis of the  return on                                                            
investment  of the regulated  business activities  in Anchorage  and                                                            
found  "it  is extremely  low".  He  qualified  that the  RCA  would                                                            
determine  otherwise;  however,  he cited  the  rate of  return  for                                                            
Anchorage  business at zero  to two percent.  He informed that  this                                                            
rate of return stymies incentive to invest for the future.                                                                      
Senator B. Stevens referenced  the definition of competitive service                                                            
area  in  Section  2,  which  he  identified  as  "the  trigger  for                                                            
deregulation" and asked how the definition was determined.                                                                      
Mr.  Stenberg  responded  that  the  "appropriate  measure"  is  the                                                            
presence of "facilities-based competition".                                                                                     
Senator B. Stevens interjected  if this definition exists in federal                                                            
law, or is utilized  by the Federal Communications  Commission (FCC)                                                            
and how "50 percent of customers" as a litmus, was reached.                                                                     
Mr. Stenberg  answered that the amount  is not contained  in federal                                                            
law, but  rather was considered,  discussed  and agreed upon  by the                                                            
House of Representatives.                                                                                                       
Senator B. Stevens asked  if the State of Illinois is the only state                                                            
with and established  percentage of customers used  in determining a                                                            
competitive marketplace.                                                                                                        
Mr.  Stenberg  affirmed   and  remarked  that  Alaska   is  "on  the                                                            
forefront"  of this matter,  as no other  state has experienced  the                                                            
same "levels  of competition".  He  noted that  other criterion  was                                                            
considered,  including   market  share  data,  and  an  "anti-trust                                                             
Co-Chair Wilken requested  the witness comment on the correspondence                                                            
from Mr. Harbour.                                                                                                               
Mr. Stenberg respectfully  disagreed with the positions expressed in                                                            
the e-mail.  He qualified that the  amendments to Section  2 adopted                                                            
by  the  House  of Representatives   "left  some  language  unclear;                                                            
there's probably some technical  clean-up that could be done there".                                                            
However, he  opined that these would  not "constitute any  kind of a                                                            
policy issue"  and he concluded, is not important  for the Committee                                                            
to discuss.                                                                                                                     
Mr.  Stenberg  next  addressed  Mr.  Harbour's   concerns  with  the                                                            
competitive  service area,  and remarked  that the  target areas  of                                                            
Anchorage, Juneau and Fairbanks  are identified. He pointed out that                                                            
facilities-based   competition  is  available  to  "virtually   all"                                                            
consumers  in those  communities. He  added that  when the FCC  "de-                                                            
tariffed" interstate  long distance rates, it "realized  that it may                                                            
not  be true  that every  consumer  has access  to facilities-based                                                             
competitors";  however, the  FCC concluded that  it was in  the best                                                            
interest of the  public in general that deregulation  occur "in that                                                            
Mr. Stenberg  spoke to  Mr. Harbour's comments  relating to  pricing                                                            
for   unbundled  network   elements.   Mr.  Stenberg   opined   that                                                            
unfortunately,  this "complicated area of law" in  which the federal                                                            
government has  "created the obligation" for carriers,  such as ACS,                                                            
to  share  their  network.  He  noted  the  federal  government  has                                                            
provided "some  broad policy guidance" in terms of  how to establish                                                            
prices  for those lease  facilities  and then has  delegated  to the                                                            
states "a great  deal of discretion" to set those  prices. He stated                                                            
that in  the establishment  of those  prices, policy  calls must  be                                                            
made.  He  disagreed  that the  policy  guidance  proposed  in  this                                                            
legislation is "in any way inconsistent with federal law."                                                                      
Mr. Stenberg  explained "accelerated  depreciation", stressing  that                                                            
the  "regulation  of rates  for lease  facilities  is fundamentally                                                             
different  than traditional  rate  regulation." He  opined that  the                                                            
intent of traditional rate  regulation was to "recover costs plus be                                                            
allowed a reasonable  profit." He  stated that in relation  to lease                                                            
facilities, the  federal government has instructed  states to "throw                                                            
out everything  we know about traditional rate regulation"  and that                                                            
regulators  should  instead be  "attempting  to emulate  what a  new                                                            
company's  costs would  be if that  new company were  to go  out and                                                            
build  an efficient  new  network."  He  surmised  that such  a  new                                                            
company  would  use  accelerated  depreciation  in  determining  its                                                            
internal  economics.   He  remarked  this  is  logical  as  well  as                                                            
"factually  shown to be true," in  that the chief competitor  of ACS                                                            
has  utilized  this  method  in  facilities   it  has  invested  in.                                                            
Therefore, he surmised  that if the goal were to emulate the actions                                                            
and costs of a new company,  accelerated depreciation is "absolutely                                                            
Mr.  Stenberg  furthered   that  when  changing  to  a  competitive                                                             
