Legislature(1997 - 1998)
04/07/1998 01:35 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
April 7, 1998
1:35 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Jerry Mackie, Vice Chairman
Senator Tim Kelly
Senator Mike Miller
Senator Lyman Hoffman
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 312
"An Act relating to animals, to food, to pest control, and to the
Alaska Food, Drug and Cosmetic Act; and providing for an effective
date."
- PASSED SB 312 FROM COMMITTEE
SENATE BILL NO. 349
"An Act exempting services of certain sports officials at amateur
sporting events from coverage under the Alaska Employment Security
Act; and providing for an effective date."
- PASSED CSSB 349(L&C) FROM COMMITTEE
SENATE BILL NO. 346
"An Act relating to competition in the provision of local exchange
telephone service; and providing for an effective date."
- PASSED CSSB 346(L&C) FROM COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 312 - See Labor and Commerce minutes dated 3/10/98.
SB 349 - No previous action to record.
SB 346 - No previous action to record.
WITNESS REGISTER
Senator Gary Wilken
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Sponsor of SB 312.
Ms. Beth Hagevig, Staff
Senator Gary Wilken
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Commented on SB 312.
Ms. Janice Adair, Director
Division of Environmental Health
Department of Environmental Conservation
555 Cordova St.
Anchorage, AK 99501
POSITION STATEMENT: Commented on SB 312.
Mr. Dwight Perkins, Special Assistant
Department of Labor
P.O. Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Neutral on SB 349.
Mr. John Renn
Anchorage Football
7014 Saturn Circle
Anchorage, AK 99504
POSITION STATEMENT: Supported SB 349.
Ms. Patricia Lillian
Alaska Amateur Softball
2850 Drake Dr.
Anchorage, AK 99508
POSITION STATEMENT: Supported SB 349
Mr. Jerry Watson, President
Farthest North Umpires' Association
P.O. Box 56829
North Pole, AK 99705
POSITION STATEMENT: Supported SB 349.
Mr. Bruce Kemmerer
Alaska A.S.A.
P.O. Box 55088
North Pole, AK 99705
POSITION STATEMENT: Supported SB 349.
Mr. Gary Matthews, Executive Director
Alaska School Activities Association
4120 Laurel St.
Anchorage, AK 99508
POSITION STATEMENT: Supported SB 349.
Mr. Lefty Schallock
Fairbanks, Basketball Association
P.O. Box 80002
Fiarbanks, AK 99708
POSITION STATEMENT: Supported SB 349.
Mr. Bob Walker, President
Anchorage Softball Umpires' Association
P.O. Box 210504
Anchrage, AK 99521
POSITION STATEMENT: Supported SB 349.
Ms. Kim Killion
Fairbanks Volleyball Association
P.O. Box 10787
Fairbanks, AK 99710
POSITION STATEMENT: Supported SB 349.
Mr. Robert Walkotte
Fairbanks Football Officials Association
P.O. Box 55784
Fairbanks, AK 99705
POSITION STATEMENT: Supported SB 349.
Mr. Ron Duncan, President
GCI
POSITION STATEMENT: Supported SB 346.
Mr. Jim Rowe, Director
Alaska Telephone Association
4341 B Street, #304
Anchorage, AK 99503
POSITION STATEMENT: Opposed SB 346.
Mr. Brain Thomas, Director
Government Affairs
Pacific Telecom (PTI)
Vancouver, WA
POSITION STATEMENT: Opposed SB 346.
Mr. Mike Notar, Assistant Business Manager
IBEW Local 1547
Juneau, AK 99801
POSITION STATEMENT: Opposed SB 346.
Ms. Steve Hamlen, President
United Utilities
5450 A Street
Anchorage, AK 99515
POSITION STATEMENT: Opposed SB 346.
Mr. Greg Berberich, Vice President
Corporate Services
Matanuska Telephone Association
Pouch 5050 S. Chugach
Palmer, AK 99645
POSITION STATEMENT: Opposed SB 346.
Mr. Tom Meade, Manager
Regulatory Affairs
Telalaska
2131 Abbott Rd.
Anchorage, AK 99507
POSITION STATEMENT: Opposed SB 346.
Mr. David Fauske, General Manager
Arctic Slope Telephone Coop.
4300 B St, #501
Anchorage, AK 99503
POSITION STATEMENT: Opposed SB 346.
Mr. Ken Trout
Summit Telephone Co.
3225 Purdue St.
Anchorage, AK 99503
POSITION STATEMENT: Opposed SB 346.
