Legislature(1995 - 1996)
02/27/1996 08:42 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 27, 1996
8:42 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Caren Robinson
Representative Ed Willis
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
* HOUSE BILL NO. 501
"An Act requiring competition in local exchange telephone service."
- HEARD AND HELD
* HOUSE BILL NO. 434
"An Act relating to unclaimed property; and providing for an
effective date."
- PASSED CSHB 434(STA) OUT OF COMMITTEE
HOUSE CONCURRENT RESOLUTION NO. 25
Declaring May 15, 1996, 381st Intelligence Squadron Logistics
Division Day.
- PASSED OUT OF COMMITTEE
* HOUSE BILL NO. 365
"An Act relating to the offense of possession of tobacco by a
minor."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 354
"An Act relating to a retirement incentive program for certain
employees of school districts under the teachers' retirement system
and the public employees' retirement system; and providing for an
effective date."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 501
SHORT TITLE: COMPETITIVE LOCAL PHONE SERVICES
SPONSOR(S): REPRESENTATIVE(S) THERRIAULT, Martin, Mulder, Toohey,
Vezey
JRN-DATE JRN-PG ACTION
02/12/96 2726 (H) READ THE FIRST TIME - REFERRAL(S)
02/12/96 2726 (H) STATE AFFAIRS, LABOR & COMMERCE, JUD
02/27/96 (H) STA AT 8:30 AM CAPITOL 102
BILL: HB 434
SHORT TITLE: UNCLAIMED PROPERTY
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/19/96 2486 (H) READ THE FIRST TIME - REFERRAL(S)
01/19/96 2486 (H) STATE AFFAIRS, LABOR & COMMERCE, JUD
01/19/96 2486 (H) ZERO FISCAL NOTE (REV)
01/19/96 2486 (H) GOVERNOR'S TRANSMITTAL LETTER
02/27/96 (H) STA AT 8:30 AM CAPITOL 102
BILL: HCR 25
SHORT TITLE: 381ST INTELL.SQUADRON DIVISION DAY
SPONSOR(S): SP CMTE MILITARY & VETERANS AFFAIRS
JRN-DATE JRN-PG ACTION
02/05/96 2627 (H) READ THE FIRST TIME - REFERRAL(S)
02/05/96 2628 (H) MLV, STATE AFFAIRS
02/14/96 (H) MLV AT 5:00 PM CAPITOL 17
02/14/96 (H) MINUTE(MLV)
02/15/96 2773 (H) MLV RPT 5DP 1NR
02/15/96 2773 (H) DP: FOSTER, IVAN, KOTT, WILLIS, MULDER
02/15/96 2773 (H) NR: DAVIES
02/15/96 2773 (H) ZERO FISCAL NOTE (GOV)
02/27/96 (H) STA AT 8:30 AM CAPITOL 102
WITNESS REGISTER
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
State Capitol, Room 421
Juneau, Alaska 99801-1182
Telephone: (907) 465-4797
POSITION STATEMENT: Sponsor of HB 501.
JIM GIFFORD, Operations Manager
Copper Valley Telephone Cooperative
P.O. Box 337
Valdez, Alaska 99686
Telephone: (907) 835-2231
POSITION STATEMENT: Provided testimony on HB 501.
TED MONINSKI, Regulatory Affairs Director
AT&T Alascom
210 East Bluff Drive
Anchorage, Alaska 99501
Telephone: (907) 264-7876
POSITION STATEMENT: Provided testimony in favor of HB 501.
RON ZOBEL, Assistant Attorney General
Fair Business Practices Section
Civil Division
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
Telephone: (907) 269-5100
POSITION STATEMENT: Provided testimony on HB 501.
DOUG NEAL, General Manager
OTZ Telephone Cooperative Inc.
P.O. Box 324
Kotzebue, Alaska 99752
Telephone: (907) 442-3114
POSITION STATEMENT: Provided testimony on HB 501.
HARRY SHOOSHAN, Principal
Strategic Policy Research/Economic and Telecommunications Public
Policy Consulting Firm
7500 Old Georgetown Road
Bathesda, Maryland 20814
Telephone: (301) 215-4027
POSITION STATEMENT: Provided testimony on HB 501.
STEVE HAMLEN, President
United Utilities
5450 "A" Street
Anchorage, Alaska 99518-1291
Telephone: (907) 273-5210
POSITION STATEMENT: Provided testimony on HB 501.
JIM ROWE, Executive Director
Alaska Telephone Association
4341 "B" Street, Suite 304
Anchorage, Alaska 99503
Telephone: (907) 563-4000
POSITION STATEMENT: Provided testimony on HB 501.
GREG BERBERICH, Vice President of Government and Regulatory Affairs
Matanuska Telephone Association, Inc.
1740 South Chugach Street
Palmer, Alaska 99645
Telephone: (907) 745-3211
POSITION STATEMENT: Provided testimony on HB 501.
JIMMY JACKSON, Regulatory Attorney
GCI
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Telephone: (907) 265-5545
POSITION STATEMENT: Provided testimony on HB 501.