environment  from  a  monopoly  situation,   increased  demands  for                                                            
innovation,  investment as well as  increased risks, arise.  He gave                                                            
an example of  increased risks in that costs might  not be recovered                                                            
on some  facilities. He cited  this as another  reason for  allowing                                                            
accelerated depreciation.                                                                                                       
Senator Bunde,  noting the highly specialized field  of utility laws                                                            
and  asked if  the witness  was available  for  consultation  during                                                            
"creation" of this bill.                                                                                                        
Mr. Stenberg  replied that  he testified "at  some length"  before a                                                            
subcommittee to  the House Labor and Commerce Committee,  as well as                                                            
the House Judiciary Committee.                                                                                                  
DANA TINDELL,  Senior Vice President, Legal and Regulatory  Affairs,                                                            
General Communications  Incorporated testified in  opposition to the                                                            
bill, as it is  "anti-competitive and anti-consumer".  She continued                                                            
reading a statement into the record as follows.                                                                                 
     It is bad  public policy done at that eleventh  hour and should                                                            
     not  be passed. CS  HB 106 promised  local telephone  companies                                                            
     with  monopoly power  to raise  rates whether  or not there  is                                                            
     competition.  Moreover,   CS HB  106  permits  local  telephone                                                            
     companies with monopoly  power to raise its competitors' costs,                                                            
     thus [inaudible] any  ability of competition to keep rates down                                                            
     where  there is competition.  In a market where one  competitor                                                            
     controls  another  competitor's  costs,  you cannot  have  true                                                            
     In  addition,  this bill,  as  a result  of last  minute  floor                                                            
     amendments,  is internally inconsistent and it  is not clear in                                                            
     its  intent. It  is difficult  to tell  what the Legislature's                                                             
     intent  is because  it has been  cut and  pasted with words  of                                                            
     previous  sections left in the bill that are  inconsistent with                                                            
     amendments that have been made on the floor in the House.                                                                  
     Without exception,  legislators that rose on the House floor to                                                            
     speak  on this bill discussed  the complexity of these  issues.                                                            
     This bill  changes the way utilities are regulated.  It doesn't                                                            
     give  intent language;  it actually changes  the way  utilities                                                            
     are  regulated.  There  are serious  public  policy  issues  at                                                            
     state.  Please  do  not  move  a  bill  that  changes  the  way                                                            
     utilities  are regulated  without  serious thought.  This  is a                                                            
     complex  bill.  It  reverses  past RCA  decisions.  It  effects                                                            
     pending  decisions  now before  the RCA  and in  our view  will                                                            
     diminish local telephone competition in the marketplace.                                                                   
     The Governor has just  appointed three new commissioners to the                                                            
     RCA. There are a total  of five commissioners to the RCA, which                                                            
     means  that that is a  60 percent turnover.  The RCA is  in the                                                            
     middle  of a proceeding to deregulate  the competitive  markets                                                            
     for local  services. They have  not completed that proceeding.                                                             
     Both ACS and GCI have filed pleadings in that proceeding.                                                                  
     Please  allow the  RCA to  do its  work. It  is an evidentiary                                                             
     body; it  can engage in discovery; it can get  the actual facts                                                            
     on the  record. With  the new RCA and  no possibility  of bias,                                                            
     GCI requests  the Legislature to permit the RCA,  as the expert                                                            
     body, to make these decisions.                                                                                             
Ms.  Tindell   addressed  the  issue   of  low  costs,  referencing                                                             
discussion  that GCI  leases "loops"  from ACS at  $19, whereas  ACS                                                            
costs are between  $33 and $40. She remarked, "That  is an apples to                                                            
oranges comparison,"  explaining ACS reference to  "loop costs as an                                                            
accounting  purpose" their  loop costs  consists  of the "length  of                                                            
facilities from the switch  to the home". She informed that GCI does                                                            
not lease  that entire facility,  but rather  the portion from  "the                                                            
neighborhood  to the  home." She stated  that GCI  provides its  own                                                            
"fiber"  around  the community  and  throughout  the city  and  also                                                            
provides  its own "switch".  She listed GCI  costs at approximately                                                             
$33 for  the "same  comparison  of what  ACS is  representing  their                                                            
costs to be."                                                                                                                   
Ms.  Tindell furthered  that  depreciation  is  also an  "apples  to                                                            
oranges comparison". She  explained, "a rate based regulated company                                                            
that's rates are set. The  overwhelming determination of those rates                                                            
is 'what  percentage  of the  plant  in the  ground do  they get  to                                                            
allocate  to  the  consumer  for the  purpose  of  setting  consumer                                                            
prices." She characterized  this as an allocation cost rather than a                                                            
depreciation  cost,  which "is  a totally  separate  phenomena  than                                                            
depreciation  for tax purposes."  She stated  that depreciation  for                                                            