Ms. Laurie Herman, Director
External Affairs
AT&T Alascom
210 E Bluff Dr.
Anchorage, AK 99501
POSITION STATEMENT: Commented on SB 346.
ACTION NARRATIVE
TAPE 98-20, SIDE A
Number 001
SB 312 - FOOD/SEAFOOD/ORGANIC FOOD
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee
meeting to order at 1:35 p.m. and announced SB 312 to be up for
consideration.
SENATOR GARY WILKEN, sponsor, said this bill consolidates existing
statutory requirements for food production and services that are
currently scattered throughout Title 3 and 17 under the Food, Drug,
and Cosmetic Act (Title 17). It helped provide greater access to
laws of Alaska by those who are most directly affected.
CHAIRMAN LEMAN asked if it was correct that this was just shifting
statutes and there is nothing new added.
MS. BETH HAGEVIG, Staff to Senator Wilken, said that is correct.
CHAIRMAN LEMAN said the Alaska Seafood Marketing Institute (ASMI)
had some initial concerns about the inspection seal, but this
wouldn't require them to do any more than what's in current law.
MS. HAGEVIG said that is right and it just shifts it from Title 3
to Title 17.
SENATOR HOFFMAN asked where it repeals the obsolete statute related
to rabies.
Number 105
MS. JANICE ADAIR, Director, Division of Environmental Health, said
rabies was repealed in Section 26. She said in most cases, except
for the Kenai Peninsula, local governments have adopted animal
control powers where they deal with that type of activity. Kenai
and Soldotna have done it as cities, but the Borough has not, but
they are working cooperatively with one another to deal with
potentially rabid animals.
CHAIRMAN LEMAN asked what happens in the unorganized areas of the
State.
MS. ADAIR answered that the village public safety officers and the
public health nurses work jointly on those issues. DEC doesn't
have anyone out there. She said there is a process they go through
and the Department of Health and Social Services has a laboratory
in Fairbanks where they do the testing on the animal to see if it
is, in fact, rabid.
CHAIRMAN LEMAN asked to make sure that this was just shifting
things from one title to another and not creating any new
inspections or labeling that doesn't already exist in statute.
MS. ADAIR said that was correct.
SENATOR MACKIE moved to pass SB 312 from Committee with individual
recommendations. There were no objections and it was so ordered.
SB 349 - UNEMPLOY EXEMPT AMATEUR SPORTS OFFICIAL
CHAIRMAN LEMAN announced SB 349 to be up for consideration.
MR. TIM BENINTENDI, Staff the Senator Tim Kelly, said "SB 349 would
exempt Alaska amateur sport officials from the unemployment tax
liabilities, but it does not relieve them of income tax liability.
This legislation is predicated on successful passage of
corresponding federal legislation which is now being worked on by
Senator Stevens' office. The two have to go hand-in-hand.
"Recreational nonprofessional sports are a large and expanding
component of our State's athletic and social life and the role of
amateur sports officials is vital to its continuation and
development. The essential character of this avocation will be
adversely impacted if tax pressures on modest stipends is not
relieved. Most amateur sports officials provide their own
transportation, uniforms, safety equipment, and other expenses
without reimbursement from the nonprofits or the recreational units
of local government that hires them. Without modest relief
provided by SB 349, there may be a decline in the availability of
qualified amateur sports officials as they pick up other work or
worse, force increases in costs to the many nonprofits which
sponsor amateur sporting events. This increase may lead to
unavoidable program reductions.
"The Alaska Legislature once did exempt amateur sports officials
from employment tax liabilities, but the exemption was lifted a
year later under the threat of losing federal funds at the
Department of Labor. Federal law was not in sync with state law at
the time.
"SB 349 is supported by the Farthest North Umpire's Association,
the Alaska School Activities Association, and the Anchorage Sports
Association. It is not opposed by the AFL-CIO and carries a zero
fiscal note."
Number 215
MR. DWIGHT PERKINS, Special Assistant, Department of Labor, said
the Department is neutral on this. They are bound by federal
legislation until it is changed. He suggested a technical
amendment to make sure they cover the state or any political
subdivisions, like Parks and Recreation. On line 6 to insert "(22)
services performed in the employee of a State, or any political
subdivision thereof, or any organization exempt from income tax
under section 501(a)..." which would make us consistent with
federal legislation.
SENATOR MACKIE moved to adopt the amendment. There were no
objections and it was so ordered.