MARK FOSTER, Consultant
Anchorage Telephone Utility (ATU)
625 West 10th
Juneau, Alaska 99801
Telephone: (907) 586-5702
POSITION STATEMENT: Provided testimony on HB 501.
HOWARD GARNER, Executive Vice President and Chief Financial Officer
Alaska Power and Telephone Company
P.O. Box 222
Port Townsend, Washington 98368
Telephone: (360) 385-1733
POSITION STATEMENT: Provided testimony on HB 501.
DAVID FAUSKE, General Manager
Arctic Slope Telephone Cooperative
4300 "B" Street
Anchorage, Alaska 99503
Telephone: (907) 563-3989
POSITION STATEMENT: Provided testimony on HB 501.
BOB BARTHOLOMEW, Deputy Director
Central Office
Income and Excise Audit Division
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-2320
POSITION STATEMENT: Presented HB 434 for the Department of
Revenue.
SYBIL SKELTON
15 Eleanor
Fairbanks, Alaska 99701
Telephone: Not available.
POSITION STATEMENT: Provided testimony on HB 434.
GEORGE DOZIER, Legislative Assistant
to Representative Pete Kott
State Capitol, Room 432
Juneau, Alaska 99801-1182
Telephone: (907) 465-3777
POSITION STATEMENT: Presented sponsor statement for HCR 25.
ACTION NARRATIVE
TAPE 96-23, SIDE A
Number 0017
The House State Affairs Committee was called to order by Chair
Jeannette James at 8:42 a.m. Members present at the call to order
were Representatives Robinson, Willis, Green, Porter and James.
Members absent were Representatives Ivan and Ogan.
HB 501 - COMPETITIVE LOCAL PHONE SERVICES
The first order of business to come before the House State Affairs
Committee was HB 501.
CHAIR JEANNETTE JAMES called on Representative Gene Therriault to
present the sponsor statement.
Number 0055
REPRESENTATIVE GENE THERRIAULT read the following statement into
the record.
"This legislation promotes competition in the market for local
exchange telephone service. It is intended to increase the choices
available and reduce the cost to customers. The bill would
authorize competition for local exchange telephone service and
encourage the Public Utilities Commission to implement a fully
competitive telecommunications marketplace statewide. The
resulting technological advances, reduced costs and increased
choices would in turn enhance the state's economic development.
"The legislation would allow Alaska to take advantage of the newly
enacted federal overhaul of the 1934 Communications Act, which was
signed into law February 8, 1996. The Telecommunications Act
establishes competition in all telecommunications markets as a
national policy. In its report the Conference Committee stated
that the bill `provides for a pro-competitive, de-regulatory
national policy framework designed to accelerate rapidly private
sector deployment of advanced telecommunications and information
technologies and services to all Americans by opening all
telecommunications markets to competition...'
"Under this act all barriers to competition in all market segments
are to be automatically removed except in the most rural areas of
the United States. Under the act, telephone companies serving less
than two percent of the telephone lines nationwide may petition
their state public utilities commission for an exemption from the
duty to interconnect with competitive companies if the incumbent
telephone company can show interconnection is not in the public
interest and it is technologically infeasible or economically
burdensome.
"For the rest of the nation, this provision could mean very small
pockets in a state or throughout the country may be granted an
exemption from competition in the local telecommunication's market.
For Alaska, it could mean the entire state could be exempted from
competition. This proposed legislation establishes the policy that
competition in the local telephone market in Alaska is in the
public interest, consistent with the rest of the country. The
Alaska Public Utilities Commission may still grant exemptions from
interconnection if it is not technically feasible, or if it is
unduly economically burdensome.
"Establishing this policy guideline is clearly within the
legislature's purview, and will eliminate needless proceedings
before the Alaska Public Utilities Commission trying to determine
whether or not competition is in the public interest in Alaska. It
will allow the Public Utilities Commission to get on with the
business of establishing regulations for this new world of
competition, and let Alaska get on with being part of the modern
telecommunications world."
The record reflected the arrival of Representative Scott Ogan at
8:45 a.m.
Number 0303
REPRESENTATIVE THERRIAULT explained the intent of HB 501 was to
take the issue of competition off the table and turn everything
else over to the Alaska Public Utilities Commission (APUC). He
said the federal act required a sweeping piece of legislation to
address the policy issues. However, there was not adequate time
left in the session to do that. Therefore, he asked the committee
members to consider the narrow issue of competition. He stated the
issue of competition versus noncompetition could be argued ad
nauseam, and the APUC could be consumed with the question according
to the suspension of modification provision in the federal act. He
stated the provision could be used to blanket the state, and not
allow competition that fell under the definition of rural. He
stated Alaska was rural in general and had fought the competition
versus noncompetition battle before, and the outcome had been
favorable to the state. Thus, the direction of deregulation to
allow the greatest level of competition at the lowest level in the
market as possible, was best for the state. He said he was willing
to consider proposals from others as long as the bill remained
focused. He cited the House Labor and Commerce Committee was
considering legislation related to this issue as well. He
reiterated a sweeping piece of legislation was impossible given the
time left this session.
Number 0638
REPRESENTATIVE JOE GREEN wondered if HB 501 would help or hinder
the possibility of "cherry picking" in the rural areas.
