SB 81-TELEPHONE COOPERATIVES;TELECOMMUNICATIONS  2:08:07 PM CHAIR BISHOP reconvened the meeting and announced the first hearing of SENATE BILL NO. 81, "An Act relating to electric and telephone cooperatives; and relating to telephone service and related telecommunications services." 2:08:26 PM SENATOR SHELLEY HUGHES, Alaska State Legislature, Juneau, Alaska, sponsor of SB 81, related that a year or two ago when she was visiting with members of her local telephone co-op, she suggested that the term "telephone" should be changed to reflect the broader scope of service. The members said they had a bill on that point and asked if she would like to carry it. She agreed. SENATOR HUGHES explained that SB 81 would provide updates to allow telephone cooperatives to use current technology and conduct business more efficiently. This will help co-op members engage more effectively and allow telephone associations to use updated terminology to describe themselves. The bill will also allow cooperatives to discuss personnel matters and competitively sensitive information in executive session. This language mirrors existing statutes. 2:12:02 PM DAWSON MANN, Intern, Senator Shelley Hughes, Alaska State Legislature, Juneau, Alaska, paraphrased the following sponsor statement for SB 81: [Original punctuation provided.] Senate Bill 81 updates the Electric and Telephone Cooperatives Act to allow cooperatives the ability to assimilate twenty-first-century technology into their governance process and to update their name to better communicate the services they provide. SB 81 will allow cooperatives to adopt into their bylaws the options of providing members with electronic notice of membership meetings, conducting annual meetings through teleconference, and counting voting members who attend via teleconference for the purposes of a quorum. These provisions will allow cooperatives to more thoroughly engage their members and allow members to more readily take an active role regardless of their location, the weather, the cost or any other obstacle that may be a challenge for in- person attendance. Over half a dozen electric and telephone cooperatives have the word "association" in their name due to their creation prior to the statutory requirement to have "cooperative" in their name. SB 81 allows the word "association" in place of the word "cooperatives" in the name of the cooperative. Additionally, SB 81 allows telephone cooperatives to use the words "telecommunications" or "telecom" in place of 'telephone' in the cooperative's name. These simple changes will allow these cooperatives the flexibility to make changes to their name to one that is a more suitable descriptor of the services they provide. By supporting these simple and yet effective changes to the Electric and Telephone Cooperatives Act that are proposed in SB 81, we will be affording Alaska's electric and telephone cooperatives throughout the state the ability to represent the services they offer more appropriately via the names of their entities and to conduct business as a cooperative in a more practical manner using the very technologies they currently provide to the public. MR. MANN delivered the following sectional analysis for SB 81: 2:14:00 PM Sections 1-3 Alaska Cooperative Corporation Act; Page 1.  Sec. 1 AS 10.15.005 Page 1, Lines 4-8 Section one adds "related telecommunications service" to the list of excluded purposes, for the type of cooperative under the Alaska Cooperative Corporation Act from which electric and telephone services are already excluded. Sec. 2 AS 10.15.575 Page 1, Lines 9-14, Page 2, Line  1  This section adds "related telecommunication service" to the list of cooperative types exempted from restrictions on the use of the term "cooperative" in its title under the Alaska Cooperative Corporation Act. Sec. 3 AS 10.15.585 Page 2, Lines 2-8  This section adds "related telecommunication service" to the list of cooperatives types exempted from the application of the Alaska Cooperative Corporation Act. Sections 3-21 Electric and Telephone Cooperative Act;  Pages 1-3.  Sec. 4 AS 10.25.010(a) Page 2, Lines 9-31, Page 3,  Lines 1-14  This section adds "related telecommunications service" to the list of physical line types that cooperatives have the power to maintain under and across public lands through the Electric and Telephone Cooperative Act. Sec. 5 10.25.030(a) Page 3, Lines 15-31, Page 4,  Line 1  This section broadens the purpose of telephone cooperatives to cover all related telecommunications services and allow cooperatives to offer a full range of telecommunication services. Sec. 6 AS 10.25.040(a) Page 4, Lines 2-5  This section adds "telecommunications" and "telecom" to the list of potential terms mandated in the name of cooperatives based on services. It also allows for the use of the term "association "in the naming of a cooperative and changes the abbreviation for cooperatives to "Inc.". Sec. 7 AS 10.25.080(a) Page 4, Lines 6-11.  