Legislature(2017 - 2018)BELTZ 105 (TSBldg)
04/02/2018 09:00 AM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB112 | |
| SB38 | |
| SB205 | |
| HB79 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 112 | TELECONFERENCED | |
| += | SB 38 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
| += | SB 205 | TELECONFERENCED | |
| + | HB 79 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 205-TELECOMMUNICATIONS REGULATION/EXEMPTIONS
9:28:21 AM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 205. She noted the proposed committee
substitute (CS).
9:28:56 AM
SENATOR MEYER moved to adopt the work draft CS for SB 205, 30-
LS1431\U, as the working document.
CHAIR COSTELLO objected for an explanation.
9:29:20 AM
EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State
Legislature, Juneau, Alaska, said there are four primary
changes:
• Requires telecommunications utilities to continue
to pay an annual Regulatory Cost Charge to the
Regulatory Commission of Alaska.
• Requires the Regulatory Commission of Alaska to
provide in their annual report to the Legislature
details pertaining to how much activity is spent
on each area of telecommunication regulatory
oversight.
• Removes exemption for AS 42.05.145.
• Removes transition language that is no longer
applicable.
9:30:20 AM
CHAIR COSTELLO removed her objection and version U was adopted.
SENATOR GARDNER asked Ms. Morledge to repeat the third change.
MS. MORLEDGE said it removes the exemption for AS 42.05.145, the
exemption for telecommunications regulation policy and
restrictions on regulation of telephone directories.
SENATOR MICCICHE asked what the new report might be because that
cost will be passed on to rate payers.
CHAIR COSTELLO said she'd like to defer the question until after
the sectional.
9:31:46 AM
MS. MORLEDGE read the following sectional analysis for SB 205,
version U.
Section 1 Municipal powers and duties. AS 29.35.070
Public Utilities. Section 7 repeals AS 42.05.810,
therefore it is removed from reference in this section
of the statute.
Section 2 Alaska Public Utilities Regulatory Act. AS
42.05.141 Adds two new subsections (e) and (f) to the
general powers and duties of the RCA. These
subsections state that the Commission may not
designate a local exchange carrier or an interexchange
carrier as the carrier of last resort, and that the
Commission may designate an eligible
telecommunications carrier consistent with the federal
code that allows for federal subsidies under the
Universal Service Fund.
A carrier of last resort is a telecommunications
company that commits (or is required by law) to
provide service to any customer in a service area that
requests it, even if serving that customer would not
be economically viable at prevailing rates.
The Universal Service Fund is a system of
telecommunications subsidies and fees managed by the
U.S. Federal Communications Commission intended to
promote universal access to telecommunications
services at reasonable and affordable rates for all
consumers.
Section 3 Annual Report This section requires the
RCA to submit an annual report to the Legislature
detailing the activity and costs related to regulating
each type of telecommunications carrier.
Section 4 Amends AS 42.05.254(a) from the previous
Committee Substitute that eliminated the Regulatory
Cost Charge. This section maintains the current RCC
funding mechanism of calculating and assessing the
charge and applies it to all telecommunications
companies.
Sections 5 & 6 both relate to implementing the
Regulatory Cost Charge for all telecommunications
companies.
Section 7 - Alaska Public Utilities Regulatory Act. AS
42.05.711 Exemptions. This section exempts
telecommunications carriers from the Act except for
the following provisions:
• AS 42.05.141(f) New section in the bill
(Section 2 above)
• AS 42.05.221 Requiring a Certificate of
Public Convenience and Necessity ? AS 42.05.231
Provision for applying for the certificate
• AS 42.05.241 Conditions of issuing/denial of
a certificate ? AS 42.05.251 Allow public
utilities to obtain a permit for the use of
streets in municipalities
• AS 42.05.254 Regulatory cost charge
• AS 42.05.261 Prohibits a public utility from
discontinuing or abandoning service for which a
certificate has been issued
• AS 42.05.271 Allows the RCA to amend, modify,
suspend or revoke a certificate
• AS 42.05.281 Prohibiting a sale, lease,
transfer or inheritance of certificate without
RCA permission
• AS 42.05296 Requirements for providing
telephone services for certain impaired
subscribers
• AS 42.05.306 Allows discounted rates for
customers receiving benefits from a social
services assistance program administered by the
state or federal government
• AS 42.05.631 Allows a public utility to
exercise the power of eminent domain
• AS 42.05.641 Extends RCA's jurisdiction to
public utilities operating in a municipality
• AS 42.05.830 Requires the RCA to establish
exchange access charges to be paid by long
distance carriers to compensate local exchange
carriers for the cost of originating and
terminating long distance services
• AS 42.05.850 Relating to the administration
of access charges by an exchange carrier
association
• AS 42.05.840 Allows the RCA to establish a
universal service fund
• AS 42.05.860 Prohibits a carrier from
restricting the resale of telecommunications
services
Section 8 AS 42.05.820 No Municipal Regulation. In
addition to a long distance telephone company, this
section amends AS 42.05.820 to add 'local exchange
carrier' that is exempted in whole or in part from
this chapter from being regulated by a municipality.
