Legislature(1997 - 1998)
03/12/1998 08:05 AM House STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 12, 1998
8:05 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Ivan Ivan, Vice Chairman
Representative Ethan Berkowitz
Representative Fred Dyson
Representative Kim Elton
Representative Mark Hodgins
Representative Al Vezey
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
* HOUSE BILL 416
"An Act relating to competition in the provision of local exchange
telephone service; and providing for an effective date."
- HEARD AND HELD
* HOUSE BILL 462
"An Act relating to the contents of certain state documents."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 416
SHORT TITLE: LOCAL EXCHANGE TELEPHONE SERVICE
SPONSOR(S): REPRESENTATIVES(S) KELLY, Therriault, Mulder
Jrn-Date Jrn-Page Action
2/16/98 2332 (H) READ THE FIRST TIME - REFERRAL(S)
2/16/98 2332 (H) STATE AFFAIRS, FINANCE
2/18/98 2367 (H) COSPONSOR(S): THERRIAULT
3/11/98 2604 (H) JUD REFERRAL ADDED
3/12/98 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 462
SHORT TITLE: USE OF STATE MONEY FOR IMAGES/MESSAGES
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
2/25/98 2429 (H) READ THE FIRST TIME - REFERRAL(S)
2/25/98 2429 (H) STATE AFFAIRS, FINANCE
3/12/98 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
REPRESENTATIVE PETE KELLY
Alaska State Legislature
Capitol Building, Room 411
Juneau, Alaska 99801
Telephone: (907) 465-2327
POSITION STATEMENT: Sponsor of HB 416.
BRUCE CAMPBELL, Legislative Assistant
to Representative Pete Kelly
Alaska State Legislature
Capitol Building, Room 411
Juneau, Alaska 99801
Telephone: (907) 465-6598
POSITION STATEMENT: Provided information on HB 416.
DANA TINDALL, Senior Vice President
Legal and Regulatory Affairs
General Communications, Incorporated
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Telephone: (907) 265-5611
POSITION STATEMENT: Provided information on HB 416 and
answered questions.
STEVE HAMLEN, President
United Utilities
5450 A Street
Anchorage, Alaska 99518
Telephone: (907) 273-5210
POSITION STATEMENT: Testified in opposition to HB 416.
TOM MEADE, Manager
Regulatory Affairs
Telalaska
2131 Abbott Road
Anchorage, Alaska 99511
Telephone: (907) 267-4149
POSITION STATEMENT: Testified on HB 416.
DAVID FAUSKE, General Manager
Arctic Slope Telephone Cooperative
4300 B Street, Number 501
Anchorage, Alaska 99503
Telephone: (907) 563-3989
POSITION STATEMENT: Testified in opposition to HB 416.
DAVID HOFFMAN
P.O. Box 83161
Fairbanks, Alaska 99708
Telephone: (907) 474-2141
POSITION STATEMENT: Testified on HB 416.
GREG BERBERICH, Vice President
Corporate Services
Matanuska Telephone Association
Pouch 5050 South Chugach
Palmer, Alaska 99645
Telephone: (907) 745-3211
POSITION STATEMENT: Testified on HB 416.
SAM COTTEN, Chairman
Alaska Public Utilities Commission
1016 West Sixth Avenue
Anchorage, Alaska 99501-1963
Telephone: (907) 276-6222
POSITION STATEMENT: Testified in HB 416.
BOB LOHR, Executive Director
Alaska Public Utilities Commission
1016 West 6th Avenue
Anchorage, Alaska 99501-1963
Telephone: (907) 276-6222
POSITION STATEMENT: Answered questions and provided information
on HB 416.
MARK VASCONI, Director
Regulatory Affairs
American Telephone and Telegraph, Alascom
210 East Bluff Drive
Anchorage, Alaska 99501
Telephone: (907) 264-7308
POSITION STATEMENT: Testified on HB 416.
JIM ROWE, Executive Director
Alaska Telephone Association
201 East 56th Avenue, Suite 114
Anchorage, Alaska 99518
Telephone: (907) 563-4000
POSITION STATEMENT: Testified and answered questions on HB 416.
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
Capitol Building, Room 511
Juneau, Alaska 99801
Telephone: (907) 465-4797
POSITION STATEMENT: Presented HB 462.
JACK KREINHEDER, Senior Policy
Policy Analyst
Office of Management and Budget
Office of the Governor
P.O. Box 110001
Juneau, Alaska 99811
Telephone: (907) 465-4676
POSITION STATEMENT: Provided information and answered questions on
HB 462.
NANCI JONES, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 110460
Juneau, Alaska 99811
Telephone: (907) 465-2323
POSITION STATEMENT: Provided information on HB 462.
ACTION NARRATIVE
TAPE 98-36, SIDE A
Number 0001
CHAIR JEANNETTE JAMES called the House State Affairs Standing
Committee meeting to order at 8:05 a.m. Members present at the
call to order were Representatives James, Dyson, Hodgins and Vezey.
Representatives Elton, Berkowitz, and Ivan arrived at 8:06 a.m.,
8:11 a.m., and 8:14 a.m., respectively.
HB 416 - LOCAL EXCHANGE TELEPHONE SERVICE
Number 0006
CHAIR JAMES said the committee would hear HB 416, "An Act relating
to competition in the provision of local exchange telephone
service; and providing for an effective date." She indicated that
she does not plan to move this bill out of committee today.
CHAIR JAMES noted that Representative Elton had arrived.
Number 0015
REPRESENTATIVE PETE KELLY, Alaska State Legislature, came before
the committee to present HB 416. He explained that under the
Telecommunications Act of 1996, the Alaska Public Utilities
Commission (APUC) was given the flexibility to provide for
competitive price structures and mechanisms that will allow for
competition among local phone companies. House Bill 416 requires
the APUC to complete these regulations by December 31, 1997. He
said he thinks it's important to note that these are regulations
that exist regardless of any action the legislature takes on HB
416. Once these regulations are completed, the APUC must then make
a series of findings to allow a competitor to enter a local phone
market. House Bill 416 assists the APUC by finding that the local
phone service competition is necessary and required for the
convenience of the public. This helps the commission because it is
a lengthy process to go through to determine this, and it's his
opinion that this is probably something that's better suited for
the legislature to make rather than a regulatory body. After the
APUC has completed this process, there are still a number of tasks
that exist before them before they can allow competition in the
market. He said they have to make sure the universal services are
provided for, that it is technologically feasible, and that the
duties of interconnection are not an economically burdensome
process for the incumbent phone company.
Number 0068
REPRESENTATIVE KELLY said HB 416 only removes one duty from the
APUC and that is whether or not competition is a good thing, HB 416
states that it is. He pointed out that some of the public
monopolies came to him with concerns about the bill, and the impact
that it may have on their particular phone company, and that they
were able to change the bill to address those concerns in the
committee substitute. He mentioned one of them is cherry picking,
there was a great deal of angst among the phone companies that this
would allow for someone to come in and take the best of the system,
compete in that market, and then leave the incumbent's company to
exist on the tiny ones that are probably subsidized in the system
somewhere.
UNIDENTIFIED SPEAKER reiterated that it is addressed in the bill.
REPRESENTATIVE KELLY remarked that he would specifically point out
where that is addressed.
UNIDENTIFIED SPEAKER asked if they should move CSHB 416, Version F,
3/6/98, Cramer.
CHAIR JAMES replied after Representative Kelly has presented it.
Number 0111
REPRESENTATIVE FRED DYSON asked, "Is the amendment, draft Version
F, getting incorporated into the committee substitute that's F?"
CHAIR JAMES replied no, it's an additional amendment.
CHAIR JAMES noted for the record that Representatives Berkowitz is
present.
Number 0118
REPRESENTATIVE KELLY referred to CS HB 416, page 2, line 9,
subsection (b)(1), Version F, and noted that it addresses the
universal services concern being provided for in this bill:
(1) regulations ensuring universal service and providing for
access charges that are compatible with full competition in
the provision of local exchange telephone service using all
methods allowed by 47 U.S.C. 251 - 276 (Telecommunications Act
of 1996); and
REPRESENTATIVE KELLY referred to page 2, lines 23-24 of the CS, and
noted it addresses the cherry picking concern:
The commission may require the applicant to offer service
throughout the study area of the existing local exchange
telephone utility.
REPRESENTATIVE KELLY referred to page 2, lines 27-28. He explained
that the Municipality of Ketchikan came to him and said they were
afraid that they would lose municipal regulatory authority over
their utilities under this bill. He indicated he didn't think it
was founded, but nonetheless, the bill was changed to addresses
their concerns.
(d) A local exchange telephone company, other than a
municipally-owned local exchange telephone company...
Number 0146
REPRESENTATIVE DYSON said the amendments Representative Kelly is
referring to are using the page and line numbers from the original
bill and not the committee substitute. He pointed out that the
amendment states, "Page 2, following line 30," but it's actually
page 2, line 27.
CHAIR JAMES said they shouldn't really be discussing the amendment
at this time, but as long as Representative Dyson brought it up --
she referred to page 2, following line 30, "Insert a new subsection
to read:" she noted it starts with (f), that above line 30, the
last subsection was (d) and asked what happened to (e).
Number 0171
BRUCE CAMPBELL, Legislative Assistant to Representative Pete Kelly,
Alaska State Legislature, came before the committee to explain the
amendment. He referred to the Amendment F.2 which was drafted to
Version F of CSHB 416, and informed the committee that at the top
of page 2, line 1, it states, "Reletter the following subsection
accordingly." He said that means that old subsection (d) becomes
subsection (e) and the new subsection becomes (f).
CHAIR JAMES said she understands.
CHAIR JAMES noted, for the record, Representative Ivan had arrived.
UNIDENTIFIED SPEAKER asked if there is a sponsor to the amendment.
CHAIR JAMES said before we go any further we need to have a motion
to bring Version F before us.
Number 0194
REPRESENTATIVE MARK HODGINS made a motion to adopt the proposed
CSHB 416, LS1568\F, Cramer, 3/6/98, as the working document. There
being no objection, CSHB 416, Version F, was before the committee.
CHAIR JAMES informed the committee that if they wanted to discuss
the amendment, someone will have to make a motion to move it. She
asked Representative Kelly why we need an amendment on the CS.
REPRESENTATIVE KELLY said, "At this time, I would not even request
that we move that amendment. There's one more thing that the CS
does, it requires the APUC to find that it is not economically
burdensome for the incumbent exchange carrier to connect to the
competing one, and that is the level of burden of proof. It is
about the connecting to the next system. The APUC does not have
to determine who the winners or losers are in competition, it
doesn't have to decide that if AT&T (American Telephone and
Telegraph), Incorporated, were to come into an area, and GCI
(General Communications, Incorporated) were in that area, that GCI
would eventually not be able to compete because of prices in
marketing and their own internal problems. It is strictly on the
cost of connecting."