MR. JOHN RENN, Anchorage Football Association, supported HB 349 and
said the alternative is for associations to bear the cost and it
would somehow go back to the youth.
MS. PATRICIA LILLIAN, Amateur Softball Association Commissioner,
supported SB 349 as it would have good long term effects to the
cost of doing business. When they were exempted in 1989, it was to
declare them as nonemployees. In 1994 the same situation existed
when the Legislature exempted them from Workers' Compensation.
This has been the intent of the legislature for a number of years
and this is consistent with that position. She thought all the
officials and user groups would support this without question.
MR. JERRY WATSON, President, Farthest North Umpires' Association,
said the legislation would have a dramatic affect on amateur sports
in the State. He explained that this is not primary employment for
most; it is done for love of the sport and for the comraderie. He
said that recruiting is difficult and bills like this will only
help that.
MR. BRUCE KEMMERER, Alaska Amateur Softball Association Umpire
Chief, said there are 300 softball officials in the State, but it's
getting harder and harder each year to recruit officials for the
sport. Passage of a bill like this would help alleviate that
problem, because unemployment and workers' compensation problems
turned people from officiating at all sports. Officials try to keep
the cost of doing business down as much as possible. The game
stipends they receive do not cover everything. There's a lot of
volunteer work that is done preparing for a season, like going to
clinics. Officials are independent contractors and are required to
file income taxes, but they need this bill to keep the costs down.
MR. GARY MATTHEWS, Executive Director, said he represents 195
member high schools and over 800 certified high school officials
throughout the State. He said for most officials it's a labor of
love and nearly everyone holds down an additional full-time job.
He explained that in most of the small communities in the State the
schools contact the officials directly, but in the larger
communities, local associations of officials coordinate the
scheduling of game assignments and help offer opportunities for
training. If officials are determined to be covered by
unemployment compensation, the cost to schools will be greatly
increased. It is important from a statewide School Activities
Association's perspective to pass this legislation.
MR. LEFTY SCHALLOCK, Fairbanks Basketball Association, supported SB
349, otherwise it could increase costs by as much as 30 - 40
percent. In most instances there would be two choices, one for the
officials organization to disband and the second would be to pass
the increased costs on to the user groups which means our youth.
MR. BOB WALKER, President, Anchorage Amateur Softball Umpire's
Association, said he represented the largest softball umpire group
in the State and supported this bill.
MS. KIM KILLIAN, Vice President, Fairbanks Volleyball Officials
Association, supported HB 349 and said this removes another added
burden to keeping youth sports on-line.
MR. ROBERT WALKOTTE, Fairbanks Football Officials Association,
supported SB 349 because he was concerned that the costs were
becoming prohibitive that the officials would probably get out.
SENATOR KELLY moved to pass CSSB 349(L&C). There were no
objections and it was so ordered.
SB 346 - LOCAL EXCHANGE TELEPHONE SERVICE
CHAIRMAN LEMAN announced SB 346 to be up for consideration.
MR. RON DUNCAN, President, GCI, supported SB 346 saying it is vital
to the future of the telecommunications industry and the economic
infrastructure of the State. He said the better our
telecommunication infrastructure is in our State, the easier it's
going to be to develop our intellectual-based resources.
Telecommunications creates the opportunity to perform services in
one location and have them consumed somewhere else. In many ways
it is more important in Alaska, because it has always suffered from
its isolation and remoteness. It's a tremendous potential addition
to the Alaskan economy.
A gentleman from Sitka who was working on economic development
issues there told him about a study they had just commissioned for
identifying new areas of economic development in Sitka and the top
15 prospects on the list identified the major detriment as the lack
of a well-established telecommunications infrastructure to allow
them to perform services in Sitka that could be consumed elsewhere.
Competition is essential to assure that we have the best possible
and the most thoroughly developed telecommunication infrastructure
we can get. The legislation is necessary because the
implementation of competition requires change and some of those are
complicated. Incumbent local telephone companies who have
monopolies today resist that change, because it forces them to
alter the way they do business. The APUC is overly cautious and
too slow in addressing this issue which retards the development of
both competition and the facilities that are necessary for economic
development. The APUC doesn't really like competition because it's
messy and is not as predictable as well-regulated monopoly. It
thinks Fairbanks and Juneau are too small for competition.
Finally, the APUC won't act as long as there are questions about
competition.