The record reflected the arrival of Representative Ivan Ivan at
8:50 a.m.
Number 0716
REPRESENTATIVE THERRIAULT replied he did not have the level of
expertise to answer that question. He stated, however, the federal
act prevented the negative aspect of competition Representative
Green referred to as cherry picking.
Number 0757
REPRESENTATIVE GREEN explained there was legislation last year that
allowed electric rural cooperatives to form an exclusive
distribution area, and wondered if HB 501 would countermand that
allowance.
Number 0783
REPRESENTATIVE THERRIAULT replied there was a difference between
the electric rural cooperatives and the provisions in the
telecommunication services. He further said the country was moving
into a higher level of competition regarding utilities in general,
and the passage of the federal act proved that trend would
continue. Therefore, legislation was needed to help formulate
policies.
Number 0841
REPRESENTATIVE GREEN commented on the rural aspect of Alaska, and
wondered about competition with respect to rural distribution.
Number 0904
REPRESENTATIVE THERRIAULT agreed Alaska was rural. He further said
there were parts of rural America that still used party lines. He
called the technology in Alaska "on the cutting edge."
Number 0955
REPRESENTATIVE SCOTT OGAN commented he had not received any calls
from constituents about high local phone rates. He explained he
was familiar with the investments telephone companies made and the
general expenditures related to setting up the equipment due to
personal experience in the telecommunication field. He said he was
worried that HB 501 would create an "open season" for the APUC to
design whatever it wanted, and wondered if there had been
discussion about attaching parameters to the APUC.
Number 1015
REPRESENTATIVE THERRIAULT reiterated there was room for the
legislature to be involved in the implementation of the federal
changes. He said HB 501 called for the local carriers to still
argue and apply for an exemption modification if it was
technologically infeasible and unduly economically burdensome. He
reiterated he did not want the APUC to get "bogged down" in the old
argument of competition versus noncompetition. The state had
answered that question before. He said the savings might only be
a few dollars and he did not expect complaints from constituents,
but asserted that was not a reason to keep the competition out of
those markets.
Number 1135
REPRESENTATIVE CAREN ROBINSON said philosophically she agreed with
competition and believed in the direction of HB 501. She wondered
if long distance telecommunication services were exempt from the
anti-trust laws, and was concerned about the possibility of
conspiracies. She further announced there was an emergency meeting
right now regarding a possible fiscal note for HB 501 and was
curious about the outcome.
Number 1190
REPRESENTATIVE THERRIAULT replied he just learned about the
emergency meeting this morning from his staff. He said he was not
sure what the outcome of the meeting would be. He further stated
the APUC had to respond to the federal act, and HB 501 allowed the
APUC to focus on other things. He reiterated the legislature would
have to involve itself in the implementation framework.
Number 1255
CHAIR JAMES wondered if the purpose of HB 501 was to send a message
to the APUC to allow competition in the event the Commission
determined it was not in the best interest of the public.
Number 1276
REPRESENTATIVE THERRIAULT replied his fear was that the APUC would
be consumed with arguing the competition versus noncompetition
question, and never getting to the technical questions. Therefore,
he was asking the legislature to consider that competition was in
the public's best interest. He explained the APUC would still be
able to consider the other allowances for exemptions based on
technological feasibility to keep competition from a certain
market.
CHAIR JAMES called on the first witness via teleconference in
Valdez, Jim Gifford.
Number 1344
JIM GIFFORD, Operations Manager, Cooper Valley Telephone
Cooperative, said his company provided telephone services to a
large geographical region. He cited Chitna, McCarthy, Mentasta,
Titlik, Valdez, Glennallen, the Copper Basin region, from Taneta
Pass on the Glenn Highway to Kenny Lake in the south and Salanta in
the north. He explained the universal service funding made it
possible for rural and remote areas to have telecommunication
services. He called for careful consideration of the remote and
rural areas to ensure continued affordable telecommunication
services, and did not want competition in the rural and remote
areas.
CHAIR JAMES called on the next witness via teleconference in
Anchorage, Ted Moninski.
Number 1424
TED MONINSKI, Regulatory Affairs Director, AT&T Alascom, said AT&T,
the parent company of AT&T Alascom, had been an advocate of opening
up the local exchange throughout the country. AT&T Alascom
similarly supported federal and state legislation that acknowledged
the value of competition. He said the recent federal legislation
passed this year included specific references to a number of
operating criteria which AT&T Alascom believed was critical to the
on-going consideration of competition in the local exchange. He
cited reasonable interconnection, cost based rates, unbundled local
service, and dialing parity. AT&T Alascom encouraged the
legislature to preserve and protect the cited important elements,
and supported the legislature's interest in the desirability of
local exchange competition. AT&T also encouraged a quick
implementation of the 1996 federal act.
CHAIR JAMES asked Mr. Moninski if he favored or opposed HB 501?
MR. MONINSKI replied AT&T Alascom supported local exchange
competition and believed it was in the public's best interest.
Therefore, in its current form AT&T Alascom supported HB 501. The
sponsor indicated there were opportunities in the federal
legislation for small world companies to seek waivers and AT&T
Alascom believed those waivers needed to be processed on a case
specific basis by the APUC.