Number 0229
CHAIR JAMES said, "One of the things I understand with the
Telecommunications Act, and this whole issue of competition and
telephone services, is that the federal law indicates that the
state commissions of public utilities on the rural areas, of which
everything in Alaska is rural except Anchorage, that they have
assigned each individual state PUC [public utility commission] to
individually review each one of these areas to see if competition
is a good idea. If that's what the federal law says to do, it
seems to me like that's what the PUC commissioners should do. And,
aren't we jumping a step here for them and saying, 'oh well, we
think this is right,' and so therefore, you don't have to make that
decision on some areas?"
REPRESENTATIVE KELLY said he did not get that same sense from his
reading of the Telecommunications Act. He indicated Mr. Jackson
could testify to that.
Number 0258
DANA TINDALL, Senior Vice President of Legal and Regulatory
Affairs, GCI, came before the committee to testify. She explained
that the 1996 Telecommunications Act states that each local
telephone company that is rural and has the number of access lines
below a certain number (150,000) has an exemption from
interconnecting their network on an unbundled facility's basis.
She indicated that is very important because what that says is they
don't have to lease their loops to another carrier until the APUC
makes a finding on this exemption. The APUC is not exempt from
competition. The Telecommunications Act goes ahead and finds that
competition is good nationwide. She said even though these rural
telephone companies have an exemption, another carrier is still
free to go in and compete with them on their own facilities without
access to the incumbent local telephone company. She said the
rural exemptions address is one method of competition and
ironically it is the method of competition that is necessary to
serve every consumer, residential and business alike so that there
won't be "cream skimming." With the exemption in place, GCI can
still go in and build facilities to the largest companies and most
profitable companies. Ms. Tindall stated GCI can't lease loops to
serve the residents and no telephone company can deny them
interconnection for that. She said the way she understands Chair
James rephrased her question was, "Isn't the APUC supposed to
decide for each of these local telephone companies whether or not
competition is good?"
CHAIR JAMES noted that she should have added unbundling because
that's what she meant.
MS. TINDALL replied, respectfully, the answer is no, that has been
decided and mandated by Congress. What the state commissions are
to determine is whether or not the rural-local telephone companies
have to unbundle their network.
CHAIR JAMES reiterated that she should have said unbundling and
asked Ms. Tindall isn't that the purpose of this bill, to allow
unbundling.
Number 0306
MS. TINDALL replied yes, this bill still leaves that decision up to
the APUC. What this bill does, without the amendment that
Representative Kelly has decided not to offer, is it simply
establishes a pro-competitive policy for the APUC and directs them
to get in place all regulations so that we can have competition.
It does not address the issue of their decision under rural
exemptions at all. It doesn't take it away from (indisc.--noise).
She explained that the reason for this bill came about is because
when GCI requested that PTI, the local telephone company serving
Fairbanks and Juneau, terminate their rural exemption, the APUC
decided that they could not make a finding on whether or not it was
economically burdensome to PTI (Pacific Telephone, Incorporated)
because they had not done the rule makings and the proceedings for
universal service and access charge reform. She said what this
bill does is directs them to put in place a universal service
system and an access charge reform system that will work in the
competitive market and protect universal service, and then enable
competition on an unbundled basis to go forward if the APUC
determines there's not uneconomically burdensome problems with it.
It does not take that decision away from the APUC.
CHAIR JAMES indicated she believes the purpose of this bill is to
tell APUC that they only have this much time to do this and make
this decision. She asked is that what the issue is.
MS. TINDALL explained that there are two purposes of this bill:
(1) to put a deadline out there for the APUC, and (2) to let the
APUC know that the policy directive of the state of Alaska's
legislature is pro-competitive in the local telephone competition.
Number 0339
REPRESENTATIVE DYSON asked, why not have the bill just say that,
get this rule making done by the end of the year, and the
legislature finds that competition is in the best interest of the
people in the state everywhere except where universal service is
demonstrably in jeopardy.
MS. TINDALL replied, "The bill says that except for the last
sentence, and what it says instead of the last sentence is, 'put a
universal service system in place that protects universal service
statewide.' Basically, the bill sets out legislative findings,
which is your pro-competitive statement, your policy directives,
directs the APUC to finish all rule makings and proceedings by
December 31, 1998." She noted Representative Kelly has amended it
to make it specifically clear that one of those rule makings is the
protection of universal service. And then it states that the APUC
shall begin accepting applications and shall look at those
applications on a fit, willing, and able basis. Ms. Tindall
indicated that is common practice consistent with the congressional
determination that competition is a good thing. Public convenience
and necessity is an old monopoly term.
Number 0361
REPRESENTATIVE DYSON said for clarification, if that's indeed what
the bill said, why does the bill need to put the 1,500 line floor
under that? Why not just leave that to the purpose directive of
the bill as you, I thought, eloquently stated it?
MS. TINDALL replied we could, frankly the 1,500 line floor was an
arbitrary number basically because they didn't want to have
competition in Fairbanks and Juneau, and then have to come before
the legislature again requesting new legislation for the next year.
But at the same time, they were sensitive to the fact that people
were concerned about the very smallest local telephone companies.
She concluded that if the committee would like to get rid of the
1,500 line floor that would be fine.
CHAIR JAMES said she believes the whole issue of universal services
is the first step and then the decision as to whether or not this
is a good idea is the second step. She commented that it seems
like the second step is getting ahead of the first step.
Number 0381
MS. TINDALL said she would agree, except that the PUC used as their
reason for not being able to make a determination on this is that
they had not done their rule making. Therefore, they felt it was
necessary to direct the APUC to go ahead and finish the rule making
on universal service and put in place a mechanism. She said there
is no doubt that universal service is a policy issue that needs to
be maintained in the state of Alaska. Ms. Tindall stressed that
they have no quarrel with that, they want a good universal service
system. And so this bill directs the APUC to put one in place to
protect universal service.
Number 0392
CHAIR JAMES asked but you don't think they'll do that without us
directing them?
MS. TINDALL said, "No, I don't. And call me jaded, but I started
out in this business in 1985. In 1983, the Alaska Public Utilities
Commission opened a docket to look at the question of long distance
competition in the long distance market. Every year there were
hearings were held, and we went in and we paid a lot of money to
lawyers, and we had hearings for two weeks solid. When the
hearings were over, the APUC thanked us asked us all to leave very
kindly and we never heard from them again until the next year when
we had another two-week hearing. In 1988, the Alaska Public
Utilities Commission closed that docket and found that there could
not be competition in the long distance market because they didn't
have enough data to make that decision, notwithstanding the fact
that they never asked for any data. At that time, GCI requested
Senator Steve Frank to introduce legislation authorizing long
distance competition, the same sort of thing we're looking at
today, a pro-competitive statement from the legislature. It didn't
pass that year and GCI ran an initiative campaign."
MS. TINDALL continued, "Competition in the telecommunications
industry is enormously popular among consumers. They want
competition. Eighty-five percent of consumers agreed that they
wanted long distance competition, and 85 percent of consumers agree
now that they want local competition. After an initiative campaign
was run, the APUC began looking at regulations for adopting
competition. We all came to the table and we worked together to
get legislation. Without that legislation, I firmly believe we
would not have long distance competition today. The arguments were
all the same, GCI will come in and cream skim, they will skim away
the profits used to support the rural communities, GCI will cherry
pick, rates will go up and the Bush will go dark. None of those
arguments have come to pass. What has happened instead is rates
have fallen by over 50 percent, people have better service, you
have competing fiber optic cables going into the Lower 48,
telecommunications is robust and Alascom is carrying more minutes
today than they were before competition."
Number 0222
MS. TINDALL stated, "We are experiencing the same phenomena again
in the local competition market. I think Machiavelli said it, way
back in 1490, that the person who was trying to bring about change
has the burden always and the enmity of all who would like to
preserve the status quo. But the local telephone companies would
like to preserve that status quo, they have a monopoly, they have
the right to go into the long distance business right now while
they retain their monopoly. If I had a monopoly, I wouldn't want
to give it up. Competition is a lot of work, you have to think
about it all the time, it cuts down on your profits. You have 22
local telephone companies in at the APUC telling them the horrors
of what will happen if there's competition in the local telephone
market. You have one company, GCI, telling you that we really need
competition in the local telephone market because it's really
important to the state of Alaska - it's something I'm going to
address in my testimony. The APUC is paralyzed, they don't know
what to do. So, yes, I do believe..."
Number 0444
CHAIR JAMES told Ms. Tindall she makes a compelling argument. She
said, "Certainly, I'm a person who really favors competition. I
also favor system, and we do have APUC there, and it seems to me
like we need to give them some time to work. The other issue is,
it seems to me like, that there are some federal regulations that
need to be drafted too before they can finalize their work. The
other thing, and I know that this is a very important issue with
the public because they want reduced charges and better services.
The problem is, I do not know that the public actually understands
the rural areas, that the rates that they pay are being subsidized,
I don't think they understand that. And anything that we might do
to threaten how universal service is going to be affected is
important to me in the bill that I pay. And I think it's not as
simple as it was with the long distance."
CHAIR JAMES said, "And I agree that eventually there probably will
be competition -- and unbundled competition is some of the more
areas that it fits. I'm not totally convinced, that in some of the
rural areas, that there is the room for two people to be doing it.
There is room for someone else to take them over, but I doubt that
there is an opportunity for competition for two services in one
area. And I guess I don't feel qualified to sit here and say,
'That is where I want this to go based on a policy.' I think that
you have to understand what the universal services issue is and how
that's dealt with before you can actually make that policy. That's
my problem, not that I don't support the idea and everything that
you said, it's a compelling argument. It's whether or not it is
premature or timely to make this decision. And then, even further,
do we have to make it or will the public cause it to happen."
Number 0473
MS. TINDALL informed the committee that the Telecommunications Act
of 1996 mandates that all universal service subsidy systems be
competitively neutral in order to allow competition. She advised
that the current universal system that we have in place is illegal
today because it's not competitively neutral. It has to be redone
anyway so that it will work under a competitive market. She said
Congress has made the determination that competition is in the
public interest - Congress has also directed that all public
utilities commissions to put in universal service systems that are
consistent with competition. The legislature is not taking any
decisions away from the APUC by this legislation. Congress has
already told them they have to do that. They can put in a
universal system. Under the proposed HB 416, APUC can still turn
down competition on an unbundled facilities basis. It just tells
them to get on with their work and not use the fact that they
haven't put in a universal service system and an access charge
reform system in place as an excuse not to have competition.