This bill doesn't really do very much, but it says that competition
is the desirable policy where possible and it tells the APUC to get
going by setting deadlines for its action and tells them which
issues to be resolved. It establishes a time-frame in which
competition can be implemented in Alaska. It doesn't mandate
competition in any particular place or tell the APUC how to resolve
the rules. It leaves the expert jurisdiction to the expert agency,
but it tells them to get on with their job.
He said there are 200 areas where GCI doesn't serve today and the
only reason they don't is because the APUC still prohibits
competition in the smallest areas of the State. Three years ago
they asked for permission to serve 50 of those smallest areas to
prove that competition could work there. The day that waiver was
granted, Alascom announced the upgrade of their facilities in those
same 50 areas and has since gone on to upgrade its facilities
statewide. Six months ago in a presentation to the Anchorage
Rotary, the President of Alascom stated that the only reason they
upgraded the bush facilities was in response to competition.
The end result of competition in Alaska is that it has worked
spectacularly well. Nobody's rates have gone up as a result of
competition and bush Alaska has state-of-the-art service with high
speed switch data available in communities where two years ago, a
fax couldn't go through. Rates are down 25 - 50 percent and
Alaskan consumers saved more than $100 million per year compared to
what they would pay without competition. Competition has been an
unqualified success on the long distance side of the business.
Given time and the appropriate actions from the PUC, the same thing
will happen in local service.
Number 485
CHAIRMAN LEMAN asked if he thought increasing the 1,500 or more
access lines to reduce the pool to the largest market areas would
be a step in the right direction to try and build consensus in the
remaining days.
MR. DUNCAN said they should be real careful, because the bill talks
about lines by study areas which are a way in which telephone
companies are broken up for regulated service. If the lines issue
was to be addressed, they would work with it, but rather than
change the absolute level of lines, they would look at multiple
vectors, so that they got the correct set of communities in the
competitive niche. Anything that moves competition forward would
be helpful to them.
CHAIRMAN LEMAN asked which areas would have priorities in best
moving into competition of local exchanges.
MR. DUNCAN replied that GCI's business plan sees local competition
evolving the same way long distance competition evolved. They
would like to go to Fairbanks and Juneau next and shortly after to
the urbanized areas along the road system, which would include the
Kenai Peninsula and the areas surrounding Fairbanks. Then building
out from there to the regional centers of Sitka, Ketchikan, Valdez,
Kodiak, Kotzebue, Nome, Barrow, and then in the final stages
building to the very smallest communities. He thought it was 3 -
5 years before competition knocks on the door of many of the
smaller communities, but the threat of competition, itself, does as
much good as competition does for keeping rates and costs down.
CHAIRMAN LEMAN said he didn't mentioned the Mat-Su area.
MR. DUNCAN responded that to him the urbanized areas in Alaska are
everything on the road system.
CHAIRMAN LEMAN asked if that included Glenallen.
MR. DUNCAN said yes, because fiber facilities pass those places now
and once they do, there is no reason not to extend the full range
of modern technology of competitive offerings to those areas.
SENATOR HOFFMAN mentioned that he left out Bethel.
MR. DUNCAN said he didn't mean to leave out Bethel.
MR. JIM ROWE, Director, Alaska Telephone Association, said the
Telecommunications Act of 1996 does not mandate open market
competition in every telecommunications market. It conditions
every competitive section with a restriction that it be consistent
with Section 254 of the Act which is a mandate to maintain advanced
universal service. Congress acknowledged that rural areas present
a telecommunications environment where competition might put
universal service at risk. Recognizing that risk, the Telephone
Act provides an exemption for rural carriers from unbundling
network elements and collocation. It specifically says, "The State
Commission shall conduct an inquiry for the purpose of determining
whether to terminate the exemption." Section 870(b)(1) of this
bill prevents the APUC from making that determination. This
conflict is particularly significant when you consider that the
Congress was thinking of rural and West Virginia, not Bush Alaska
when they wrote rural safeguards into federal legislation.
The APUC conducted a very lengthy hearing and came to a decision on
this issue that prompted GCI to take this action. It could not
determine that affordable rates could be maintained and refused to
lift the rural exemption. This meant that GCI could build
facilities to compete, it could resell the local carrier service at
retail, it could buy the local carrier service at a wholesale rate;
all GCI cannot do is resell to the local carriers unbundled network
elements and collocate.
GCI comes before the legislature asking them to circumvent a public
policy safeguard that says the State Commission shall conduct an
inquiry for determining whether to terminate the exemption. The
Alaska Telephone Association opposes this bill.