CHAIR JAMES called on the next witness via teleconference in
Anchorage, Ron Zobel, Department of Law.
Number 1598
RON ZOBEL, Assistant Attorney General, Fair Business Practices
Section, Civil Division, Department of Law, said he was here to
respond to any questions, and he did not have an initial statement
prepared.
CHAIR JAMES called on the next witness via teleconference in
Kotzebue, Doug Neal.
Number 1655
DOUG NEAL, General Manager, OTZ Telephone Cooperative Inc., said
his company serviced 11 villages and the Red Dog Mine. He said the
service area was approximately the size of the state of Indiana.
He explained his biggest concern was with respect to "cream
skimming." He cited it would be easy for a telecommunication
provider to come to Kotzebue and take out the large high volume
users. He said his fixed expenses would remain the same in that
event, but his rates would need to be raised.
CHAIR JAMES called on the next witness via teleconference in
Washington D.C., Harry Shooshan.
Number 1709
HARRY SHOOSHAN, Consultant for ATU, Strategic Policy
Research/Economic and Telecommunications Public Policy Consulting
Firm, explained the objective of the new federal act was to open
all markets to competition. He said it aimed to open the long
distance and video/cable television markets to competition, and to
remove the lines between industries that had balcanized
telecommunications in the United States since the mid 1950's. He
further said the act shifted power to the federal government and
the Federal Communications Commission (FCC). Therefore, the FCC
could preempt any state regulation that acted as a barrier to entry
or a restraint on competition. He asserted in several specific
areas the federal act left absolute discretion to the states to
give state commissions greater latitude, and cited alternatives to
traditional public utility regulations, and pricing flexibility for
incumbent firms that faced competition from new entrants. The
federal law provided an impetus to move forward to modernize the
states' law as other states were doing. He suggested a broad focus
to make certain the APUC had the necessary tools to adapt
regulations that were real to the twenty-first century. He cited
the authority to adopt alternatives to the traditional public
utility regulation style, and the authority to permit pricing
flexibility to benefit the customers, and forbear regulations
altogether when it no longer serviced the public interest. He
stated HB 501 was brave, but deceptively simple. He described it
as too narrow and generally worded. It did not address the need
for alternative forms of regulations, pricing flexibility and the
power to forbear a regulation. It also failed to address the
preservation of universal service. He further said the bill only
addressed local competition, and failed to consider barriers to
entry in the long distance market in Alaska. He cited as an
example, long-term contracts entered into by long distance
companies that might limit competition from new entrants. In
conclusion, he stated that the removal of inappropriate impediments
to entry was admirable, but it should be considered in a broader
legislative context as it pertained to the new federal act, and
more direction should be given to the APUC.
CHAIR JAMES called on the next witness in Juneau, Steve Hamlen.
Number 1972
STEVE HAMLEN, President, United Utilities, said his company
provided services to 58 rural communities in the state. It was a
native owned company, and served a population of approximately
20,000 people. He referred the committee members to several maps
illustrating the Yukon - Kuskokwin service area, the Fairbanks
service area, and the Chenega Bay service area in Prince William
Sound. Mr. Hamlen read the following provision from the APUC
operating budget overview into the record.
"The Commission believes that the legislature should take the lead
by setting the statutory framework for utilities regulation. The
Commission is best able to carry out legislative intent concerning
the extent of regulation when the legislature's directives are
clear in the governing statutes."
MR. HAMLEN said HB 501 was not needed because it was already
addressed in the federal act. He cited Section 253 in the federal
act titled, "Removal of barriers to entry." The section stated no
state or local statute could prohibit the ability of any entity to
provide any intrastate or interstate telecommunication services.
He cited Section 251 in the federal act listed the duties of local
exchange carriers to implement competition. The duties included
resale of the services to competitors, number portability, dialing
parity, access to the right-of-ways, access to unbundled network
elements, physical or virtual co-location, interconnection
requirements, illegal changes to subscriber carrier selections,
cross-subsidation, procedures for negotiation and approval of the
interconnection agreements, and the requirement to provide space in
the poles. He reiterated the federal act already addressed the
issue of competition. The state, however, did need legislation
that addressed the areas in the federal act left to the states. He
cited the federal act did not address the duties of interexchange
carriers. He said there was not a level playing field, and in the
state of Alaska there were only two long distance carriers. The
state needed the same access to long distance facilities and the
use of long distance facilities, as well as to open the
interconnection as local exchange carriers were required to provide
to the long distance carriers. He explained there were two very
large carriers in the state that wanted to move into his business
on an uneven playing field. He called them "deep pocket players,"
and the legislature needed to take action or companies would be put
out of business and there would be fewer consumer choices. He
cited one barrier to entry for a local telephone service to break
into a long distance service was Alascom's wholesale rates. He
said Alascom's wholesale rates were higher than their retail rates.
The federal act prohibited local exchange carriers from having
wholesale rates higher than retail rates. He said that was not
fair. He also cited call routes directed through Anchorage as
another barrier. He further said the duties to local exchange
carriers needed to apply to interexchange carriers as well. The
timetable required regulations in place to provide open
interconnections to local exchange networks by March. In
conclusion, he said HB 501 only had the potential to put small
businesses out of business and suggested changes were needed.