Number 0491
REPRESENTATIVE ETHAN BERKOWITZ said, "Madam Chair, it appears that
you and Representative Dyson have come to the ground that I wanted,
and I just observed it's probably because we've been sitting on the
Telecommunications Committee. ... But, I agree competition is good,
but I also agree that this committee here probably isn't the
appropriate forum to be making the decisions that you're asking us
to make in this bill. And in particular, I noticed that the
section you indicated we could remove, but that would be section
[subsection] (b)(2), mandating competition for 1,500 or more access
lines. I will defer any further comments right now."
REPRESENTATIVE HODGINS asked if we were going to have anybody from
APUC testify.
CHAIR JAMES replied yes.
Number 0508
REPRESENTATIVE HODGINS gave a brief example. He explained he had
a food distribution business in Glennallen, and there were two
competing local telephone companies up on the "Alcan" (Alaska-
Canadian) Highway, a little bit east of Tok. People, because there
were two systems, if a person called from one system to the other
it was long distance. And, so there were a number of people who
actually had two telephones in their homes because it was cheaper
to pay the base rate on two phones than it was to try to call your
neighbor across the street which was long distance. He asked if
the universal service system would prevent that from happening in
an area if you have two local providers and you called someone,
that's not on your system, is that long distance?
MS. TINDALL replied that as long as you have interconnection
between the two local telephone companies, calling between them
will be a local call and should be invisible to the consumer. She
pointed out that the Federal Act mandates that interconnection and
no local telephone company can get out of that requirement. That's
a situation that should not happen.
Number 0523
REPRESENTATIVE KIM ELTON asked Ms. Tindall what kind of latitude
the APUC may have after the passage of HB 416 in making a decision
on competition based on what they believe (indisc.--noise) that may
be on the consumer.
MS. TINDALL responded the only thing that changes in the APUC's
latitude is they have to respond to an application in 90 days.
REPRESENTATIVE ELTON reiterated APUC can make a decision that in
market "X," they're not going to allow competition because of the
potential impact of pricing on the consumer.
MS. TINDALL replied yes, after the APUC has put in place a
universal system and an access charge reform system. If they
receive an application for a competing carrier in market "X," if
they still feel that unbundled facilities will cause an undo
economic burden they can determine not to require the incumbent
local telephone company to unbundle their network. She added that
they have all the same latitude that they had before.
CHAIR JAMES informed the committee GCI is the prime mover of this
bill and that she wants to give them the opportunity to present the
bill as part of the sponsor's position.
Number 0553
MS. TINDALL mentioned she wants to give the committee a feeling for
the importance of telecommunications and the importance of
competition in the local telephone business throughout the state.
She stated, "We are in a new age called the information age. We
are going from a manufacturing-based economy in this country to a
knowledge-based economy. Telecommunications is the key facilitator
in this new age. I was reading an article in the Daily News the
other day that was talking about the latest generation, the new
'baby-boomers,' is the first generation who claims computers as
their birthright. There is no doubt that we are in a new age, and
this new age has ramifications for this country and indeed the
entire world. What those ramifications are, is that with broadband
telecommunications, if you are a student you can access whatever
classroom you want in the world and do an interactive learning
program. You can learn from the experts, you can learn at your own
pace, and that's the way learning is going to go, that's the way
education is going to go. Teachers are going to become
facilitators of this rather than sitting and teaching in the
classroom. The ramifications, for a state that does not have a
modern telecommunication system, is that their children will not be
able to access the best. They will still be in one-room classrooms
in Bush Alaska trying to teach 12 grades with one teacher, and they
will not be able to keep up in the world market, or even in the
country. There will be a world of 'have' and 'have nots' and the
'have nots' will be those that don't have modern
telecommunications."
Number 0578
MS. TINDALL continued, "Modern telecommunications is also essential
to Alaska to diversify its economy. I was reading in the paper ...
that the legislature's in a spin because of dropping oil prices.
We all agree we need to diversify the economy away from dependency
on oil. Telecommunications breaks the link between where work is
produced and where work is sold. With a modern telecommunications
system, you can live anywhere you want and still be able to
globally market your product. That has enormous implications for
Alaska, it is the key to (indisc.--noise) diversity for Alaska, for
Alaska to get away from its dependency on oil revenues. It is the
key to economic development in rural Alaska, and it is the key to
people in Alaska maintaining their way of life because they don't
have to change to get on the computer."
MS. TINDALL continued, "Telecommunications is a global issue.
Anchorage, Alaska has competition at the local level. We're
getting all sorts of new broadband facilities, new services. We're
all ready to go for interactive video, tele-medicine, Internet at
amazing speeds, but we can't access the rest of the state and the
rest of the state cannot access us. We cannot be a modern
telecommunication state unless the entire state has modern
telecommunication, and it has to be end to end. You can put all of
the money into the long distance network you want, and to broadband
tele-medicine, and things like that. But, if you get to the local
level, and there's a bottleneck of old technology, it won't do you
any good. So, competition throughout the state is an Anchorage
issue still, even though we have competition in Anchorage, and it
should be an issue that this legislature cares very much about. I
believe and I submit to you that it is one of the key drivers to
Alaska's future."
Number 0610
MS. TINDALL stated "A modern telecommunications system can only
come about through competition and there are two reasons for this.
One, monopolies do not have the incentive to put in new technology.
They make their money based on a rate of return on the facilities
they have in the ground. New technology is always lowering costs
and being able to do more for less. That means less money in the
ground that means less money on the rate of return. In addition,
as a monopoly company, you don't have competition breathing down
your neck, and so you're not out there racing to put out new
services to meet consumer demands. In a monopoly environment, the
monopolist determines what the consumers need and provide that
instead of the consumers determining what they need. The other
reason a monopoly environment cannot provide a modern
telecommunications system is the pace of evolution is changing too
fast. If there's anything we can say about telecommunications is,
we have no idea what it will look like in five years, we have no
idea of what services will be available. A single monopoly
provider cannot keep up. It just can't be done."
Number 0620
MS. TINDALL concluded, "The only way we're going to keep up with
modern telecommunications is through a competitive market industry
and that's what Congress found, and that's why Congress passed the
Act that they did. This is important for the legislature to take
up. I submit the policy decision on whether or not we have a
competitive modern telecommunications system is too important to be
left in the APUC's hands. Yes, I believe you should leave the
details up to the experts. I believe you should leave the
implementation up to the experts. I believe you should let the
experts decide where competition will and won't work, but at least
put out a policy saying that modern telecommunications, end-to-end
at the local level as well as the long distance level, is key to
the state of Alaska and the APUC should implement it wherever they
can. That is the role the legislature needs to play here."
Number 0628
CHAIR JAMES said she agrees with everything Ms. Tindall said,
however, as a legislature, we do have a responsibility and that is
to our citizens. She said she also agrees that's where we're
heading, however, she indicated her problem with this whole issue
is, when is it time to make a decision - after it's been reviewed
or before it's reviewed.
CHAIR JAMES explained they've had problems with garbage in the
Fairbanks area for a couple of years. She indicated that she feels
garbage companies don't have the same investment as lines and
facilities that electricity and telephone companies have. She
asked, "Why do we have to have them go through APUC to determine
whether or not they can have garbage service somewhere." Chair
James mentioned she has a bill that addresses that issue. For
example, since last year, a large garbage company has come in and
bought out the companies who didn't want competition. She pointed
out that it's happened in Fairbanks - they had competition and then
they had one. And the rates were not necessarily responsive to
what the lower rate would have been. She mentioned there's two
issues, there's cost and there's service.
Number 0647
CHAIR JAMES said she supports GCI's process and admires them for
their forward thinking without a doubt in her mind. She indicated
she has anticipation because there are a number of little companies
throughout the state who are depending upon their existence, and
many of them are even owned by the people they serve. And so the
transition is the important part. And for the transition she
doesn't believe that the legislature can leave that for the private
sector. She said, "We, as a government, have a responsibility to
make sure that that is handled in a responsible and timely manner."
Chair James indicated she has seen government make mistake after
mistake, after mistake, and once a mistake has been made, you can't
always go back and remove it because there are people that are
dependent on that issue. She stated she is not interested in
competition to another monopoly that is the fear she has in some of
these areas. Chair James said, "Having said that, I think we have
a responsibility to address that issue. In fact, I'm interested in
some of my people in my district being able to use a fax machine
that they can't now on their telephone."
Number 0675
REPRESENTATIVE DYSON referred to Ms. Tindall's testimony where she
said that in a monopoly environment, we won't get the technology
advances (indisc.). He noted he was informed that ATU (Anchorage
Telephone Utility) had the most modern switches and that they were
doing better than most people in the country in terms of getting
fiber optic (indisc.--noise) to the customers - and doing a number
of other things that were apparently kind of state of the art, and
so on and so forth. He asked if he was misled.
MS. TINDALL replied yes, somewhat. She said ATU has been slow to
roll out some services like caller ID (identification), which has
been around for five or ten years. They have forced customers to
change their telephone number when they moved across town when that
wasn't necessary. They charge you for calling up and adding a
service to your telephone - your basic service, in addition to
giving you a monthly reoccurring charge. They essentially charge
you for the right to do business with them. They have dropped
those charges with competition, they are starting to allow
customers to take their numbers with them if they move across town.
They are coming out more quickly with new services and new packages
to win the hearts and minds of consumers. And they're rolling out
ISDN (Integrated Services Digital Network) and other new
technologies because they're in a race now. So, they are probably
okay, they've provided a good service. The question is, is it as
good as it's going to need to be for the future.
REPRESENTATIVE DYSON stated her point is well taken. He said he
was asking about ATU's switches and their fiber optic equipment.
He asked if that equipment is very modern and up to date.
MS. TINDALL replied she didn't know for sure.
Number 0701
MS. TINDALL said let me clarify. This legislation is not asking
for deregulation, as in the case of the garbage case. We are not
asking for any lessening of regulation at all, and GCI is willing
to submit and amend any legislation to submit to the full panoply
of regulation. This bill doesn't deal with deregulation. It
doesn't take any decisions away from the APUC. It simply
establishes the pro-competitive guideline. She said the impression
that she would like the committee members to leave here with today
is think very carefully about the other arguments as you hear them
and hear all sides of the questions. She said, "The cream skimming
arguments, they'll only provide service to the high-profit
customers, rates will go up - are all of the same arguments that we
used in long distance, and none of those things happened. Moving
from the status quo to a new world can be very scary, but this
country has embraced competition as its economic model because we
believe it provides the best..."
TAPE 98-36, SIDE B
Number 0001
MS. TINDALL continued, "...who will have to move from a monopoly
world to a competitive world - and you're feeling bad for them.
Please think about the consumers, as well. Thank you, very much."