SENATOR HOFFMAN asked who the members of his association are.
MR. ROWE answered the incumbent local carriers in the State - 23
members, except for Circle.
SENATOR MILLER asked if he would classify Fairbanks as rural like
Virginia.
MR. ROWE said it's completely perspective and when he reads
national telecommunications publications, their concept of rural is
Appalachia, not Bethel.
TAPE 98-20, SIDE B
He hoped they would be careful with our rural areas as the
Congressmen were with Virginia.
SENATOR MILLER commented if Fairbanks was going to be defined as
rural, he wanted it defined as rural under ANILCA for subsistence
preference.
MR. ROWE added that the bill is very specific about what is rural
using census bureau blocks.
SENATOR MACKIE asked why it wouldn't be good for the people of
Alaska to not have a competitive environment in terms of better
rates, access, and technology whether it's in Bethel or Fairbanks.
MR. ROWE answered that he absolutely believed if competition is
going to bring better services, lower rates, and more features,
that's wonderful. That's what the APUC is supposed to decide. As
this bill does, it's incorrect to assume that competition is going
to bring lower rates. It's going to move rates toward cost which
is typically what's done. Everyone in this state, exclusive of the
Anchorage area, receives contributions of universal service support
in the amount of between $40 million - $60 million per year. In
rural areas where people are paying $10 or $15 for local service,
that doesn't mean their service costs that per month to provide.
It is far more than that.
MR. ROWE said he talked to a state commissioner in Illinois who
said he didn't want to support the people in Alaska. He feels that
they don't support Alaskans; the people in her state were
supporting a national network of telecommunications that is
valuable only as a national network. If competition comes in to
rural areas, there will be competition for the universal service
support money and for the business customers.
SENATOR MACKIE asked if anyone under the 1,500 phone lines wouldn't
be affected.
MR. ROWE answered that was correct.
SENATOR MACKIE said he agreed with many of his points; his concern
is economy of scale and if it would cost more in smaller areas to
provide a service, like education. He asked if he would put his
finger on a particular number that would protect the small areas of
the State.
MR. ROWE said he didn't have an answer and feared that putting a
number there would be incorrect. He wanted the APUC to move just
as quickly as possible to decide where competition would be
advantageous to the public. He thought this bill is trying to
circumvent that opportunity for them to make that decision.
SENATOR MACKIE asked if this bill mandates them to make
competition.
MR. ROWE answered yes, absolutely. He said this bill is not about
time. It allows APUPC to make the determination that there shall
be competition under any method allowed in the federal act and if
they don't decide within 90 days, by default, there is competition
by any method under the federal act. That's on page 2, lines 8 -
12, the collocation language where you go into the facilities of
the local company that is already out there and get to use some of
its space to put your equipment in. Unbundled services is where
they break down the elements and sell them that way, he explained.
Number 512
MR. BRIAN THOMAS, Director, Government Affairs, Pacific Telecom
(PTI) said they oppose this bill. PTI understands that change is
forthcoming and inevitable, but when Congress allowed competition,
they were concerned about its affect on universal service. That's
why they created rural exemptions for some of the more onerous
requirements of the Telecommunications Act. This bill is
unnecessary and misdirected. Contrary to the public statements of
others, local telephone competition in most forms may proceed in
all of PTI's communities at any time. SB 346 is misdirected
because it attempts to put a definite time frame on matters which,
to some extent, are outside the scope and jurisdiction of the APUC.
Today every area that is served by [indisc], including Anchorage,
Fairbanks, Juneau, and the Kenai Peninsula is open to competition.
When representatives of other telecommunications entities claim
that the APUC's decision to retain the rural exemption blocks
competition, they are being misleading. This decision really means
that three of four forms of local telephone competition may proceed
at any time in any of Pacific Telecom's service areas. The fact
that competition has not progressed, rests not with APUC or Pacific
Telecom or even other Alaskan telephone companies, but with the new
entrant's own corporate decision. The reason is that a new entrant
may construct its own facilities, resell PTI's local exchange
service at retail, resell local exchange services at a wholesale
discount, or purchase unbundled elements and collocation. There is
nothing today stopping anyone from competing on the basis of the
first two. The rural exemption applies only to the third and
fourth methods of competition. It is important to note for all
areas served by PTI, that the third form of competition is also
available, because they voluntarily waived the exemption. They are
in active negotiations with another carrier right now for this form
of competition in Juneau.