tax purposes  does  not affect  "the price  that a  company gets  to                                                            
charge for consumers;  it is simply a tax issue that  determines the                                                            
amount of taxes  that company will  pay that year. In contrast,  she                                                            
said depreciation  for ratemaking  purposes  "directly gets  plugged                                                            
through to the consumer."                                                                                                       
Ms.  Tindell  expressed  that  this  bill  would  "deregulate  local                                                            
telephone companies  with monopoly  throughout their entire  service                                                            
area in many cases where  there is not competition, for the purposes                                                            
of depreciation."  She informed  this would  allow the companies  to                                                            
"automatically  increase  the  rates  they charge,  whether  or  not                                                            
there's competition."                                                                                                           
Ms.  Tindell furthered  that  this  bill would  allow  a company  to                                                            
deregulate in  areas where no competition exists.  She suggested the                                                            
provisions  are unclear as to "which  direction the RCA is  supposed                                                            
to go."                                                                                                                         
Ms. Tindell  spoke to the inconsistencies  of the bill, referencing                                                             
page  2, lines  6 -  13, a  portion  of Section  2,  which adds  new                                                            
sections to AS 42.05, and reads as follows.                                                                                     
     Sec.   42.05.433.    Exemption   from   retail    tariffs   for                                                            
     telecommunications  services  in  a competitive  market. (a)  A                                                            
     local  exchange  carrier  may  petition  the commission  for  a                                                            
     determination that  one or more of its markets is a competitive                                                            
     services  area. The commission shall, within  90 days, grant or                                                            
     reject  the petition  according  to the standard  set forth  in                                                            
     this  section. If the  commission fails  to act within  90 days                                                            
     after the submission  of such a petition, the petition shall be                                                            
     deemed granted. A  certification exempts the telecommunications                                                            
     utility from retail tariff filing requirements.                                                                            
Ms. Tindell  pointed  out the origin  and issuing  authority  of the                                                            
aforementioned certification  is not specified. She continued citing                                                            
subsection (b) on lines 14 - 17, which reads as follows.                                                                        
          (b) A certification filed under (a) of this section is                                                                
     effective upon filing.  The commission may deny a certification                                                            
     only  upon  a  written  finding  and order  that,  based  on  a                                                            
     preponderance  of the  evidence, the  competitive service  area                                                            
     standard has not been met.                                                                                                 
Ms. Tindell  questioned  the establishment  of both  a petition  and                                                            
certification  and  the  90-day  effective  date  provision  of  the                                                            
petition   compared   to  the   immediate   effective   date  of   a                                                            
certification filing.                                                                                                           
SFC 03 # 2, Side A 12:21 PM                                                                                                     
Ms. Tindell  referenced Section  1 and commented  that "in  order to                                                            
get competition  using [an existing]  carrier's network for  a rural                                                            
area, there  must be  a finding  that it will  not affect  universal                                                            
service or  rates to that rural area."  She opined that it  would be                                                            
"difficult if not impossible" to meet that finding.                                                                             
Ms. Tindell  indicated other representatives  of GCI were  available                                                            
to speak to the incompliance of this bill with federal law.                                                                     
AT EASE 12:22 PM / 12:28 PM                                                                                                     
Senator Taylor  asked for an explanation of the differences  between                                                            
"bundled" and "unbundled".                                                                                                      
Ms. Tindell  informed of the separate  issues of "bundled  packages"                                                            
and  "unbundled  elements".  She  explained  that  under  commission                                                            
regulation, a dominant  carrier with monopoly power is not permitted                                                            
to bundle  its local services  market with  other offerings  because                                                            
the regulation presumes  that this carrier has all the customers for                                                            
the  local service  and  that it  would be  unfair  to provide  that                                                            
carrier  with "a  leg up"  in attracting  those  customers to  other                                                            
services for  which competition exists.  She qualified that  the RCA                                                            
granted  provisions  to  allow  the  dominate   carrier  to  request                                                            
Ms. Tindell then defined  unbundled elements as "a notion of carrier                                                            
to carrier costs", explaining  this relates to a competitive carrier                                                            
entering the  market and leasing the  existing carrier's  network in                                                            
order  to  provide  service.  Because the  existing  carrier  has  a                                                            
"bottleneck facility"  and has monopoly control over  that facility,                                                            
she  stated  that the  U.S.  Congress  has ruled  that  the  network                                                            
facilities  should  be  "broken  down  into  its  smallest  elements                                                            
possible" to allow a competitive  carrier to lease only the elements                                                            
necessary to provide service.                                                                                                   
Senator Taylor thanked the witness for the explanation.                                                                         

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