CHAIR JAMES told Ms. Tindall that her testimony was excellent and
she appreciated her being here today and that she has shown a lot
of light on this issue. Chair James said, "The transition is
important to me. It is true that these people have to learn what
competition is about, and I know that efficiency reduces cost, not
necessarily other ways of doing it, and to bring efficiency into
our system certainly should be our goal. But there is a transition
period and it has human consequences and, therefore, not that I'm
saying we shouldn't do it, I'm saying that we need to do it in a
way that causes as little trauma as possible. And I am totally
depending on APUC, they're the only ones we have to make those real
serious decisions. And so, therefore, that's my hesitancy. And
thank you very much for your testimony."
Number 0029
REPRESENTATIVE HODGINS said in the deregulations of another utility
and that would be the gas in the Anchorage area. He said it's his
understanding that maybe there's no similarity between the two that
there are now a lot of different people supplying gas to different
customers in Anchorage - using the same transmission lines. And it
appears like some of these people are picking the customers that
use the most BTUs (British thermal units) and offering them a price
that's attractive for them to go with them. He asked, "And that is
not possible under the telephone -- the scenario that we've got
here? Is that possible that somebody might come in and say, 'well,
geese, I'm going to get the big office buildings,' And then thusly
make it more expensive for the residential deal? Is that
possible?"
Number 0053
MS. TINDALL replied, "Under Representative Kelly's proposed
legislation, the APUC has the full authority to require any
competitive carrier to serve every consumer."
REPRESENTATIVE HODGINS again asked if it would be possible to do
what he just said.
MS. TINDALL responded no, it is not possible under Representative
Kelly's legislation.
REPRESENTATIVE HODGINS asked, if APUC grants it?
MS. TINDALL replied, "APUC most likely will, and we would encourage
them to do so to require any competitive carrier to serve every
consumer so that there can't be cherry picking."
Number 0064
REPRESENTATIVE HODGINS asked, "Why do they do that with gas and
they wouldn't do that with telephone?"
MS. TINDALL joking replied that they don't have good guys like GCI
advocates. She said she wanted to clarify that without
Representative Kelly's legislation, it will happen. GCI will go in
and serve the largest consumers on their own facilities. She said,
"PTI will have to interconnect with us. We will not be able to
serve the consumers and this will happen in 1999."
CHAIR JAMES asked Representative Kelly if he has anything further
to add.
Number 0081
REPRESENTATIVE KELLY stated, "I think most of your concerns are met
in this bill. I think universal services are provided for. I
think the purview still remains with the APUC to decide the
technical issues - to decide how the transition period goes. And
I think, if it is the desire to provide competition, this is the
best way to do it. As Ms. Tindall pointed out, if cherry picking
is a bit of a concern, it can happen now under this bill - it
probably won't. I think the idea of a monopoly of one, where in a
competitive environment, is a lot different than in a monopoly of
one in an environment that is not competitive. Even if you are the
only person operating in an area, if you know that someone else can
come into your area, you are going to look over your shoulder. And
if you're looking over your shoulder, you are going to be looking
at every way possible to provide services and lower prices. That
simply does not exist under the current system that we have."
REPRESENTATIVE KELLY stressed that this bill does not take anything
away from the APUC. These regulations are moving, but quite
slowly. These are the same kinds of things that had to happen to
bring about long distance technology and long distance competition
in the state. The legislature had to go through a process of
working with the APUC, we had to go through a process of phone
companies trying to get into the market and failing. He said, "And
it eventually was legislation that was passed. And it was only
legislation that moved it along in a manner that made it happen.
I don't think, without the legislation, it is going to happen, or
certainly not within the foreseeable future. I think technology is
moving so fast that we have to keep up. And the only way to keep
up is to pass this legislation - so that when the golden age of
telecommunications arrives, and Bill Gates and his buddies all get
together and provide the kind of amazing services that we've been
reading about, that Alaska will be ready to receive it, we are not
right now. There is technology available out there that will blow
your socks off. We're simply not capable of handling that. We
have places in the state that technology just isn't there and it
won't be there without competition. So, I think every argument you
made, is addressed in this bill."
CHAIR JAMES said it's interesting - there already is competition,
and it's called purchase. Companies purchase other companies -
that's the way they compete. She stated that she agrees that
monopoly without competition is totally different from monopoly
with competition.
Number 0142
REPRESENTATIVE DYSON asked Representative Kelly if he is convinced
that he still doesn't want to move to Version F.2.
REPRESENTATIVE KELLY replied no, not without further discussion.
He pointed out there is a letter, dated March 6, 1998, in the
committee member's packet from Ron Zobel, Assistant Attorney
General, Department of Law, regarding HB 416. Representative Kelly
said he has a general understanding of this, but he thinks there
will be some highly technical questions that may come out of this
-- offering this amendment, but he would rather have Mr. Zobel
explain it. He indicated it would go much better for the
committee.
REPRESENTATIVE DYSON said, "I think that some efforts that several
of us have been making -- and what you've done here is fired a shot
across the bow at APUC. And I hope they get the message and get
very industrious about writing the rules and citing these issues.
And if they don't, I'll be helping you load another cannon next
session."
Number 0167
CHAIR JAMES announced she just received a fiscal note.
REPRESENTATIVE KELLY added that he also just received it and said
he couldn't give too much of an analysis on it. He indicated a lot
of it looks like they're asking for a fiscal note to do what
they're [Department of Commerce and Economic Development (DCED)]
already doing.
CHAIR JAMES indicated that she hasn't read the narrative either,
but after spending two days in a Telecommunications Seminar on this
issue for telecommunications, she said she does know that the APUC
does need more money to deal with this issue. She said, "They
[APUC] live from the payment from the providers -- actually which
is paid by the consumers. We don't fund them generally out of
general funds, it's their income that they are allowed to spend.
And I know that they were talking at that time about needing about
$200,000 to hire additional people to be able to get through this
maze of things. And this might be that same -- the $173.5 might be
that similar amount of money that they were wanting to do -- which
they get it from the payments that they get from the providers."
Number 0192
REPRESENTATIVE KELLY said that's the kind of the sense that he got
by skimming over it briefly. That's why he was thinking it would
probably be more appropriate in a separate appropriation. He added
that he believes that there's probably some costs associated to
this bill.
CHAIR JAMES said, "Representative Kelly, I know that there might
costs to this bill, but it seems like there's costs anyway - that's
my point. And so it doesn't seem to me like that it's appropriate
to put the cost on this bill. And you know, I'm not taking a
position on the bill to say that. But it doesn't seem to me that
the fiscal note is appropriate to be tied to this bill -- as much
as is a fiscal note that they need anyway."
REPRESENTATIVE KELLY said that was the point he was trying to make.
Number 0209
STEVE HAMLEN, President, United Utilities, testified via
teleconference to express United Utilities concerns. He noted
United Utilities is a Native-owned local exchange company and that
they now serve 58 villages - most of these villages are located in
Western Alaska. The first thing he pointed out in the bill is the
fact that there's 1,500 access lines that are set out in the bill.
He said, "If you look carefully, the bill would exempt locations
like King Salmon, and locations such as Tanana with 121 access
lines, and Whittier with 155 access lines. So these locations are
exempted. Yet the bill would apply to locations like Akiak with 69
access lines, Venetie with 41 access lines, and Rampart with 26
access lines. Frankly, we don't understand why the bill targets
companies. If the bill had targeted locations with greater than
1,500 access lines, it may have been more acceptable."
STEVE HAMLEN continued, "But, we still would want to offer, or
suggest additional amendments to the bill. And there's two broad
areas here I'll mention. The first area is to broaden the scope of
the bill to include long distance services. The provisions
contained in this bill, HB 416, to promote local exchange
competition can also be applied to the long distance market. Small
local exchange carriers like United Utilities cannot now
affectively compete with dominant competitors like GCI and AT&T,
because the rules that United Utilities has to comply with are now
skewed in their favor. For example, United Utilities cannot offer
long distance services except through a separate subsidiary.
United Utilities cannot bundle long distance and local services.
United Utilities, nor its affiliate, Unicom, have access to the
same time constrained dispute resolution processes that are now
available to the dominant competitors to resolve disputes for their
entry into local markets. And United Utilities and Unicom are
unable to purchase long distance services at wholesale rates for
resale. Nor can we purchase unbundled long distance network
elements. The dominant competitors, GCI and AT&T, can take
advantage of these rules that clearly favor them."
MR. HAMLEN continued, "The implementation of the Telecommunications
Act was delegated by Congress to the FCC (Federal Communications
Commission) and the APUC. While United Utilities would like to
have its own bill to prioritize its interest over others, we
believe that the APUC is taking the proper steps to implement the
Act, and that HB 416 would interfere in this process and place the
interest of large dominant competitors, like GCI and AT&T, over
those of smaller companies and consumers in general. United
Utilities respectfully requests that the committee not pass HB
416."
Number 0284
TOM MEADE, Manager, Regulatory Affairs Manager, Telalaska,
testified via teleconference. He informed the committee Telalaska
owns Interior Telephone, a small local exchange carrier with
approximately 4,000 access lines and Mukluk Telephone, also a local
exchange carrier with approximately 1,000 access lines. He said
Telalaska serves about 22 villages and are headquartered in
Anchorage. Mr. Meade said, "I have a little bit different
perspective on the Telecommunications Act than Ms. Tindall. The
Telecommuncations Act was written primarily to introduce
competition in the Lower 48 - where the Bell companies have
enormous markets. And it's appropriate where you have as many
access lines in one building, for instance - such as the high-rises
at the World Trade Center, as we have scattered throughout the
entire state, with the exception of Anchorage. But Congress also
recognized that competition was not in the best interest
necessarily in rural areas. And that's why they put rural
exemption in place for -- an exemption from interconnection for
small local telephone companies. And in our particular instance,
it costs $150 per month, per line, to provide service. We can't
just drive down the street to fill a service order like they do
here in Anchorage. In the case of Little Diomede, we have to
charter a helicopter to get out there, and there are only 56 access
lines to serve. Competition's not going to drive those costs down,
it's simply going to add another layer of cost on top of that.
Fortunately, the Act requires the state commission to determine, on
a case-by-case basis, where competition should be allowed through
unbundled interconnection. That's a requirement of the act."
MR. MEADE stated, "The APUC has been slammed recently for not
having the rule makings done. And while there are people in this
room who know I've been on the opposite table with the APUC a
number of times, I can't fault them in this case. They don't know
what's in the public interest or what's economically burdensome
until the FCC finishes its rule makings first."
MR. MEADE concluded. "As for the claim by Ms. Tindall that this is
denying access, that the people in the Bush can't connect to the
rest of the world, we have the band width to connect to the rest of
the world, it's the interexchange carriers that don't have the
capacity on the satellite to bring the people in the rural areas
out (indisc.) the information super highway. We believe that needs
to be addressed too."
