03/06/2018 03:15 PM House STATE AFFAIRS

               HB 360-STATE INTERNET PROCUREMENT                                                                            
                                                                                                                              
3:54:52 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS  announced that the final  order of business                                                               
would  be  HOUSE  BILL  NO.   360,  "An  Act  relating  to  state                                                               
procurement regulations."                                                                                                       
                                                                                                                                
3:55:21 PM                                                                                                                    
                                                                                                                                
JACOB  GERRISH,  Staff,  Representative  Scott  Kawasaki,  Alaska                                                               
State Legislature,  on behalf  of Representative  Kawasaki, prime                                                               
sponsor of  HB 360,  stated that the  proposed legislation  is an                                                               
act relating  to state procurement  regulations.   He paraphrased                                                               
from  the sponsor  statement, included  in the  committee packet,                                                               
which read in part, as follows:                                                                                                 
                                                                                                                                
     HB  360  would   require  contracted  Internet  Service                                                                    
     Providers  (ISPs)  to  practice  net  neutrality  while                                                                    
     doing business with  the State of Alaska.  It would add                                                                    
     to  the  state  procurement  code  a  prohibition  from                                                                    
     contracting with  ISPs that do  not treat  all websites                                                                    
     equally or  that engage in paid  prioritization. HB 360                                                                    
     would harness  the State's market power  to incentivize                                                                    
     ISPs to  keep their word  and follow net  neutrality in                                                                    
     practice.                                                                                                                  
                                                                                                                                
     The  Governors of  Montana, New  York, New  Jersey, and                                                                    
     Vermont have  all signed executive  orders implementing                                                                    
     procurement restrictions like those in HB 360.                                                                             
                                                                                                                                
     This bill would  ensure that the agencies  of the State                                                                    
     of Alaska have  access to a free and  open internet and                                                                    
     it would put pressure on  ISPs to ensure the public has                                                                    
     access to the same.                                                                                                        
                                                                                                                                
MR. GERRISH added  that the Oregon State  Legislature just passed                                                               
legislation like HB 360.                                                                                                        
                                                                                                                                
3:56:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH  opined that  HB  360  is unnecessary;  and                                                               
there is  a competitive market  for internet services.   He asked                                                               
if there  has been any  evidence of reduced or  comprised quality                                                               
of services [since the repeal of net neutrality].                                                                               
                                                                                                                                
MR. GERRISH  replied that he  is not aware  of any cases  of that                                                               
occurring, but there are cases  of reduced or blocked services in                                                               
other states, usually with Netflix or sharing services.                                                                         
                                                                                                                                
REPRESENTATIVE BIRCH said, "The Netflix  is kind of a red herring                                                               
that keeps popping  up.  It's an instance ...  that happened some                                                               
time ago.   This appears to me to be  ... unfortunately a largely                                                               
partisan  effort to  try to  make a  statement against  a problem                                                               
that doesn't exist."  He offered  that he will not support HB 360                                                               
and relayed,  "I don't see why  we should be mucking  around with                                                               
the  state  procurement  guidelines."    He  maintained  that  if                                                               
someone  does  not like  his/her  service  provider, then  he/she                                                               
should  find   another  one.     He  stated  that   the  proposed                                                               
legislation  is unnecessary  and burdensome  at a  time when  the                                                               
legislature should be focused on other issues.                                                                                  
                                                                                                                                
REPRESENTATIVE KNOPP  stated that he does  not see a need  for HB
;  and  if  the  other net  neutrality  legislation  [HB  277]                                                               
passes, this  one would not be  needed.  He asserted  that Alaska                                                               
has three  ISPs, which have  promised not to exploit  the market.                                                               
He  maintained that  if they  renege on  that promise  and charge                                                               
different rates or  slow down services in favor  of higher paying                                                               
customers,  that would  put the  state in  a difficult  position;                                                               
under HB  360, the state  would be prohibited from  utilizing the                                                               
services but would still need the services.                                                                                     
                                                                                                                                
3:59:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    TUCK   commented    that   major    pieces   of                                                               
infrastructure  need to  be for  the public  good.   He mentioned                                                               
that there was  a time in American history  in which corporations                                                               
were  chartered, and  to get  a charter,  the corporation  had to                                                               
demonstrate  that they  were  operating for  the  benefit of  the                                                               
public  and  not  just  for  profit.    He  maintained  that  the                                                               
deregulation  of the  telecommunications industry,  which allowed                                                               
for  competition, was  a good  thing; however,  the concerns  are                                                               
that  for  the industry,  it  is  more  about profit  than  about                                                               
delivering  necessary infrastructure  for the  exchange of  goods                                                               
and services and making sure Alaska's economy thrives.                                                                          
                                                                                                                                