Number 2372
REPRESENTATIVE BRIAN PORTER commented on Mr. Hamlen's testimony
regarding the bill adversely affecting small businesses, and
wondered if that was because it did not address the deficiencies in
the federal act.
Number 2380
MR. HAMLEN replied, "that's correct." He stated Congress looked at
the long distance market nationally and determined there was
competition, but it did not look at Alaska where there were only
two carriers. He reiterated a level playing field was needed.
Number 2395
REPRESENTATIVE PORTER asked Mr. Hamlen if HB 501 was redundant?
MR. HAMLEN replied, "yes it is." He also said it was not
necessary.
Number 2405
REPRESENTATIVE PORTER asked if the federal act prevented cherry
picking?
Number 2415
MR. HAMLEN responded there would be winners and losers, according
to the long distance carriers. He reiterated a level playing field
was needed to be able to compete.
Number 2424
REPRESENTATIVE PORTER wondered, if under the federal act and
current APUC regulations, would a company be able to come in now
and siphon off the major players and leave the utility with a minor
player.
Number 2450
MR. HAMLEN replied, "yes." He further said that was the market
place and competition at work. However, he cited, Alaska received
over $50 million a year to provide assistance for carriers serving
high cost areas. The long distance carriers now want to be able to
compete for that support. Therefore, Congress provided those
exemptions for a reason, he said, because there would be a limited
amount of money and the public would not want to pay for duplicate
facilities.
TAPE 96-23, SIDE B
Number 0006
REPRESENTATIVE GREEN commented on the time table Mr. Hamlen
referred to in his testimony.
Number 0019
MR. HAMLEN replied the FCC was required to adopt regulations to
open interconnections by August. He said the point was that when
the regulations went into effect, a level playing field needed to
be established.
Number 0030
REPRESENTATIVE GREEN asked Mr. Hamlen if an amendment was needed to
HB 501?
Number 0038
MR. HAMLEN replied there was a bill being proposed in the House
Labor and Commerce Committee that addressed the issues discussed
today. He cited HB 501 needed a lot of work.
REPRESENTATIVE GREEN asked if the bill in the House Labor and
Commerce Committee addressed the concerns discussed today?
MR. HAMLEN responded, "yes."
Number 0060
CHAIR JAMES commented it was late in the calendar for this
legislative session, and wondered what would happen if nothing was
done this session.
Number 0068
MR. HAMLEN replied an advantage would be given to the long distance
carriers that wanted to get into the Alaskan market. The APUC
needed the direction from the legislature to create a level playing
field, and the best and easiest way to accomplish that was through
a piece of legislation.
Number 0085
CHAIR JAMES stated legislation was needed, and according to Mr.
Hamlen a "big fix" was needed rather than a "little fix" which
everyone had admitted would be very difficult to accomplish this
session. She asked Mr. Hamlen if he had any other solutions?
Number 0095
MR. HAMLEN replied it was not as difficult as it seemed. He said,
if Congress could pass a 214 page act, the state could pass a bill
that would at least level the playing field.
Number 0113
REPRESENTATIVE ROBINSON asked Mr. Hamlen why it put his company at
a disadvantage to work with the APUC?
Number 0121
MR. HAMLEN replied the regulations by the APUC required a public
notice process creating delay tactics by the long distance carriers
enabling the process to be dragged out for months and even years.
CHAIR JAMES called on the next witness in Juneau, James Rowe.
Number 0145
JAMES ROWE, Executive Director, Alaska Telephone Association, said
he represented the 22 local exchange carriers that were members of
the Alaska Telephone Association. He cited they delivered local
telecommunication to almost all of the communities in the state
both rural and urban. He provided the committee members with a one
page summarization of the state's responsibility under the federal
act. He said the federal act recognized the rural concerns, but
had no perspective about rural Alaska. He cited the example of the
state of New Jersey classified as rural and remote, urban and semi-
urban. He said the act discussed competition and universal
service. He said universal service was very important to Alaska.
He said competition was good, but even the Chair of the FCC,
commented that pure competition and universal services were not
compatible goals. He stated prior to the act being passed there
was discussion of jobs creation. However, in reaction, AT&T cut
40,000 employees. He further said in Alaska there was good service
and reasonable rates. He also cited in the wake of the federal act
AT&T announced they would increase interstate rates in 80 percent
of their market by 4.3 percent. He asserted caution was needed in
the areas supported by universal service funding. He was concerned
about multiple carriers raising the cost beyond which the federal
government would not be interested to contribute to the universal
service fund. He recommended the committee members act with
caution, keep the public's best interest high, and look at the
potential if acted upon too quickly. He further said the issues
could not be addressed with a one page bill.
Number 0383
REPRESENTATIVE OGAN asked Mr. Rowe if there was the possibility of
a larger company to come in and subsidize rates to take over the
market and unfairly take out the local competition.
Number 0400
MR. ROWE replied it did not have to be a large company. A small
predator company could take out the local competition, if cross-
subsidies were used. He said it was not pure competition, and the
APUC needed guidance.