Number 0342
DAVID FAUSKE, General Manager, Arctic Slope Telephone Cooperative
(ASTC), testified via teleconference in opposition to HB 416. He
informed the committee that their company serves the Arctic Slope
Region, which is a very challenging mix of traditional villages and
a Prudhoe Bay oil complex and portions of the pipeline. Mr. Fausek
said, "We have been in existence since 1980, when we initially
brought rural local telephone service to these communities. And we
presently serve about 2,300 access lines, or more accurately, we
serve less than 1,500 residential lines and villages, and less than
1,500 commercial and business lines at Prudhoe Bay."
MR. FAUSKE stated, "ASTC opposes the proposed CSHB 416. We think
it represents an approach to a broad and complicated economic issue
which implies that a legislative Band-Aid or aspirin will make
everything better. I have no doubt that the sponsors of the
proposed bill, and the members of this committee in general, share
the very good intention of endorsing open market competition as I
do and our company does in all areas of Alaska's commerce and
industry. I also have no doubt that this committee, and the
legislature in general, know that the passage of a brief,
generalized, superficial statement on such subjects as fair
subsistence, local funding of schools, or permanent fund
restructure would satisfy neither the voters, nor the resolution of
the issue. Especially if such casual legislation was not preceded
by a thorough investigation, public analysis, and hearing of the
issues and their consequences."
MR. FAUSKE said, "In the case of HB 416, the proper approach to the
issue is, I think ironically contained in the text of the draft
bill itself." He referred to HB 416, page 2, line 3, subsection
(5), which reads:
the commission should oversee competition in local exchange
telephone service to ensure that the competition is fair to
consumers and competitors;
MR. FAUSKE continued, "That's exactly what is happening today, and
what has been underway for several months. The APUC has several
'R' (regulatory) dockets, which I think the committee members have
been referred to, including interconnection access, universal
service, and so forth, and local competition. The point being is
that the APUC has taken an active and assertive role, maybe at long
last, in this process. And that role includes the necessity of
addressing the entire gamut of federal legislation, regulation, and
increasingly litigation relative to the issue of competition, and
the related issues of access, universal service, and
interconnection. Since there is a band-aided agency, and the APUC
is actively undertaking this process - which thus relieves the
legislature of that complex task, the legislative action should be,
eventually the result of, and on the basis of this process rather
than an inadequate and premature substitute for it."
Number 0393
DAVID HOFFMAN, testified via teleconference on HB 416. He noted
he's been a professor at operations research and quantitative
methods and dealing with computer graphics and high technology
issues over the last 25 years. He said he retired from the
university and is currently working as a private consultant in
Fairbanks.
MR. HOFFMAN said, "I have reacted quite strongly - personally to
the APUC decision because I've been in Alaska since 1968 and very
much an advocate of seeing Alaska stay as progressive and as
innovative as the rest of the Lower 48. I work out of my home as
a consultant and I deal with companies here in Alaska. But I deal
even more so with organizations and companies in the Lower 48. I
was very relieved to see HB 416 come to fruition as an opportunity
to address this issue. And I think there are two main concerns -
which have been already brought up, but I'd like to address them
from my perspective. Obviously the economics is part of that and
I feel that, if there is competition to local service in areas like
Fairbanks and smaller communities, we will see benefits that come
from that. The competition does affect the rates - favorably for
the individuals - the consumers. And as I talked to many other
people about this issue, I find that they feel the same way about
it."
Number 0414
MR. HOFFMAN continued, "From my perspective, I also feel that
there's the issue of what comes with the technology. To site just
a simple example of that, two months ago I bought a new computer,
and as I was learning to use this new computer I found that there
was software on it that I cannot yet use because the resources that
are on the computer are not accessible or useable with the current
connectivity that I have. And I believe that monopoly in a local
service will not bring those capabilities to me any faster. It
will, in all likelihood, probably take longer. ... A few weeks ago
I was interested in downloading some sample simulation software,
after repeated attempts, I finally ended just aborting the process,
calling the company and having them send to me the nine computer
disks and the manual by UPS. If I was on a faster connectivity,
these kinds of things would be routine. Video phones are a
possibility. There's software already on these computers when you
buy them for white board, for conferencing. You can't do that yet.
You really don't get a 56K connection. In the future, I follow
what's happening with Internet II, my son designs communication
boards in the Lower 48. ... Having worked for the supercomputing
center I could see the benefits of being a much faster connectivity
- that's something that I just have my doubts is going to come to
the home in some time in the future in a monopoly environment. ...
On television I see products being advertised that you can't get in
Alaska outside of Anchorage, and some of them you can't even get in
Anchorage."
MR. HOFFMAN concluded, "So with regard to the economic benefits,
and for me in particular, the technological benefits, I feel that
this is a very important issue. And I would very much like to see
the competition happen. I feel that, in the next five years, we're
going to see far more innovations than we've seen in the last 50
years in terms of communications. And I would like that to be able
to be something that the people of Alaska can have access to. If
we wait too long for encouraging innovations and facilitating
innovations, we will find that Alaskans are farther and farther
behind, when, in fact, in Alaska we should be pushing for these
things even faster."
Number 0454
GREG BERBERICH, Vice President, Corporate Services, Matanuska
Telephone Association (MTA), testified via teleconference on HB
416. He told the committee they serve 11 different local exchanges
along the road system from Eagle River to Clear and Anderson, and
also the village of Tyonek - across from Anchorage. He
complimented Chair James and the committee on their understanding
of the issues. He noted that he has worked with the committee for
the past year trying to identify those issues, as we transition
from a monopoly environment to a competitive environment.
MR. BERBERICH said, "We all understand that competition is the law
of the land. Specifically, Congress set the Public Utilities
Commissions - in the middle of that decision, with regard to the
rural companies, as you well know, all the local exchange companies
in Alaska - other than ATU, fall into that category. And it is a
very high cost area, and the issues that you brought out, I think
are the issues that we need to worry about. MTA, I think you honed
in on the very specific issue of the problem with a number of the
decisions that have to be made at the federal level regarding
universal service and access charges, and what we need to do there
prior to making any determinations on the state level. I think the
APUC has done a good job in getting the number of the dockets that
they've got going, but they are dependent on what happens at the
federal level. And I think it's important that what we do here as
we transition to a competitive environment, is that we don't
substitute one competitor for another."
Number 0486
BOB LOHR, Executive Director, Alaska Public Utilities Commission,
testified on HB 416. He informed the committee Commissioner Sam
Cotten, Chairman of APUC, is on his way at this time. He said,
"The APUC has no position on HB 416 at this time. As you know, and
as you observed, the APUC estimated a fiscal note of $173.5 which
declines over time within four years to zero. It is tied
specifically to this bill from the 90-day deadline. And the
regulatory deadlines do increase the cost of the commission."
MR. LOHR referred to page 2, subsection (c). He said, "The 90-day
deadline, for the first time, provides that if a certificate
application isn't acted upon by that time, then it automatically
goes into effect. I urged you to consider the public interest
implications of that sort of default - automatic effective
provision. The commission does not miss deadlines that are imposed
by the legislature, but if we happen to do so, I think there's an
issue there as to whether that serves the public interest well in
terms of ensuring that those that do provide utility services are
fit well and able to provide service - even under a competitive
standard."
Number 0503
MR. LOHR referred to the fiscal note. He said, "The costs, in this
fiscal note may be recoverable directly from the parties rather
than from the regulatory cost charge, and that's one reason they're
itemized in the bill. But, however you decide to provide the funds
would be fine. Frankly we do need the money, and would use it as
effectively as possible."
MR. LOHR said, "The commission will adopt key new regulations by
December 31, 1998. During the summer we went through and detailed
some of the key proceedings that are occurring. The access charge
reform proceeding -- those regulations will be adopted whether or
not this bill passes by December 31, 1998. The Telecommunications
Act of 1996 requires those regulations, and requires that the
system of access charges be made competitively neutral. Some of
the points Ms. Tindall made are certainly valid. The access charge
system has to be made workable in a system that has more than one
provider of telecommunication services. It was not designed, with
that in mind originally, not to serve that purpose as currently
established."
MR. LOHR continued, "Universal service is another key area. The
initial phase of this proceeding will be completed by December 31,
1998. The administrative structure -- the method and source of
funding of an instate universal service fund, as well as the
services (indisc.) providers to be supported, and the amount of
support are key - critical variables. I'll just use this as one
example of why these regulations are so difficult. These are
complex proceedings. They require the coordination with, and the
cooperation of the industry and the public. We need carefully
thought-out comments on these regulations in order to be able to
advance that quickly. It may not seem that December 31, 1998, is
quick, but given the complexity of the regulations and the need to
make sure they dovetail with what the federal government is doing
through the Federal Communications Commission is extremely
important."
MR. LOHR stated, "The FCC had a hearing last week on universal
service and it was apparent from that on-bank hearing, as they call
it, that the FCC doesn't have a clue of what the universal service
structure - the subsidy structure for high-cost rural areas is
going to look like. It's clear that their predecessors had a very
controversial proposal in mind. There's been tremendous turnover
within the FCC itself, and the new members are scratching their
heads and trying to figure out which direction to go. I won't
dwell further on... I will mention the administrative structure of
the universal service fund at the federal level, because the FCC
did that quickly - they did it wrong and the general accounting
office found that they lacked the authority to structure the
universal service mechanism - the schools and library's fund, and
the health care support fund - the way that they did, and they got
in big trouble with the Senate, and especially with Senator
Stevens. We'd like to ensure that whatever approach the commission
takes, whether or not this is instate universal service fund, that
it's fully sustainable, supported and well justified legally. I'm
just trying to suggest that these are complex tasks."
Number 0545
MR. LOHR referred to refuse deregulation. He said, "Representative
James, you referred to refuse deregulation. The interesting
pattern - just to update you since then, the company that bought
the company that didn't want competition is now proposing to buy
every other refuse company in the state, virtually. USA Waste
Services is now proposing to buy Star Sanitation in Fairbanks - I
don't believe Hite's on the list yet, but virtually -- the
companies down in Kenai, all over the state, so convergence is a
key factor there. Those applications are in front of the
commission at this time."
MR. LOHR referenced Representative Hodgins' question regarding the
gas industry. He said, "The providers of gas are using tariff
services of Enstar - the natural gas provider, and that is under a
tariff provision. But they do not own plant or facilities, as a
result, they're not certificated entities and, therefore, the
commission doesn't regulate them and that's how they're able to
operate in that fashion."
Number 0563
CHAIR JAMES said, "I wanted to tell you Hite - yes, and Juneau -
yes."