REPRESENTATIVE TUCK  relayed that  net neutrality  provisions and                                                               
regulations were in place  and prevented communications companies                                                               
from engaging in  practices that would give  them advantages over                                                               
other companies, as well as requiring  the public to pay for more                                                               
and more  services.  He  offered that in the  capitalistic world,                                                               
how  money is  spent  determines what  happens  and what  doesn't                                                               
happen; therefore, the proposed  legislation offers a procurement                                                               
policy  that  indicates  that  Alaska   wants  there  to  be  net                                                               
neutrality - it wants goods and  services to be fair for everyone                                                               
-  and will  spend its  money using  companies that  practice net                                                               
neutrality.  He said, "That's capitalism."                                                                                      
                                                                                                                                
REPRESENTATIVE   TUCK   mentioned   that  Alaska   gives   Native                                                               
Corporations   Small  Business   Administration's  (SBA's)   8(a)                                                               
[Business Development  (BD) Program]  status because  it benefits                                                               
the communities:   the corporations  are building  septic systems                                                               
and water  systems; and it serves  as an example of  Alaska using                                                               
procurement policies to promote the will of the state.                                                                          
                                                                                                                                
REPRESENTATIVE TUCK continued by saying  that he is amazed at the                                                               
number  of  people  under  age  30 that  are  familiar  with  net                                                               
neutrality;  they've expressed  their concern  for the  repeal of                                                               
net neutrality; some corporations  are concerned as well, because                                                               
it would affect their ability  to deliver goods and services; and                                                               
only a  small group of  corporations with  advantageous positions                                                               
in the market want it repealed.   He concluded by saying that the                                                               
procurement policy  under HB  360 allows the  state to  spend its                                                               
money to benefit the public.                                                                                                    
                                                                                                                                
4:03:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  if net  neutrality means  that all                                                               
internet  websites are  treated  equally  regardless of  content,                                                               
source, and business relationship, and none are blocked.                                                                        
                                                                                                                                
MR. GERRISH replied yes.                                                                                                        
                                                                                                                                
REPRESENTATIVE JOHNSON  suggested there  are times when  a person                                                               
would want websites to be blocked.                                                                                              
                                                                                                                                
MR. GERRISH answered that a court  can order a website to be shut                                                               
down for legal  reasons; the proposed legislation  is not related                                                               
to that situation.                                                                                                              
                                                                                                                                
REPRESENTATIVE  JOHNSON offered  that  she is  referring to  spam                                                               
[unsolicited  electronic messages]  -  not  illegal but  terribly                                                               
annoying.  She asked for an  explanation of paragraph (1) on page                                                               
1, lines 7-8.                                                                                                                   
                                                                                                                                
MR. GERRISH  gave an example:   A small company, such  as a local                                                               
bed and breakfast, has a website,  and a large company, such as a                                                               
cruise ship  company, has a  website.  Net neutrality  means that                                                               
the internet company would not be  allowed to block the small bed                                                               
and breakfast  website and allow  the larger cruise  ship company                                                               
access.  Spam  filters would still be allowed  under the proposed                                                               
legislation.                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON expressed her  concern that legislators be                                                               
aware of  the consequences when  creating regulations.   She also                                                               
mentioned  that there  are  outstanding  questions regarding  the                                                               
Federal Communications Commission (FCC) [net neutrality] ruling.                                                                
                                                                                                                                
4:06:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  if the  proposed legislation  would                                                               
affect  choosing a  company that  provides higher  speed internet                                                               
services.                                                                                                                       
                                                                                                                                
MR. GERRISH  replied that  one could still  buy access  to higher                                                               
speed internet  services; however, the  ISP would not  be allowed                                                               
to speed up  or slow down the websites accessed.   He stated that                                                               
under net neutrality, for a  person buying a one gigabyte ("gig")                                                               
plan, all the websites would download at the same speed.                                                                        
                                                                                                                                
REPRESENTATIVE  LEDOUX   asked  if   any  of   Alaska's  internet                                                               
providers have engaged  in activities that did not  adhere to net                                                               
neutrality, since the repeal of net neutrality.                                                                                 
                                                                                                                                