Number 0420
REPRESENTATIVE GREEN asked Mr. Rowe if he was akin to fixing HB
501, subscribing to the legislation in the House Labor and Commerce
Committee, or something altogether different?
Number 0442
MR. ROWE said he supported legislation, but HB 501 did not go into
enough depth.
Number 0454
CHAIR JAMES asked Mr. Rowe what the APUC would do if the
legislature did not pass any legislation?
Number 0465
MR. ROWE said the APUC would be confused and reasonably so. He
said it would make decisions of which the legislature would look
back upon and wished it had given guidance.
Number 0470
CHAIR JAMES wondered if one of those decisions would be to not have
competition among the local telephone services.
Number 0475
MR. ROWE replied the state could not make that decision because the
federal government already said there could be competition.
Number 0479
CHAIR JAMES wondered if competition was in the public interest in
Alaska.
Number 0482
MR. ROWE said the federal government allowed that, and he would
like to see the legislature give the APUC guidance regarding the
public interest issue.
CHAIR JAMES called on the next witness in Juneau, Greg Berberich.
Number 0505
GREG BERBERICH, Vice President of Government and Regulatory
Affairs, Matanuska Telephone Association Inc., said there were
numerous powers delegated to the state in the federal act that
needed to be addressed by the APUC and the legislature. He said
his company believed public interest was one of the issues
addressed in the federal act due to the different high cost
sections in the rural areas. He further said HB 501 did not
address those concerns and more thoughtful discussion was needed.
CHAIR JAMES called on the next witness in Juneau, Jimmy Jackson.
Number 0576
JIMMY JACKSON, Regulatory Attorney, GCI, said he favored HB 501.
He said the Telecommunications Act of 1996 was passed by an
overwhelming margin supported and largely directed by Senator Ted
Stevens. He explained the central purpose was to open all
telecommunication markets to competition because one segment after
another had been opened to competition. He said in every instance
there was opposition but the results were good. He cited a fax
machine was a result of competition, for example. Therefore,
Congress believed opening other segments would bring the same
benefits. The act left the implementation to the states, he
explained, which depended on the specific details made by the
people who implemented the policies. The purpose of HB 501 was to
establish that competition and the local exchange market were good
and that as the APUC implemented its decisions they would recognize
that competition would benefit the market. He explained it did not
take away its discretion, but simply directed it to approach the
decision that competition was good for the consumers. He further
said the long distance companies were not exempt from the state
anti-trust laws, but other utilities were. This, he said, was a
result of legislation passed about five years ago regarding long
distance competition. He said the findings in HB 501 parallel the
legislation passed five years ago. He cited whole sale rates
needed to be addressed, and reiterated the competition issue was
addressed already. He also cited cherry picking was prohibited by
the federal act. The act allowed the APUC to require a carrier to
service an entire area. He said competition would bring other
benefits and not just a reduced cost of service. He cited a
quicker service line, and faster internet access as examples. He
further said universal service was protected by federal legislation
and existing state statutes.
Number 0900
CHAIR JAMES commented most of the money was made in the long
distance service, and wondered why a person would want a different
local carrier. She agreed that price was not necessarily the goal
of competition, but better service due to the new age of
technology.
MR. JACKSON agreed with Chair James. He further said there was a
one stop shopping provider goal.
Number 0955
CHAIR JAMES wondered if there was the possibility of one company
taking over everything in the state.
Number 0966
MR. JACKSON replied he thought that was not possible because
technology progressed too rapidly. He cited in wireless the FCC
auctioned off six different licenses for cellular type services in
addition to the two that existed. He said there were too many
niches in Alaska and too many opportunities, and his company was
not concerned about that happening.
Number 1026
REPRESENTATIVE GREEN asked Mr. Jackson if HB 501 was sufficient to
take care of the expressed issues today, or if it would take care
of only GCI's concerns?
Number 1058
MR. JACKSON said HB 501 gave the APUC direction to face the issues
before the next legislative session. He said more detailed
legislation would probably be necessary in the future, but was not
sure what it would address. He also said HB 501 did not undercut
any of the issues expressed today, it simply approached the
competition issue.
Number 1105
CHAIR JAMES announced she would like to extend the meeting and
wondered if there were any conflicts. She also announced she did
not want to take any action on this bill today.
Number 1116
REPRESENTATIVE IVAN explained he had a 10:00 a.m. commitment today
so he could not stay.
Number 1128
REPRESENTATIVE OGAN explained he had a bill in another committee so
he could not stay.
Number 1133
MR. JACKSON commented there was concern HB 501 would cost the APUC
money to implement. He said it would not cost the APUC money to
implement HB 501 because it took one argument off of the table. He
said it would cost the APUC money to implement the federal act,
however.
CHAIR JAMES explained a quorum was still present, despite the two
representative that had to leave, so the meeting would continue.
CHAIR JAMES called on the next witness in Juneau, Mark Foster.
Number 1192
MARK FOSTER, Consultant, ATU, encouraged the committee members to
look at the broader view than what was spelled out in HB 501. He
said there were two key areas for a competitive market place to
work. They were: pricing flexibility and market flexibility.