In the recent rural exemption proceedings, the Commission
appropriately found that only the fourth form of competition should
not be allowed for awhile in rural markets. The Commission
reasonably concluded that until certain state and federal matters
have been resolved to provide for continued protection of universal
service, there was sufficient cause to restrict this form of
competition. There remains concern that they wait until access
charges have been appropriately formed and both federal and state
universal support mechanisms have been better targeted to provide
support to those consumers where support is most required. Because
unbundling and collocation allow competitors to immediately avoid
access charges and cherry pick the universal service support,
competitive unbundling and collocation would be inconsistent with
preservation of universal service and would lead to dramatic and
damaging local rate increases, particularly for residential
consumers.
At the federal level, the FCC will soon be convening a task force
to examine and make recommendations regarding future federal
funding of rural areas. Of particular interest to Alaska consumers
will be both the amount of federal funding to be made to rural
areas as well as the means to target such support to the
appropriate consumers. Unfortunately, the fact is that neither the
Alaska legislature nor the APUC control this process. Until such
matters are ultimately resolved at the federal level, the APUC
reasonably found that conditions are not appropriate for the fourth
form of competition. Premature removal of the exemption for this
type of competition means the new interest, like GCI, has the
ability to use its network for free or at very little cost to skim
the market immediately by targeting select customers and avoiding
payment of access charges. Such a result is inconsistent with
preservation of universal service. While SB 346 is well-intended
and seeks to put a time-frame on competition by requiring the APUC
to act on certain matters by the end of this year, the fact is that
some matters are simply beyond state jurisdiction and the
legislature's efforts. Until they know with certainty how federal
universal support will be handled and the APUC has had a chance to
consider and adjust its policies to be consistent with or
complementary to the federal approach, it would be careless to
proceed with the final form of competition that would occur under
the time-frame contemplated in this bill.
Number 457
CHAIRMAN LEMAN said page 2, lines 9 - 10 provide that the
Commission adopt regulations ensuring universal service and
provides for access charges compatible with full competition. He
said it wouldn't be his intent that the fourth form of competition
not lead to universal service and he didn't think it said that.
MR. THOMAS said the problem is that the APUC by the end of the year
won't necessarily know what the federal mechanism will be in order
to adjust its policies to be consistent with the federal mechanism.
SENATOR MACKIE asked how GCI could build facilities.
MR. THOMAS said they could construct their own facilities and in
Fairbanks, they have already been deploying fiber optic cable.
They own the cable companies in a lot of communities and can
utilize those facilities to provide telecommunications services.
They also own PCS licenses across the State and they recently won
the LNBS (for two thirds of the State) auction, which is a new
technology that the FCC is making available through an auction
process and they could use that as a vehicle for competition.
CHAIRMAN LEMAN asked if he considered Juneau to be rural.
MR. THOMAS answered that he considered it rural from the
perspective that there is a core area and a noncore area. He
changed his mind and said he wouldn't consider it rural. There are
rural aspects to serving some customers, like the ones at the end
of the road, in Juneau. This needs to be considered as they allow
the final form of competition to take place, even in Juneau.
Number 417
MR. MIKE NOTAR, Assistant Business Manager, IBEW Local 1547 in
Juneau, opposed SB 346. They are not sure that the competition GCI
speaks of in support of this bill is in the best interests of their
5,000 Alaskan members and Alaskans in general. The competition GCI
is seeking creates very complex issues and several items need to be
addressed prior to this occurring. GCI now has the ability to
compete head-to-head, but is not willing to do so in those ways.
They believe the APUC has made a prudent decision regarding this
and that process should be allowed to continue. They would like to
see a level playing field of competition where the residential
customer doesn't get adversely impacted by either higher rates or
a degradation of service quality. They believe the local service
competition in Alaska requires a more comprehensive look before
taking the proverbial leap.
SENATOR MACKIE asked him how this bill would negatively affect the
members of IBEW.
MR. NOTAR answered that they see it as a potential job loss and a
degradation of wages in the State of Alaska and in the
telecommunications industry.
SENATOR MACKIE asked how that would happen.
MR. NOTAR explained that for GCI to go into an area and be able to
glean off the customers that they wanted would potentially drive
wages down and eventually drive people out of work to a certain
extent.
SENATOR MACKIE asked if IBEW worked for certain companies and not
for others.
MR. NOTAR answered that IBEW represents a lot of telecommunications
workers and a lot of local operating companies in the State.
SENATOR MACKIE asked if they worked for GCI.