MR. GERRISH  replied that all  the in-state ISPs have  pledged to                                                               
practice  net  neutrality;  therefore, the  proposed  legislation                                                               
would not affect any current state contracts.                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  why  the  proposed legislation  was                                                               
introduced if  the ISPs have  pledged to practice  net neutrality                                                               
and there are no current problems.                                                                                              
                                                                                                                                
MR. GERRISH  responded that on  April 23 [2018], a  company could                                                               
choose  to  begin blocking  online  content  and begin  packaging                                                               
online  content and  charging extra  for  it.   He expressed  his                                                               
belief  that HB  360 would  harness  the state  market power  and                                                               
incentivize  ISPs   to  keep  their   pledges  to   practice  net                                                               
neutrality.                                                                                                                     
                                                                                                                                
REPRESENTATIVE LEDOUX asked  why the state would not  wait to see                                                               
if a problem develops.                                                                                                          
                                                                                                                                
MR. GERRISH answered that the  intent of the proposed legislation                                                               
is to prevent a problem from occurring.                                                                                         
                                                                                                                                
4:09:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP gave  an example:   A  mega giant  ISP with                                                               
unlimited  resources,  such  as American  Telephone  &  Telegraph                                                               
(AT&T), and a small independent  ISP with limited resources, such                                                               
as General  Communication Inc. (GCI),  get into a bidding  war to                                                               
provide streaming  service for  Netflix.   The mega  giant, AT&T,                                                               
has  multiple band  widths and  GCI does  not.   He asked  if GCI                                                               
could be at a disadvantage  competing with AT&T, because AT&T can                                                               
offer a faster speed internet for less money.                                                                                   
                                                                                                                                
MR.  GERRISH replied  that  he  did not  believe  so;  it is  the                                                               
connection between  the ISPs in  Alaska and the  broader [out-of-                                                               
state] internet that  is the determining factor.   He stated that                                                               
GCI  connects  to  the  Lower  48  through  peer  to  peer  (P2P)                                                               
agreements;  underwater  fiber  optic cables  connect  Alaska  to                                                               
Seattle, Portland, and  other cities.  He mentioned  that GCI was                                                               
just  purchased  by  Liberty  Interactive  Corporation  (LIC)  in                                                               
Colorado, which  may have  expanded GCI's  P2P network  to access                                                               
more bandwidth.  He suggested  that smaller companies may connect                                                               
to the internet  in state, not out of state.   He maintained that                                                               
the ISPs all connect differently.                                                                                               
                                                                                                                                
REPRESENTATIVE KNOPP said  that the point he was  making was that                                                               
if two  companies are  competing to provide  a service,  and they                                                               
have a disparity  in resources, the smaller company  would be put                                                               
at a disadvantage to provide the  service if its ability to do so                                                               
was limited under  the proposed legislation.   He suggested there                                                               
may be unanticipated consequences.                                                                                              
                                                                                                                                
MR. GERRISH answered that HB  360 would not require any companies                                                               
to  practice net  neutrality  but would  require  that the  state                                                               
procure internet services from those that do.                                                                                   
                                                                                                                                
REPRESENTATIVE  KNOPP  relayed  that   it  would  prohibit  those                                                               
companies from doing business with the state.                                                                                   
                                                                                                                                
REPRESENTATIVE  JOHNSON asked,  "How do  you envision  this being                                                               
enforced, and who would be responsible for that enforcement?"                                                                   
                                                                                                                                
4:12:38 PM                                                                                                                    
                                                                                                                                
MR. GERRISH  replied that the  commissioner of the  Department of                                                               
Administration  (DOA) can  adopt procurement  regulations through                                                               
AS  36.30.040; the  proposed legislation  would require  that the                                                               
commissioner of  DOA include  net neutrality  in the  adoption of                                                               
procurement regulations.   He offered that he considers  it to be                                                               
like an  in-state hire requirement.   He said, "If we  give money                                                               
to  a contractor,  we throw  in a  10 percent,  20 percent  state                                                               
hire."                                                                                                                          
                                                                                                                                
REPRESENTATIVE JOHNSON  commented that  she is  all for  free and                                                               
open  use of  the internet  and equal  access [to  the internet].                                                               
She   expressed   that   she  is   concerned   about   unintended                                                               
consequences and the necessity of HB 360.                                                                                       
                                                                                                                                
4:14:01 PM                                                                                                                    
                                                                                                                                
CHAIR KREISS-TOMKINS announced that HB 360 would be held over.