Pricing flexibility was needed to allow the players involved to
compete in a reasonable manner. Marketing flexibility was needed
to allow the market to be tested. He explained these two areas
were left to the states in the federal act and if rules were not
adopted, the larger carriers would have an edge over the local
phone companies. He further said the FCC had 80 rule makings to
implement. The legislature needed to implement policies that
addressed Alaska so that the FCC had a clear policy direction to
consider.
CHAIR JAMES called on the next witness in Juneau, Howard Garner.
Number 1392
HOWARD GARNER, Executive Vice President, Alaska Power and Telephone
Company, said he represented about 3,500 rural Alaskan customers
and about 15 exchanges. He explained the employees owned about 85
percent of the Alaska Power and Telephone Company. He stated the
comments made earlier touched on what his company wanted to say.
He announced his company supported the legislation in the House
Labor and Commerce Committee and it could be achieved if everyone
pushed in the same direction despite the time constraint. He said
his company made large investments in rural Alaska and was
concerned about its ability to continue making those investments.
Number 1474
CHAIR JAMES commented rural Alaska should have all of the benefits
of pricing and services available. She said computer services
offered the possibility to bridge that gap, and the benefits of
competition should give rural Alaska more services. She asked Mr.
Garner if he agreed with her statement?
Number 1509
MR. GARNER replied, "he did not necessarily agree." He explained
there were incentives in place to encourage investments to keep up
with the technological changes. His company took great pride
because its customers were offered state of the art facilities and
services, and competition would not necessarily enhance those
services.
Number 1535
CHAIR JAMES asked Mr. Garner if he wanted competition in local
areas?
Number 1549
MR. GARNER stated that one answer did not fit all locations and
perhaps there should be exceptions for the extremely small and
isolated locations.
CHAIR JAMES called on the next witness in Juneau, David Fauske.
Number 1572
DAVID FAUSKE, General Manager, Arctic Slope Telephone Cooperative,
said his company served the North Slope, seven villages in Prudhoe
Bay, and Deadhorse. He commented the previous speakers already
addressed most of his concerns. He said with all due respect to
the sponsor of HB 501, it had no utility. A pure philosophical
principle could be accomplished by a joint or separate resolution
of the House and Senate. However, if HB 501 implied ramifications
beyond competition, and if the federal act included implications
for the state of Alaska, then the legislature was better served to
address those issues in the federal act.
Number 1710
REPRESENTATIVE PORTER asked Mr. Fauske if the federal act required
the maintenance of universal service in the rural areas?
Number 1728
MR. FAUSKE replied, according to his understanding, the federal act
advocated for the continuation of universal service as a policy.
Number 1745
CHAIR JAMES asked Mr. Zobel what he expected the APUC to do in
response to the federal act with or without HB 501?
Number 1760
MR. ZOBEL said he could not predict the response of the APUC. He
said it was currently in the process of assessing the impact of the
federal act.
Number 1802
REPRESENTATIVE ROBINSON asked Mr. Zobel to respond to the issue of
the anti-trust laws. She wondered if it might cause collaboration
between the local exchange companies.
Number 1820
MR. ZOBEL said the relationship between the anti-trust laws and the
regulated industries was complex. However, if the legislature
wanted to create a fully "competitive telecommunication market
place" then modifications were logical and necessary to avoid
deregulation. He explained in 1990 the legislature required the
anti-trust laws to apply to long distance telecommunication
services. Therefore, it was logical to also apply the anti-trust
laws to the other areas open to competition. He said there were
three options available, and cited repeal subsection D in AS
45.50.572 in the federal act, take out the words "long distance,"
and apply an exemption to public utilities other than
telecommunication utilities.
Number 2166
REPRESENTATIVE THERRIAULT explained there was not another piece of
legislation introduced in the House Labor and Commerce Committee,
but rather it might be introduced. He said he was willing to look
at the possible provisions in the other piece of legislation and
work with the testifiers to consider their suggestions today. He
wondered why HB 501 was a problem, even if it was redundant
according to the testimony today, and asked where was the harm?
Number 2326
CHAIR JAMES asked Representative Therriault if he would be
interested in a subcommittee to address the issues further?
Number 2338
REPRESENTATIVE THERRIAULT replied he would like to be involved, but
was concerned about the remaining time in the legislature.
Number 2371
CHAIR JAMES said she wanted to take a serious look at the issues
and asked for volunteers.
REPRESENTATIVE THERRIAULT wondered if Chair James was going to
reschedule the bill.
CHAIR JAMES replied the earliest HB 501 could be heard again was
Tuesday, March 5, 1996.
TAPE 96-24, SIDE A
Number 0000
CHAIR JAMES again asked for volunteers. No one responded.
Number 0024
REPRESENTATIVE ED WILLIS announced he would be gone all next week.
Number 0040
CHAIR JAMES called for a brief at ease at 10:15 a.m.
CHAIR JAMES called the House State Affairs Committee meeting back
to order at 10:20 a.m.
Number 0130
REPRESENTATIVE ROBINSON announced she would be willing to work with
the Chair to move this bill forward.