MR. LOHR remarked that they're going statewide.
CHAIR JAMES replied, "I don't think they're going to bother Healy.
In any event, I thought you might enjoy that."
CHAIR JAMES referred to the statement that APUC is not taking no
position on HB 416. She said, "You indicated that you're taking no
position on this bill, however, you did indicate that the fiscal
note, that you've added is because of the deadlines that are set
out in this bill. So are you saying that, okay, we'll do it, but
you've got to give us the money to do it. Is that what your
response is to this bill?"
Number 0569
MR. LOHR replied, "Yes, basically that's correct, Madam Chair. I
point out that the commission hasn't taken a position on the bill
because there hasn't been a public meeting scheduled with all
members present since the bill was introduced. The commission, if
you wish, might take a position. In the past, the commission found
it more useful to focus on serving as a technical resource to
answer questions of the committee and leave the policy question to
you."
CHAIR JAMES said she appreciates that very much. She said, "I
started this meeting saying that I was not planning to move this
bill today. But I certainly would like -- have you been listening
to all the testimony?"
MR. LOHR replied he has.
CHAIR JAMES continued, "I certainly would like to have an
evaluation of the issue from the perspective of the time lines, as
well as whether or not we have to tell you this is what we want you
to do."
MR. LOHR said he would be happy to tell that to the Chairman of
APUC, who just entered the room.
CHAIR JAMES asked Mr. Cotten if he has anything to add.
Number 0584
SAM COTTEN, Chairman, Alaska Public Utilities Commission, said he
doesn't know what's been said, therefore, he said he doesn't have
anything to add at the moment.
Number 0587
MARK VASCONI, Director of Regulatory Affairs, AT&T Alascom,
testified via teleconference on HB 416. He said AT&T Alascom has
reviewed HB 416 and stated for the record that they are not opposed
to the bill in its current form.
MR. VASCONI said, "To the extent that HB 416 places
responsibilities on the APUC, we see the APUC acting responsibly.
They're on a trajectory to promulgate regulations ensuring
universal service and access reform by late 1998. However, if
additional resources are required to complete the work required by
HB 416, we would certainly support the addition of resources."
Number 0609
JIM ROWE, Executive Director, Alaska Telephone Association, came
before the committee to testify on HB 416. He stated, "I have a
lot of respect for Ms. Tindall and the industry, her presentation,
and her manner. You've noticed we haven't had 22 people speaking
against her, but I would say, even if we had in the industry, we
never depict Ms. Tindall as a small still voice. I would have you
refer to one of the last comments she made in particular. And that
it, it was ominous, she said, 'If we don't pass this bill, GCI, by
the end of 1999, will go in and cherry pick.' And I think that's
a very honest statement. I absolutely expect that. And I would
say, if you, if you do pass the bill, GCI will go in and cherry
pick. So, that's a foregone conclusion. They are a for-profit
business, as she mentioned, they're not a cooperative. That's what
they're supposed to do, they're supposed to make money for their
stockholders. By her statement that in 1999, if you don't pass the
bill we'll cherry pick. I also think that speaks for their public
policy, it has nothing to do with the customer, it has to do with
the bottom line of profit."
Number 0626
MR. ROWE said, "Let's go back to the 1996 Act that was passed. And
it didn't just happen in 1996, it went on for a number of years and
different iterations, and it finally passed and became the 96 Act.
This Act was basically looking at most of the telecommunications
companies in the United States, the big companies - eight of them
that do 95 percent of the access lines. It did recognize, because
we're a loud voice in rural areas, that small companies matter -
that small companies are serving high-cost areas in difficult
terrain and difficult conditions. And because of that, there were
protections put in there because it might be different, not because
it is different, but because it might be different in those areas.
And the protections are that an expert agency in each state, a
public service commission, should look at these rural areas and see
if indeed the public interest is going to be served or if there
might be damage. Now, if they say we have competition everywhere
and, gee, if something bad happens, then you go back and you do
something about it. That's the opportunity that [HB] 416 is
offering. Go in and do this everywhere, except where companies
don't have 1,500 lines. It's reactionary and I think GCI was
honest about this. They've gotten a couple of decisions they were
not happy with lately. But I'll tell you, in general, the industry
in the state - the local exchange industry is very impressed with
the way the commission has been looking at very tough problems.
And they haven't been given the whole game plan yet. The FCC is
still struggling. My God they're struggling. Bob Lohr mentioned
the universal service hearing (indisc.) last Friday. I was there,
I saw things that local exchange long distance companies, here in
Alaska - whoever, would not be comfortable with - going on in front
of these people. But it's human, I can understand why. They're
living within the belt-line."
Number 0649
MR. ROWE continued, "When the Telecommuncations Act was passed, the
people in Washington, D.C. -- let's face it, only three
representatives from our state, passed a bill that worried about
rural protections. Within the last month and a half I've seen
national publication saying, 'Now chairman, FCC Chairman Kenard
(ph.) knows what a rural telephone company is, he spent the day in
Roanoke, Virginia looking at such and such a telephone company. ...
There's absolutely no relationship to what we're talking about in
rural Alaska. And I'd suggest that it's in their wisdom, the
people in Washington, D.C., said, 'Rural might be different, rural
might need consideration.' Be careful what you do there, that we
shouldn't here at this level, disregard the opportunity for expert
consideration by the APUC and pass legislation that circumvents
their opportunity to make decisions."
Number 0664
CHAIR JAMES said the one thing she would say in response to Mr.
Rowe's testimony, is that the 1996 Act did pass. All of the things
that Ms. Tindall said, about the future in a communications world
is different than the one we know. That's true, it's coming, it's
going to be here, and we're all going to benefit from that. She
indicated her biggest concern is the transition, and to be sure
that people are not hurt in the process. Chair James reiterated
that she supports competition in every place that it will fit. It
is what makes the world go round, it is what makes services get
better and it's what makes the prices reasonable. She stressed
that she wants to be absolutely sure, before the committee goes
forward, that we've covered all the bases and that we're not
opening ourselves up for some tragedy along the line that we can't
reverse.
CHAIR JAMES referred to the statement that APUC needed $200,000 to
deal with this, but they were going to deal with that by getting
their fees, and now they've got $170 some on this one because of
the deadlines. She asked Mr. Rowe for examples of getting
decisions out of APUC. The ones she is familiar with are that
we're so delinquent, the garbage issue and the sale of the
utilities in Fairbanks, which cost Fairbanks a lot of money because
it took the APUC a long time to do that. Chair James said, "So I'm
sensitive too about things are timely and there's a reasonable
amount of time to spending - doing things, and then there's, some
times you've got to figure out how to get it done quicker because
there's a need. And, people were hurt in that issue, so I'm very
sensitive to those issues. And I'm looking forward to everybody
participating to see exactly what the right way to approach this
is."
Number 0689
MR. ROWE replied he absolutely agrees, and he thinks there's the
opportunity for a quick decision - to also hurt people sometimes.
He said, "I think there's been no louder voice out there than the
Alaska Telephone Association in complaining to the APUC about their
slumpful movements in the past. And even when we had the
telecommunications hearings in Anchorage, in December, I think
pretty much, Chairman Cotten agreed. They'd like to see things
quicker and we all agreed, speed is very important. We're
certainly not saying they're going too fast on anything. But I
appreciate the questions they've asked, I see that they've really
looked at the issue, and quite honestly, if the FCC hasn't told you
all the rules yet, and the rules they have made up - many of them
have been overturned and thrown back in court. Right now, Senator
Stevens, Senator McCain, and a number of other Senators, are
writing letters questioning them of where they are in universal
service and how this impacting them. All of the answers aren't out
there for us to be able to base state level decisions on. That
doesn't mean competition should be stopped..."
TAPE 98-37, SIDE A
Number 0001
MR. ROWE continued, "...spoke for many people in the state, in that
they don't really understand that competition will not necessarily
lower your price. The cost is higher. Competition will draw that
price you're paying toward the cost. And if the cost is greater
that can mean it's going up, we've seen that in pay phones
nationwide. Let me also say that, as we talk about the technology
that's out there - and Ms. Tindall brought this up, and her
statement spoke of the bottleneck of all technology out there. I
think we can all be proud that Alaska was the first state in which
the state telecommunications modernization plan was approved. And
this was demanded by the rural utilities service. And essentially
this dealt with the local telephone companies' infrastructure where
basically all digital. It's very modern. There's a bottleneck out
there, and as Mr. Meade mentioned, the bottleneck is with the long
distance carriers. That's why you can't get your Internet access,
perhaps out of Anaktuvuk Pass to Seattle as good as you can
elsewhere. And, I don't deny that the satellite is a challenge, it
is. But there's no more modern telecommunications that can be put
in on a local nature that's going to make any difference. So, I
would caution you that the disparaging inference that we have old
technology out there in the local exchange is incorrect."
Number 0042
CHAIR JAMES stated, "The universal services issue itself is
distressing to me - because of, what is universal services. And
it's very very basic as I understand it. We're talking about going
into an era where everybody is going to be able to have this
contact with the rest of the world. And I expect, that what we're
expecting, is that some of our very rural areas in Alaska are going
to be able to be served with that without any subsidy. And that
bothers me because I'm not sure, at this point, someone can prove
to me that it can happen. ... I have people in my district, on the
road service who can't use a fax machine. Now that's distressing
to me - when they live only a short distance from town, and that's
not part of the universal services. They're not required to have
that. And yet now we're proposing to give these people a lot more.
And we're giving them a subsidy in the rural areas in order to
provide the services we've got. And yet now we're going to do all
these more, and we want that subsidy to remain, but we're saying
we're going to do it without a subsidy. I hope that's true that we
can do that, but what I hope what is even further true, that if
we're going to service the whole state, that they service the whole
state. No one has proven to me, no one's even discussed it with me
that that is the potential, or a time frame, or what can happen.
That should be the goal, and getting from here to there should be
a plan that gets us there with as little damage to the people as
possible so that when they're at the end, the benefit's worth it.
And I guess that's the whole selling point that I'm interested in
hearing."
Number 0089
REPRESENTATIVE ELTON asked Mr. Rowe is there is anything that he
sees in this bill that would prevent the APUC from hearing the
policy arguments that he [Mr. Rowe] presented to the committee and
making a decision on competition based on the policy arguments --
with the exception of the time lines that are provided in the
legislation.
Number 0097
MR. ROWE replied, absolutely. He said his feeling is, after
looking at the legislation, it's telling the commission what their
decision will be, and they have 90 days to make it. And it is not
giving them the opportunity to make a decision otherwise. He said,
"And, I can only really speak comfortably to the initial bill
because I didn't see the amendment until about 4:30 last night.