Section 9 AS 42.05.890 Definitions. This section
defines "local exchange carrier," "long distance
telephone company," and "long distance telephone
service."
Section 10 Related to implementing Section 4, the
Regulatory Cost Charge.
Section 11 Repealers. This section repeals the
following provisions, as the changing nature of the
industry and market conditions have rendered them
obsolete:
• AS 42.05.325 Registration and regulation of
alternate operator services also unnecessary
at this point
• AS 42.05.800 Findings
• AS 42.05.810 Competition unnecessary in
today's market, which experts can speak on.
MS. MORLEDGE noted that Ms. O'Connor could answer detailed
questions.
9:37:50 AM
CHAIR COSTELLO listed the individuals available to answer
questions.
SENATOR GARDNER asked what kind of change Section 4 describes.
9:39:05 AM
CHRISTINE O'CONNOR, Executive Director, Alaska Telecom
Association, Anchorage, Alaska, said that change is spreading
the cost across a broader section. About half of the telecoms in
Alaska don't pay the RCC [Regulatory Cost Charge] because they
have become exempt. The committee substitute would cause all
telecoms to resume paying the regulatory cost charge. That
provides a broader base to support the Regulatory Commission of
Alaska (RCA).
SENATOR GARDNER said she didn't know if that was good or bad.
Noting that Section 7 has a description of the services for
which the utility that provides telecommunications services is
not exempt, she asked what is being exempted. She asked for an
answer in common language, not numbers. All the sections apply
to telecommunications services and now a bunch are being
exempted. She asked what they are.
CHAIR COSTELLO asked the drafter to comment on which sections
the exemptions are for.
9:41:09 AM
EMILY NAUMAN, Deputy Director, Legislative Legal Services,
Legislative Affairs Agency, Juneau, Alaska, said she would
submit her answer in writing because the answer isn't as
straightforward as it might seem. The challenge is that she
wouldn't want to misstate what statutes apply. All the statutes
other than the ones listed in the RCA statutes will apply with
the exception that some of those statutes are specific to
certain types of utilities or certain types of behavior that a
telecommunications company might never engage in.
SENATOR GARDNER rephrased the question. She asked if there is
any impact on consumers in exempting any of those provisions or
are they no longer relevant to the industry.
MS. NAUMAN suggested the RCA would be better able to answer that
question.
9:42:32 AM
DAVID PARISH, Common Carrier Specialist IV, Regulatory
Commission of Alaska, Anchorage, Alaska, said the RCA would no
longer be able to assign COLRs [Carrier of Last Resort]. The
primary impacts for consumers would be the RCA would lose
current jurisdiction over interconnection agreements, so
disputes between carriers would no longer come to the RCA. Also,
the RCA would have no exercise of economic jurisdiction over
rate making for the carriers across the state that have no
competition. That is for both left market and interexchange
markets. He did not know if there would be negative effects
immediately, but should a carrier want to raise rates in a
monopoly market, there would be no obligation for the increase
to be vetted and approved by the commission.
9:44:27 AM
SENATOR MEYER commented that this bill pertains only to
landlines.
MR. PARISH agreed.
SENATOR MEYER asked the percent of people who have landlines.
MR. PARISH estimated that it was below 50 percent. There is a
steady decline with residential use. Businesses tend to keep
their landlines longer, but the erosion is steady.
9:46:06 AM
STEPHEN MCALPINE, Chair, Regulatory Commission of Alaska,
Anchorage, Alaska, said when the power goes down and the cell
towers are no longer operable, someone without a landline can
come to his house and make a call. He has two landlines.