MR. NOTAR answered no, that GCI is an unrepresented company.
SENATOR MACKIE asked if he had IBEW people working for GCI, would
he think this is a good bill.
MR. NOTAR said he would still want to look at how the competition
would affect the consumer.
MR. STEVE HAMLEN, President, United Utilities, said they serve 58
rural communities and have approximately 5,500 access lines and 100
employees. They would like to compete. The problem is that they
can't compete effectively and their concern is that the deep pocket
players can get special legislation and then use their substantial
financial resources to drive the competition off. For small rural
companies, like United Utilities, to compete with GCI and AT&T
Alascom, the first thing you find is that there's not a level
playing field. United Utilities, through its affiliate Unicom, has
had a complaint pending before the APUC for two years. They have
not been able to get that complaint resolved and have been told by
the Commission that it will address the issues in an up- coming
market structure docket. Those issues include having access to the
same rules and capabilities to compete. He suggested deleting on
line 9 "regulations insuring universal service" and inserting
"regulations promoting competition in all telecommunications
markets including long distance and local markets and insuring cost
effective universal services" which would begin to level the
playing field and give them an opportunity to compete.
CHAIRMAN LEMAN asked how many access lines they have in Bethel.
MR. HAMLEN answered that they serve 58 villages and the average
number of access lines in each village is 87. They do not provide
local service in Bethel, but they would like to compete in Bethel
and provide local and long distance services. If they cannot offer
both, they are unable to compete effectively. The rules the APUC
has right now do not give them the same abilities that GCI has to
resell unbundles networks to resolve disputes and to operate
through a single corporate entity.
MR. GREG BERBERICH, Matanuska Telephone Association, opposed SB
346, because it is a self-serving attempt by some to circumvent a
specific mandate by Congress that in rural areas state commissions
will determine on a case-by-case basis whether to allow the rural
companies exemption to provide interconnection to competitors on an
unbundled basis. The Telecommunications Act mandates competition
in the local exchange market and competitors can enter the market
in the four ways mentioned. There are no restriction or approvals
required. However, Congress did recognize it may not be
appropriate to require collocation and the purchase of unbundled
elements in rural areas. That is why it set out in law that state
commissions review competition through the fourth method.
GCI has mounted a campaign that the APUC has stopped competition
which is just not true. Rural companies are not exempted from
competition. Congress realized that in rural high cost areas, all
forms of competition may not be consistent with the universal
service provisions of the Act which have two objectives: to open
the local exchange market competition and to maintain universal
service that is affordable throughout the country. Rural companies
in Alaska currently receive over $50 million in universal service
and access charge support. The FCC is currently considering
shifting 75 percent of that support to the states and he asked
where that support would come from. He said that support keeps the
rates as low as they are now and those rates are way below cost.
This issue and many others need to be resolved before opening
markets to unfettered competition. It is the role of the APUC to
develop a competitive marketplace while insuring affordable
telephone service throughout Alaska.
Number 276
MR. TOM MEAD, Telalaska, opposed SB 346. He said they have about
5,000 lines in 21 villages and serve little villages from Little
Diomede to Fort Yukon and Galena to Dutch Harbor. The bill is in
direct conflict with federal law and the APUC is already acting to
meet the requirements of the Telecom Act. GCI's position in recent
APUC hearings undercut its own stated objectives of modern,
affordable service. A blanket bill such as this which essentially
mandates competition for all but 2,700 of the 373,000 lines in the
State of Alaska goes against the Telecom Act. The APUC has a
schedule to implement changes that are required by the end of the
year and everyone in the industry, including GCI, agreed that was
appropriate and they would all work together to get the regulations
in place by the end of the year. He did not believe there was a
legitimate purpose for this bill.
He pointed out that it is APUC's responsibility to protect the
public's interest. Mr. Duncan is protecting the shareholders'
interests at GCI which is appropriate for him. The APUC has a
balance to maintain and its caution is justified. He said that
rates came down when competition was introduced to the
interexchange market because the interexchange market was
subsidizing local rates at the time. When competition was
introduced into Tok, local rates went up. The subsidies that were
being provided by the telemarket were being driven out. In
Anchorage, alone, they had a twenty percent rate increase in 1988
and a 50 percent increase in 1992 - purely as a result of
competition coming in and driving out subsidies. Competition
doesn't reduce costs, it just drives the price toward costs. If
the cost of service is $150 a month per line, competition will
drive the price toward that. When you talk about what size is
appropriate and who should be served competitively, he knew that
for his company, Dutch Harbor, their largest exchange, supports all
the other exchanges. If they had to bring their price toward cost
at Dutch Harbor, it would bring their business line rate down to
$20, but it would bring the local residential rate in Cold Bay and
Fort Yukon up to $46 per month. Competition isn't necessarily in
the public's best interest. The new satellite services that are
available right now through GCI are far less than what's
deliverable through the current local exchanges. Essentially, they
are the bottleneck.