And I expect, some of the people who represented the local
companies, probably didn't see it until they went into their LIO
(Legislative Information Office) this morning. Mr. Rowe referred
to page 1, subsection (2) on line 9, which is saying that the
legislature finds that:
local exchange telephone service should be provided
competitively wherever possible;
MR. ROWE indicated he would be more comfortable if that had said,
"competitively whenever it's in the public interest." There is no
feeling for public interest in the bill at all, and that was the
feeling he got from it. What he sees this bill saying, is that the
public utilities commission shall make a determination that
competition will be done.
CHAIR JAMES replied without a doubt, the sponsor explained that's
what the bill does, that's what it's for. And, the testimony from
Ms. Tindall says we've been down this road before. And, the only
way we ever got to be in the long distance service was by having a
piece of legislation that says the APUC shall do that. Ms. Tindall
believes that date is here now, and that if we don't' do this, they
won't do this. Chair James indicated she did not know that she
agrees with her on that, but it's certainly a compelling argument.
Number 0131
REPRESENTATIVE ELTON said, "I can appreciate your concern about the
language on line (indisc.--paper shuffling), but it's part of a
legislative findings, and it's complimented by lines 3 and 4, on
page 2, which is also legislative intent language that says that -
should be - that competition is fair to consumers and competitors.
And, I would read that as meaning that the APUC can make a decision
based on the impacts on the consumer or the impacts on the
incumbent."
(5) the commission should oversee competition in local
exchange telephone service to ensure that the competition is
fair to consumers and competitors;
MR. ROWE replied, "That's certainly not the ways I'm seeing it,
Representative Elton. But I guess I go back then very much to the
federal legislators when they passed the Act, and said be careful
in rural areas. And I fear this bill is not allowing us the
opportunity to be careful."
Number 0151
REPRESENTATIVE BERKOWITZ said Section 1 of the bill, even if it's
the original bill, seems "pretty motherhood and apple pie." Aside
from his concern about public interest not being expressly
mentioned, he asked Mr. Rowe if he has any concern with this.
MR. ROWE replied, "You know what, if this bill just was -- the
first section, subsection (1), we'd all wave the flag for that. We
want this in the state."
modern, affordable, efficient, and universally available local
and long distance telephone service is essential to the people
of the state;
Number 0163
MR. ROWE referred to subsection (3).
technological advances, reduced costs, and increased consumer
choices for local exchange telephone service, resulting from
the adoption of an appropriate competitive market structure,
will enhance the state's economic development;
MR. ROWE said that's making a judgement that it will. He suggest
it say:
a competitive market structure might enhance the state's
economic development;
MR. ROWE stated, "And that is absolutely what the APUC is supposed
to consider. Will a competitive market structure in this rural
area be a (indisc.) to those people in the state overall? And I
don't think this allows them to do this, this makes the judgment
that it will."
Number 0078
REPRESENTATIVE BERKOWITZ asked Mr. Rowe, "In (4), (5), and (6).
MR. ROWE repled that would be (4):
the benefits of competition in local exchange telephone
service should be available to consumers throughout the state;
MR. ROWE stated it's rather assuming that there are benefits. The
impact of competition in local exchange telephone service should be
available to consumers throughout the state. He said, "What would
happen? Well, the impact is certainly more neutral. The impact
could be negative, as well as positive. And the APUC, I think is
making the determination that if indeed there are benefits,
positive impact - by competition, it should be in those areas.
And, I think we would all agree that's absolutely the way it should
be. But I would caution us that we're making a statement that
saying, 'competition is in the public interest.' And if
competition is in the public interest, there was no reason for
rural caution in the Federal Act - because it's an absolute."
Number 0193
REPRESENTATIVE BERKOWITZ asked, as Representative said, doesn't
subsection (5) somewhat allay those concerns.
MR. ROWE replied, "I see section (5) as saying, and they shall
oversee competition. Which means there is competition, there's no
opportunity for less than competition. And I suppose, I am
certainly reading this with eyes that are wearing different colored
glasses than Ms. Tindall's. But I guess that's human. I'm
concerned about what's here, I'm not satisfied that this is a bill
that's - at all serving consumers in the state. In fact, honestly
I'm scared of it. And I'm not scared of it for the companies. I
don't bring the issue of companies before you at all. I bring the
issue of the consumers of telecommunication services in the state
of Alaska."
REPRESENTATIVE BERKOWITZ addressed Mr. Rowe's concerns, he said,
"You're worried that there's a predetermination that competition is
universally good."
MR. ROWE replied, "I think that's an American (indisc.--paper
shuffling), yes, and I agree. As a previous position in my mind,
that competition is good, yes."
Number 0217
REPRESENTATIVE BERKOWITZ asked, "And there might be certain market
segments that competition might not be in the best public
interest?"
MR. ROWE said he agrees.
REPRESENTATIVE BERKOWITZ reiterated, "I just wanted to (indisc.),
that's your concern with the bill."
MR. ROWE replied, absolutely.
CHAIR JAMES announced she would take the bill under advisement.
Chair James mentioned earlier that she did not plan of moving HB
416 out of House State Affairs Standing Committee today.
HB 462 - USE OF STATE MONEY FOR IMAGES/MESSAGES
Number 0228
CHAIR JAMES announced the next order of business is HB 462, "An Act
relating to the contents of certain state documents."
Number 0235
REPRESENTATIVE GENE THERRIAULT, Alaska State Legislature, came
before the committee. He read his sponsor statement:
House Bill 462 is designed to curtail the increasingly
prevalent practice of using state publications to further
personal political agendas. HB 462 would place a number of
publications off-limits to state officials for personal
purposes. In the past, these documents have been used to
disseminate legitimate programmatic deadline information, but
I believe that they have deteriorated recently into materials
used primarily for self promotion. While any elected official
would relish the opportunity to send political and personal
messages to the electorate at state expense, this sort of
message should be restricted to individual stationary or
newsletter format purchased through the appropriate budgets.
The use of routine publications for this has the potential of
politicizing the underlying programs and I think that should
be curtailed.
Number 0253
REPRESENTATIVE THERRIAULT read the following sectional analysis:
Section 1 amends AS 44.99 by adding a new section that
prohibits state agencies from placing a picture of a state
official on an application form, warrant, or direct deposit
notice. It limits the use of messages from state officials on
those publications to what is required by law, is necessary
for understanding the document, or addresses a seasonal health
issue. It allows messages from the commissioner of the
department, director of the division, or head of the
legislative agency responsible for the program or activity for
which the document is issued as long as the message is limited
to stating the requirements of the program and providing
reminders about deadlines.
The bill defines "state official" as the governor, lieutenant
governor, a legislator, a state judge, a state justice, the
commissioner or deputy commissioner of a state department, the
director or deputy director of a state department, a board
member of a public corporation of the state, a member of a
state commission, board, or the authority, an officer of the
University of Alaska, or an employee of the state.
REPRESENTATIVE THERRIAULT noted examples of past publications were
provided to committee members, he believes some are appropriate
messages some are clearly inappropriate.
REPRESENTATIVE THERRIAULT indicated he went back and forth with the
drafters on the wording of the bill. If the committee has
suggestions on alternative wording, he would be willing to consider
that.
Number 0290
REPRESENTATIVE DYSON made a motion to move HB 462 from the
committee with individual recommendations and attached fiscal
notes.
REPRESENTATIVE BERKOWITZ objected for purpose of debating it.
CHAIR JAMES stated for the record that she had a similar concern
last year. It had to do with a mailing by governor that had to do
with some of his credits and so forth that he was hoping to put
through the legislature. She pointed out that it was a fairly
large piece, she received as a small business and some of her
clients received it as well because it was (indisc.) up business
tax. It had a big picture of the governor on it. Chair James
indicated it looked so much like a piece of campaign literature
that she instructed her staff to call to find out how it was paid
for because it didn't say that on it. She said she wouldn't have
done that had it looked like something she would have gotten from
the governor's office, but the size of the picture, the whole thing
looked to me like campaign material that you would see during a
campaign season. The ironic twist of the response she received,
because the issue was credits against a tax and the question that
my staff asked was, how was it paid for, and it was paid for just
out of the governor's office funds. She stated, "Then it was paid
at the taxpayer's expense, he said no it wasn't because we don't
have any taxpayers. And the document itself was the taxpayer's
(indisc.--coughing) we're going to get a credit if they did this.
So I thought that statement by a staff person that was kind of
ironic, not that they had time to think about it, we don't have any
personal tax but we do have a tax. We have a corporate income tax,
and this was definitely aimed toward them. You know, there are
taxpayers out there."
CHAIR JAMES reiterated she has never seen such a piece of
advertisement on an issue that didn't look so much like a campaign
material.
Number 0333
REPRESENTATIVE THERRIAULT believes if we had a law that restricted
anything that looked like "red light" campaign material, or if
there was a law (indisc.--background) the theft of original idea we
would probably all would run afoul of that. He believes it's
legitimate to differentiate between those things that he sends out
on, a piece of stationary, that's purchased with state money. He
mentioned "We all get an office account and we can put out
newsletters, and certainly in my newsletter, I put my spin on the
issues. In letters, it has my political philosophy on a piece of
legislation. That's different though than an ordinary state
publication that's goes out once a month - and turning that into a
personal propaganda piece."
Number 0351
REPRESENTATIVE THERRIAULT continued, "There are lots of examples
that I think the current Administration has taken the publications
to a new all-time high. Very slick, very good, at least this is
not something that is once a month sent out to thousands of people
in the state of Alaska who are participating in a particular
program. Where did the mailing list for these publications come
from, I don't know. But this is not an ongoing state program that
has been turned into a slick mailing (indisc.), that's what I'm
getting at. My concern is that the underlying programs become more
and more politicized as that mailing list is used more and more to
send out this type of application. I think the previous
Administrations have resisted - maybe they just haven't been savvy
enough to utilize that means as much as this Administration. But
I think with the appearance of a photo of the governor on
documents, the growth of that photo on documents - if we keep up
this rate of growth pretty soon the yearly dividend application
will be an eight by ten glossy. I don't think we want to do that
with that particular document and I don't think we should do that."
Number 0372
CHAIR JAMES remarked this is a really sensitive issue but really
appreciates Representative Therriault bringing it forward because
that's what she's heard from the public as well. Regardless of
politics, people have been making that statement, "Boy, this
governor sure does know how to advertise himself, and I've never
seen it before."
REPRESENTATIVE BERKOWITZ stated, "There are some good ideas in your
bill, but remember this legislative majority report to the people
that was paid for by the people. To me I found this probably more
offensive than you find in these things, because this is a
publication that went out, that repeatedly referred to the
Republican led majority accomplishments, it has a web site
reference to the Republican organization, that didn't come out of
personal office account, but went statewide. Now, it would seem to
me, in the interest of fairness, that you would close the door on
this type of blatant partisan political advertisement as well. And
your bill doesn't do that."