This section adds "related telecommunications" to the list of services an individual agrees to use to be considered a member of the cooperative under the Electric and Telephone Cooperative Act. Sec. 8 AS 10.25.090(a) Page 4, Lines 12-18  This section removes the explicit obligation for cooperatives to hold member meetings at a time and place outlined in their bylaws and instead directs them to conduct meetings more generally as their bylaws direct. It also clarifies that the relevant bylaws in this section are the bylaws of the cooperative. This section also allows for the annual meetings of cooperatives to be conducted through teleconference unless prohibited by cooperative bylaws. CHAIR BISHOP noted that the bill would also allow cooperatives to conduct meetings by teleconference. MR. MANN agreed and continued the sectional. Sec. 9 AS 10.25.090(c) Page 4, Lines 19-22  This section removes the explicit obligation for cooperatives to hold district delegate meeting at a time and place outlined in their bylaws and instead directs them to conduct meetings more generally as their bylaws direct. It also clarifies that the relevant bylaws for this section are the bylaws of the cooperative. Sec. 10 AS 10.25.100 Page 4, Lines 23-31, Page 5,  Lines 1-8  This section adds the use of electronic mail and text messages to the list of acceptable means of communicating notices of regular and special meetings of a cooperative. This section also provides further clarification of the time restrictions of notices of meetings while also outlining what constitutes being given "notice" with relation to email and text notifications. Sec. 11 AS 10.25.110(a) Page 5, Lines 9-19  This section establishes that individuals considered present under 10.25.110 (c) may be considered present to make a vote to adjourn in circumstances in which quorum has not been met. 2:18:25 PM Sec. 12 AS 10.25.110 Page 5, Lines 20-22 This section adds subsection (c) to 10.25.110 which allows for those members or delegates that vote electronically to be considered having attended the meeting. Sec. 13 AS 10.25.175(a) Page 5, Lines 23-31  This section removes "similar communications equipment from the description of authorized teleconference meetings for a cooperative board of directors. Sec. 14 AS 10.25.175(c) Page 6, Lines 1-13  This section adds "personnel matters" and "matters the immediate knowledge of which could have an adverse effect on the ability of the cooperative to compete in the market served by the cooperative" to the list of subjects of discussion in an executive session. Sec. 15 AS 10.25.290(a) Page 6, Lines 15-19  This section adds "related telecommunications services" to the list of services that a corporation could supply to be permissible to convert to a cooperative once it has met the requirements of this chapter. Sec. 16 AS 10.25.430 Page 6, Lines 20-31, Page 7,  Lines 1-3 This section replaces references to 7 U.S.C. 901 - 950B with 7 U.S.C. 901 - 950bb-2 and removes "of 1936" from the references to the Rural Electrification Act of 1936 to update the chapters references to federal law. Sec. 17 AS 10.25.460 Page 7, Lines 4-12  This section adds "a domestic or foreign corporation authorized to transact business in the state whose business office is identical with the registered office" to the types of agents a cooperative is required to maintain in the state. Sec. 18 AS 10.25.810 Page 7, Lines 13-17 This section adds "related telecommunications service" to the list purposes for which a cooperative, nonprofit, membership corporations may be organized under this chapter. Sec. 19 AS 10.25.820 Page 7, Lines 18-25  This section adds "related telecommunications service" to the list of services provided by existing nonprofit cooperatives that are subject to this chapter as if originally organized by it. Sec. 20 AS 10.25.840 Page 7, Lines 26-31, Page 8,  Lines 1-4  This section adds a paragraph defining the term "related telecommunications service" to mean the transmission and reception of messages, impressions, pictures, and signals by means of electricity, electromagnetic waves, or any other source of energy, force variations, or impulses, whether conveyed by cable, wire, radiated through space, or transmitted through other media; or a service capable of electronically generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information, through the use of broadband Internet access, data center services, information technology, or other technology services. Sec. 21 AS 10.25.030(b) and 10.25.400(e) Page 8, Line  5 This section repeals AS 10.25.030(b) which outlined the original meaning of "related telecommunications service". It also repeals AS 10.25.400(e) which excludes telephone cooperatives which have an annual gross revenue exceeding $25,000,000 from AS 10.25.400(b) (which outlines the actions that must be taken by a cooperative's board of directors before a disposition or sale of more than 15% of a cooperative's total assets) unless a resolution is passed by the cooperative's board of directors to make AS 10.25.400(b) apply. 2:21:57 PM SENATOR HUGHES pointed out that the bill uses the term "teleconference," which includes communication over the internet using microphones and speakers. The telecommunications community has a preference for the language that refers to that and may request clarification. She also pointed out that there are 17 telephone utility cooperatives and 17 electric cooperatives that provide service throughout Alaska. She said she was not aware of any opposition to the bill and both the Alaska Telephone Association and the Alaska Power Association have written letters of support. She commented that the small fiscal note could be covered by passing the hat and thus avoid a finance referral. 2:24:02 PM SENATOR STEVENS referenced Section 15 and asked if the list of services that a corporation could supply to be permissible to convert to a cooperative was actually listed in the bill. SENATOR HUGHES deferred the question to an expert in the room. 2:24:59 PM RYAN PONDER, Director, Legal, Regulatory and Government Affairs, Matanuska Telephone Association, Palmer, Alaska, said a list of electric and telecommunication cooperatives that will be affected by the bill was distributed but it is more appropriate to describe SB 81 as a bill that will empower co-op customers to better manage their service providers. It updates the statutes to the 21st century. Responding to Senator Stevens' question, he explained that Section 20 provides a definition for "related telecommunications services." It includes all the types of services one would expect from a technology company that offers broadband communication. 2:27:52 PM MR. PONDER began the PowerPoint. He spoke to the following points that describe telephone cooperatives in Alaska and why the update was needed: • Since before statehood, Alaskans have joined together to form electric and telephone cooperatives. They did this to bring electric and telephone service to areas that other utilities had no interest in serving. • Today, electric and telephone cooperatives are the economic backbone of their communities, providing affordable and reliable power, telecommunications, broadband internet and other vital technology services to thousands of their members all across Alaska. • Alaska statutes for telephone and electric cooperatives, adopted in 1959, are outdated. Decades have passed without needed substantive revisions to reflect changes in law and technology. • Current statutes place undue restrictions on the member-owners of telephone and electric cooperatives regarding how they can operate and manage the cooperative and take advantage of current technology. • Statutes also are very limiting in the types of services that cooperatives can offer, restricting a cooperative's ability to meet its membership needs. MR. PONDER highlighted the following proposed changes to the Electronic and Telephone Cooperative Act: Broadly speaking, the proposed amendments to the Act would: • Expand the definition of the services a telephone cooperative can provide to cover all of the telecommunications and information services that cooperative customers expect; • Further expand cooperatives' ability to use electronic means to communicate with their members and conduct cooperative business; • Update the reasons a cooperative's board can conduct an executive session to better reflect disclosure concerns of employment matters and protect cooperatives operating in competitive markets; He noted that as stated earlier, this mirrors what is already in Chapters 6 and Chapter 15 of Title 10. • Improve the language regarding cooperative registered agents and sales of cooperative assets. • Changes in technology require additional services to be offered • Transparency, accountability and privacy are required by members • Protection of aggregate and specific data required for providers to protect the value of cooperative • Improved communication methods between members and their co-op assure increased member involvement 2:30:35 PM MR. PONDER displayed the following benefits that the update will achieve: • Adding "or a related telecommunications service" permits telephone cooperatives to offer broadband and other data services that are required by their Members and Federal Regulations through the cooperative rather than a subsidiary, thereby permitting customers to be members of the cooperative. • Amending AS 10.25.040(a) allows cooperative members to use something other than "telephone" in the cooperative's name, which better reflects the nature of services cooperatives are currently offering. • Allows all cooperatives to use the word "association" in the name, not just grand- fathered in existing cooperatives MR. PONDER related that years ago the legislature informed all cooperatives that had "association" in their name that they were not in compliance with the statute because they didn't have "cooperative" in their name. It took some time to explain to the legislature that these names were grandfathered. SB 81 will eliminate the possibility of that happening in the future. He continued to describe the following benefits of updating the Electronic and Telephone Cooperative Act: • Allows members to receive notice of meetings electronically (10.25.100) • Allows members to attend annual meetings by teleconference (10.25.090) • Allows teleconferenced attendees to be part of the quorum (10.25.110) • Allows members who voted by mail or electronic means to be part of the quorum (10.25.110) • Allows discussion of personnel matters in executive session (10.25.175) • Allows discussion of matters affecting competitive factors in executive session (10.25.175) MR. PONDER displayed the following points to summarize why SB 81 was necessary: • Aligns naming convention with historical names before current legislation was adopted • Aligns names with industry standards and service offerings • Aligns legislation with current member service needs and regulation • Protects integrity of the cooperatives • Allows for increased member involvement CHAIR BISHOP asked if the bill would provide any monetary benefits. MR. PONDER said yes. The statutes require that every co-op member is mailed notification of annual meetings so it would be a sizable savings if all the cooperatives could send those electronically. He noted that MTA alone has 30,000 members. 2:33:13 PM SENATOR STEVENS asked if the electrical cooperatives in Cordova, Homer, and Kodiak support SB 81. MR. PONDER said absolutely; both the Alaska Telecom Association (ATA) and the Alaska Power Association (APA) support the legislation. 2:34:10 PM At ease 2:34:35 PM CHAIR BISHOP reconvened the meeting and asked who supplied the language for Section 20. MR. PONDER replied Mr. Lehman with APA supplied the language. He offered his belief that it reflects the FCC definitions. 2:35:28 PM MICHAEL BURKE, CEO, Matanuska Telephone Association, Palmer, Alaska, stated support for SB 81. He said this legislation is past due. The Act has had no major changes since it was enacted in 1959 even though technology and the way members and owners interact have changed. SB 81 will also provide the members with flexibility in how they interact and manage the affairs of their co-op. The bill would allow members to change the bylaws of their cooperative if they decided it was beneficial but it was not compulsory. He said there wasn't any downside for the MTA membership and how it wants to conduct business going forward. 2:37:39 PM CHRISTINE O'CONNOR, Executive Director, Alaska Telecom Association, stated that ATA represents broadband, landline, and wireless telecommunication companies statewide. She testified that SB 81 will allow modern cooperatives in Alaska to operate in a modern way which will accommodate more effective and efficient service. She reported that ATA's members unanimously support SB 81. 2:38:49 PM CRYSTAL ENKVIST, Executive Director, Alaska Power Association, Anchorage, Alaska, stated that APA is the statewide trade association for Alaska's electric utilities. The members provide power to more than 0.5 million Alaskans statewide. She reported that APA supports SB 81 which would modify statutes governing telephone and electric cooperatives to accommodate technological advances in communications. In particular, sections 8, 10, and 11 of the bill will provide more flexibility for cooperative members in their annual meetings. 2:40:35 PM CHAIR BISHOP opened public testimony on SB 81. Finding none, he said he would leave it open and hold SB 81 for further consideration.