MR. DAVID FAUSKE, General Manager, Arctic Slope Telephone Coop,
opposed SB 346. He wanted to speak particularly to the issue of the
suggested deficiency in local exchange service. He wondered why
this proposed legislation is not expanded to be an omnibus rural
utility competition bill. Why focus on only one public service
utility. He said the reality is that the subsidy is what is being
competed for and the monopoly service would shift from one monopoly
provider to another monopoly provider.
Number 185
MR. KEN TROUT, Summit Telephone Co., opposed SB 346. He said they
are a small company with 140 access lines and serve Ferry Summit,
Chena Hot Springs, Coldfoot and Wiseman areas. Although they would
be exempt from the competition under consideration in this bill,
they are concerned about the process of implementing the
competition process. The determination of the public benefit or
harm done by the competitive market should be done on a case by
case basis by the APUC. Summit has three concerns: forcing a due
date for regulations while federal regs continue to move and affect
our State, the size of competitive areas, and the lack of
protection for the incumbent telephone company universal service
and reasonable pricing.
While it's true that the Commission may not be as expeditious as
everyone would like it to be, its responsibility is to protect the
interests of the State. This bill would detract from orderly
transition to competition. The Commission is presently dealing
with the issues and APUC's concerns are for the consumers and
smooth integration of federal regulation.
The cost of serving remote and rural territories is high and the
support that's given to them is an integral part of the process of
serving those customers. While a company may successfully service
remote areas under current status, allowing competition into small
areas may be to the detriment of their consumers.
MS. LAURIE HERMAN, Alascom, said they do not oppose SB 346 in its
current form. She said they look forward to participating in
future discussions.
CHAIRMAN LEMAN asked if they amended the bill to restrict its
application to the larger service areas, would that change her
recommendation?
MS. HERMAN said their position is whatever moves competition
forward is good for the State and its residents. She would want to
see what the magic number was and how it was calculated. She
didn't have any recommendations for that, however.
TAPE 98-21, SIDE A
MR. DUNCAN responded that many of the same arguments were used when
they proposed competition in 1982. The process ultimately resolved
in a way that rates went down and today AT&T operates without a
subsidy and the network is more efficient.
In talking about the need to reform state access charges and FCC
action before the APUC can act is a catch-22 situation, since the
FCC is opposing any reform to current access rules. Some people
are suggesting that GCI is the bottleneck in rural Alaska, but
that's simply not true. Today the interface speed is not
appropriate which is an issue that will be solved soon.
Generally, the message the legislature is getting is to go slow and
be careful. That's because the incumbents have everything they
need today and the longer it stays the way it is, the happier they
are. There have been suggestions that GCI has the opportunity to
compete in other ways. If they believed that was true, they would
have less incentive to press this bill. However, if GCI goes back
to the Commission and asks to compete using its exclusive
facilities, they would be told they face the same roadblocks and
would be back before the legislature next year.
CHAIRMAN LEMAN asked him if he thought this bill was in conflict
with federal law.
MR. DUNCAN answered that they wrote the bill very carefully because
it's difficult in light of the comprehensive federal law to provide
much direction to the PUC without running into that conflict.
That's why it's so skinny and says implement competition in any way
you can that's consistent with the federal act.
CHAIRMAN LEMAN said he wanted to clarify the legislative drafters
wrote the bill.
MR. DUNCAN agreed with the correction.
SENATOR MACKIE asked if he had a list of phone exchanges in the
State.
MR. MEADE answered that there are 3,541 subscriber access lines in
Bethel.
SENATOR MACKIE moved to amend on page 2, line 16 to change 1, 500
access lines to 5,000 access lines. There were no objections and
it was so adopted.
SENATOR MACKIE moved to pass CSSB 346 (L&C) from Committee with
individual recommendations. There were no objections and it was so
ordered.
CHAIRMAN LEMAN adjourned the meeting at 3:17 p.m.
| Document Name | Date/Time | Subjects |
|---|