REPRESENTATIVE THERRIAULT replied, "I clearly differentiate between
that, and if that was attached to a check that you would receive
from the government once a month, or a check that you are entitled
to apply for once a year, I think both the Administration and the
legislative branch have budgeted amounts to send out information in
that format. Certainly if you want to introduce legislation to
curtail that, that's a step further than what this legislation
(indisc.). What this legislation is designed to do is
differentiate between those ongoing state programs and attaching
any kind of information, that information, this information, to
documentation that is sent out in conjunction with an ongoing state
program."
Number 0403
REPRESENTATIVE ELTON said he was curious about some instances in
which he may run afoul of this. He stated, "The way I read this is
that it not only covers visage, or photo, ... Would this prohibit
me - one of the things that I do is I send a notice to people, in
my community, that they have not yet applied for the permanent fund
dividend, it's a message. I do it on letterhead, suggesting that
if you haven't done this you ought to do it because the deadline is
March 31. Would this legislation prohibit me from doing that?"
REPRESENTATIVE THERRIAULT responded he didn't believe so, it's not
intended to. He asked Representative Elton if he was using his
office account to pay for that.
REPRESENTATIVE ELTON replied he would be.
REPRESENTATIVE THERRIAULT stressed you are not using the mailing of
a dividend document and attaching your message to that document.
REPRESENTATIVE ELTON referred to page 2, line 4, "program" is
defined as "permanent fund dividend program" and "longevity bonus
program." He asked if that definition only applies if it's a
warrant.
Number 0426
REPRESENTATIVE THERRIAULT referred to page 1, line 7, "may not
place a message from a state official on or with an application."
He explained you can't put the message on the check stub. You
can't put the message on the application form. If you're using
your own office account and stationary you should be allowed to do
that. A newsletter from your office is not on the warrant, not
sent out with the application, or any part of the application, so
that would not be swept in by this bill.
REPRESENTATIVE BERKOWITZ asked what if Representative Elton, or any
of us were to send out a PFD (permanent fund dividend) application
with a letter.
REPRESENTATIVE THERRIAULT replied, "I didn't think that would fall
in here because, number one I would suspect that you would be using
your own postage, and again the message -- you're right, there
might be something here that if you got a blank application and
sent it out with the form - I think we could probably craft
language if that is a legitimate concern so that it's the mailing
coming from the division, so you would not be able to supply the
dividend division with ten thousand messages that they would insert
in with their mailing. But if you want to get a bunch of blank
forms and you send things out yourself that would be fine. But you
should not be able to piggyback on the statewide postage."
Number 0454
CHAIR JAMES asked if there was any reason HB 462 could be held
over. Since no one was left to testify on line to teleconference,
she asked if it could be shut down. [Lost sound, didn't pick up
full statement].
Number 0462
JACK KREINHEDER, Senior Policy Analyst, Office of Management and
Budget, Office of the Governor, came before the committee. He said
he would start by answering Representatives Berkowitz' and Elton's
questions. His understanding of the bill is that you would not be
prohibited from the situation of sending out a PFD application with
a message that the deadline is coming up, or what have you, because
on line 7, page 1, it says a "state agency may not place a
message..." since you're not a state agency, he believed he would
be okay there. He noted, "However, that's notwithstanding, we do
have some serious concerns about this bill. Our overall concern is
that, in addressing a couple of specific instances that legislators
may have disagreed with the Administration on the content of
messages, that it's casting a very broad net and placing a very
broad restriction on helpful communications between state
government and the people of the state. A couple of specific
examples that they're concerned about -- the 1998 PFD application
for example has this information from the Permanent Fund
Corporation that provides information about the fund's performance
and balance and so on. His reading of the bill is that this
helpful information would be prohibited because it's not addressing
the requirements of the program or a reminder about the deadline.
That's one concern is that this type of information would be
prohibited, as he reads it, as well as the brochure that's included
with the checks themselves come from the corporation, not from the
Administration or a message by the governor.
MR. KREINHEDER pointed out other areas of concern is for example
with business license applications. As he understands, the
Department of Commerce [and Economic Development] doesn't provide
routine mailings of this type, that (indisc.) situation where the
department might want to provide information about an upcoming
small business conference, information on other types of assistance
that are available from the department for small business. So,
again, the concern is that this is casting a very broad net if
there are concerns about particular messages. He thinks that is
something they could talk about, but to prohibit any type of
mailing, or additional information not related to deadlines or
program requirements are accessibly broad. He asked if Nanci Jones
had anything to add to that.
Number 0511
NANCI JONES, Director, Permanent Fund Dividend Division, Department
of Revenue, was next to testify. She indicated she just wants to
give a chronology of the dividend booklet. Ms. Jones said,
"Governor Hammond, starting in 1979, started endorsing the
application process and he had signed letters. Only one time in
four years he had, on the outside cover - front and back, he had
endorsed letters to each Alaskan. In 1988 the dividend division
was borne where all the services, pertaining to the application and
the dissemination of the check was under one division - and
Governor Cowper then had endorsed them on the outside of the
booklet."
MS. JONES continued, "Since the history, the booklet has looked
like an encyclopedia and it was my desire, as the new division
director, to add a little bit of human service into the booklet so
people could better relate to us. When we first came in, and you
all can share with me that you were getting tons of letters,
complaints about the type of service that we were giving to the
applicants over in the Permanent Fund Dividend Division. The first
booklet had an endorsed letter by Governor Knowles, no pictures,
the only picture, again was a survey that the Permanent Fund
Corporation sent out asking, 'What do you do with your dividend, do
you spend it or do you save it,' that was the first picture. And
the next I asked the governor's office to give me a picture because
I knew the corporation was going to do pictures, and I, myself,
asked the staff to pose for a picture on the outside of the
booklet, so again we could have a better relationship - that people
can see that we are humans, we're not designed to not give them a
dividend. Again, that was the pictorial one 1997."
MS. JONES concluded, "In 1998, then the only picture - then again
the board of trustees, it has the page explaining what the progress
of the dividend's fund (overall fund), and then it has a letter on
it which just explains how much is in the fund and reminding people
to help other people to file. And I just sent out a letter which
you all should have received to ask you to remind your
constituents, when you leave on your break, to file by the
deadline. I just wanted to make that clear that it was actually
for the dividend. It was actually my idea to redesign the booklet,
to make it a little friendlier, easier to read, more white space.
So I would like to take credit for that."
Number 0544
CHAIR JAMES told Ms. Jones she has done a fine job on the booklet.
Chair James asked her to hold up the 1997 and 1998 booklets to see
the comparison (a little picture in 1997 and a bigger picture in
1998). She noted the perception of the public is what it appears
to them to be, that the governor has been, for four years, running
for office on government funds. She agreed that they get nit-
picky, what we do to solve the problem of the perception with the
public is we make innocent things illegal and we do it time after
time. Maybe where this belongs is in the ethics bill, the public
needs to feel comfortable with the way that their state funds are
being spent.
REPRESENTATIVE BERKOWITZ said he agrees completely that those kinds
of political messages, on government publications, are
inappropriate. It doesn't matter whether it's a Democrat or
Republican putting them out.
MR. KREINHEDER said this is not a political message, he encouraged
them to read it. It simply talks about how successful our
permanent fund has been, a source of pride and security for all of
us, be sure to fill out your application today, if you know
somebody who might need help please lend a hand, the deadline
(indisc.) filing, etcetera.
Number 0591
REPRESENTATIVE BERKOWITZ said he understands that but some of the
examples that Representative Therriault sited, whether it's
discussion of ongoing or legislative issues, he does find that
inappropriate. If you're going to send something out, you send out
what you're going to send out, he thinks to some extent rank has
its privileges, the governor can put his picture on certain things,
he can sign certain things, but it's not fair to log (indisc.) in
official publications.
CHAIR JAMES noted she gets the Governor's Message every month on
the longevity bonus, generally they're compassionate, but we have
had some that were very pointed as well. There isn't enough room
on there to let seniors know what you're talking about. If there's
a hot button in there, that's a political message and is
inappropriate. When it comes to ethics, we all know what's
ethical, but there's another level and that's what the public
suspects as ethical or not.
Number 0617
MS. JONES made a plea to not relegate them back to where they are
like an encyclopedia and it's all words and no one reads it and
it's just a waste of money. She stressed there are some
publication people in the small villages won't get except for -
unless we put the fund information in with their dividend.
CHAIR JAMES asked about closing the fiscal gap.
MS. JONES replied it's the insert that was in with your check and
it's all about fund transfers and the amount of the earnings...
Corporation.
CHAIR JAMES asked what's the picture about closing the fiscal gap,
what's that issue.
MS. JONES reported they wanted your thoughts to establish (indisc.)
whether you disagreed, agreed or disagree, it was a survey. There
is more about the fiscal gap and the difference between...
REPRESENTATIVE IVAN IVAN jokingly said, "Include all 60 legislators
in that packet and I'll feel comfortable."
Number 0634
REPRESENTATIVE THERRIAULT reiterated, "We went around and around in
trying to decide where to draw the line and that's why I said I'm
not wedded to any particular language. Maybe the sensible thing is
no official holding an elected office. I think that the format of
the dividend application - it's much more pleasing to look at now.
We've all learned constructive use of white space, I agree with the
steps that they've taken. He asked is there any reason why the
picture on the front couldn't be a picture of the permanent fund
staff, same information, same pleas, get in touch if you have a
question. Is there any particular reason why my picture's not on
there? How about me having a personal message wishing happy Easter
to all the constituents that get a dividend check, or bonus check
in my district signed by me. Why can't we have the longevity bonus
staff wishing people a Merry Christmas? Let's take it all the way
back to the days in, I think Chicago, when your government check
was given to the politician and he came around, knocked on your
door and gave you your paycheck. Just send all the dividend checks
to me, I'll set up a little stand on the street corner, people can
stop by and get their dividend check from me. They'll know where
the money came from. It came from me. I think that's sort of the
message that we put out. I think it's inappropriate for me to have
that access to those publications, I think it's inappropriate
clearly for any elected official to have access and we know that
when you put out a newsletter. The advice you get is put on a
picture, don't send anything out, a newsletter format, without
putting lots of pictures and use that white space. Any elected
official would love to have access to that. I just think it should
be completely disallowed."
Number 0658
REPRESENTATIVE BERKOWITZ jokingly said the Co-chair of Finance
[Representative Therriault] does know that the money does come from
him.
CHAIR JAMES indicated HB 462 would be brought up at the next
meeting.
ADJOURNMENT
CHAIR JAMES adjourned the House State Affairs Standing Committee at
10:20 a.m.
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