Number 0144
CHAIR JAMES explained, based on discussion with the sponsor of HB
501, and the Chair of the next committee of referral, she would be
willing to move HB 501 forward to the House Labor and Commerce
Committee.
Number 0228
REPRESENTATIVE PORTER moved that HB 501 move from the committee
with individual recommendations and attached zero fiscal note.
Hearing no objection, it was so moved from the House State Affairs
Committee.
Number 0280
REPRESENTATIVE ROBINSON announced that she hoped the House Labor
and Commerce Committee would look at the anti-trust issue.
Number 0360
REPRESENTATIVE GREEN announced that he hoped the issues discussed
today would be addressed in the House Labor and Commerce Committee.
Number 0386
REPRESENTATIVE WILLIS announced that he hoped the cherry picking
issue would be addressed in the House Labor and Commerce Committee.
He said he would vote against HB 501 as written because it did not
address more of the issues.
Number 0430
CHAIR JAMES said technology was advancing fast and she was
concerned Alaska would be left out. She stated competition was one
way to address that concern.
HB 434 - UNCLAIMED PROPERTY
The next order of business to come before the House State Affairs
Committee was HB 434.
CHAIR JAMES announced HB 434 and HCR 25 would be heard today but HB
354 would not be heard until Tuesday, March 5, 1996.
CHAIR JAMES called on Bob Bartholomew, Department of Revenue, to
present HB 434.
Number 0615
BOB BARTHOLOMEW, Deputy Director, Central Office, Income and Excise
Audit Division, Department of Revenue, said HB 434 addressed the
unclaimed property program. The objective was to improve the
program. This was the first revisit of the program, he explained,
for both the state and the businesses it affected. He said the
workload grew every year, and part of the legislation reduced the
workload in-order-to continue to operate the program. He explained
the statutes placed the state as the custodian of unclaimed
property and was in charge of finding the owner. If the owner was
not found, he stated, the proceeds went to the general fund. He
further said HB 434 defined a mutual fund as other property so
businesses could turn it over to the state as unclaimed property.
The bill also clarified the combined reporting requirements, and
unified the small property value to read $100 to reduce
administrative workload and duplication. The bill also required
the division to advertize one time per year saving about $20,000.
The bill also required fee finders to disclose the value of the
found property of which 90 percent was returned to the owner and 10
percent retained.
MR. BARTHOLOMEW explained the amendments to HB 434 based on an
audit. He explained the amendment to Section 1 clarified the
language. The amendment to Section 5 changed the publication
duplication. The amendment to Section 10 added the word "warrants"
for clarification. He called the amendments technical. He
announced several insurance companies, banks and the court system
supported the amendments to HB 434.
Number 1150
REPRESENTATIVE PORTER asked Mr. Bartholomew if HB 434 affected HB
295, allowing the municipalities to deal directly with their own
property?
Number 1165
MR. BARTHOLOMEW replied the amount of property concerned in HB 295
was small and would not affect the unclaimed property program. He
explained HB 295 addressed property claimed in the law enforcement
agencies as a result of an arrest, so it would not fall under the
unclaimed property program.
CHAIR JAMES called on the first witness via teleconference in
Fairbanks, Sybil Skelton.
Number 1260
SYBIL SKELTON expressed her personal opinions regarding HB 434.
She stated she did not know if her oldest son was dead or alive and
alleged he would be unclaimed property and feared he would be kept
from her. In conclusion, she stated she was tired of being left
out and treated like she did not know anything.
Number 1378
REPRESENTATIVE ROBINSON moved to adopt Amendment 1 9-GH2025.A.
Hearing no objection, it was so adopted.
Number 1408
REPRESENTATIVE ROBINSON moved that CSHB 434(STA) move from the
committee with individual recommendations and attached zero fiscal
note. Hearing no objection, it was so moved from the House State
Affairs Committee.
HCR 25 - 381ST INTELL.SQUADRON DIVISION DAY
The next order of business to come before the House State Affairs
Committee was HCR 25.
CHAIR JAMES called on George Dozier, Legislative Assistant to
Representative Pete Kott, to present the sponsor statement.
Number 1477
GEORGE DOZIER, Legislative Assistant to Representative Pete Kott,
said HCR 25 declared May 15, 1996 as the 381st Intelligence
Squadron Logistics Division Day. The Division was stationed out of
Anchorage and had received numerous awards. He cited the Air Force
Outstanding Logistics Plans and Program Award, the Lieutenant
General Leo Marquez Award, the General Thomas P. Gerrity Award for
Outstanding Logistics, and the Honorable Dudley Sharp Award. He
said the Division was outstanding in its field and deserved a day
to set aside for it.
Number 1530
REPRESENTATIVE WILLIS moved that HCR 25 move from the committee
with individual recommendations and attached zero fiscal note.
Hearing no objection, it was so moved from the House State Affairs
Committee.
Number 1555
REPRESENTATIVE PORTER said contrary to his military experience
"military" and "intelligence" were not contradictory terms.
Number 1569
ADJOURNMENT
CHAIR JAMES adjourned the House State Affairs Committee at 10:48
a.m.
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