SENATOR MEYER asked if the CS addresses the concerns Mr.
McAlpine raised at a previous meeting.
MR. MCALPINE said, as Mr. Parish indicated, there are two
overriding issues. The bill is getting better, but this is the
type of bill that ought to be developed over time. The RCA has
had to deal with carriers that decide to stop service. He asked
where customers go to complain about that. That is what is
happening in the MatSu. Some of the customers have been cut off
because they have been losing the better system that MTA
[Matanuska Telephone Association] has decided not to provide.
Because MTA is deregulated, consumers do not have the ability to
come to the RCA's consumer protection arm. They are going to the
FCC [Federal Communications Commission]. He cannot say anything
further because it is on the RCA's public meeting agenda on
Wednesday. Carriers of last resort are receiving tens of
millions in subsidies in competitive markets. He would like that
to go to high-cost areas or to development of other kinds of
telecommunications that could better serve the rural areas of
Alaska. The second concern is the failure to agree on
interconnection. In case of a dispute between two carriers,
current statute provides that the utility would apply to the
commission to arbitrate.
MR. MCALPINE said he didnt know when those changes were
developed. This bill appeared without any prior notice and as
they work through it, there are multiple concerns and problems.
Many have been addressed, but he would like to see a good bill
come out at the end of the pipe rather than the one currently
before the committee.
SENATOR MEYER asked if the added year-end report was a concern
for the RCA.
MR. MCALPINE said the RCA does calculate time dedicated to
different activities. He isn't sure what "should provide the
legislature with detailed activity" means exactly. It could
require more staff time, but they could do it.
SENATOR GARDNER asked the impact of the provision in Section 8
that adds a local exchange carrier to the exemption from
municipal regulation.
MR. PARISH said this already exists for long distance carriers.
His understanding is that it means a municipality cannot step in
and start regulating since the RCA, under this bill, would not
have jurisdiction.
9:53:49 AM
MS. O'CONNOR agreed with Mr. Parrish. She went on to address
issues raised earlier. The latest national figures indicate just
42 percent of households have landlines, but those are still
important and they are not in any way proposing to eliminate
landlines or to degrade that service. Local rates are capped
federally. If they wish to raise rates, which is not happening
today, they would be limited by the federal rate ceiling.
Regarding Chair McAlpines comments about the COLR, she said
that obligation continues under the certificate process. It is
one of the listings not being exempted. The commission is
currently looking into one situation. This bill doesn't change
that. Regarding the funds companies are receiving to provide
service, there is a docket in which the RCA is actively pursuing
how to change that. The chair and commissioners have stated
their goal is to reform that and industry is actively
participating and has submitted draft regulations, comments, and
proposals to implement those changes.
MS. O'CONNOR clarified that the bill requires that the annual
report be formatted to show the detail of the telecom
activities. It is intended to use the data already collected.
The RCA annual report format changes and some years it is
difficult to see how much activity is attributed to each form of
telecommunications. They were not suggesting any additional data
be collected, just that the presentation provide a similar
detail as was provided in the FY2017 report.
9:59:05 AM
SENATOR MICCICHE said the fiscal note still says the regulatory
cost charge (RCC) would be removed for telecommunications
services, so that needs updating. Looking at the last line of
the fiscal note, he asked that if in the future the RCC funding
mechanism is removed from telecommunications, if that would
reduce the workload of the RCA. He asked what is the likelihood
that the RCC would be passed on to other regulated utility
sectors.
MR. PARRISH said he assumed that the question is referencing if
RCCs are eliminated for telecommunication companies. He asked if
that was correct.
SENATOR MICCICHE said they haven't had an updated fiscal note.
Before the bill was amended, it eliminated the RCC for
telecommunications services and the fiscal note said it could be
shifted to the other regulated utilities, which has been a
concern of his. He asked if the RCA doesn't regulate
telecommunications, wouldn't that reduce the RCA work load and
avoid a cost shift to the other regulated utilities.
10:01:10 AM
KRISTIN SCHUBERT, Manager, Commission Section, Regulatory
Commission of Alaska, Anchorage, Alaska, said in regard to
shifting RCCs to other regulated utilities, they are still going
to be doing work on telecoms, and so that burden is going to be
shifted to the other utilities because the RCCs are calculated
using labor ratios. Since they cannot charge telecoms RCCs, that
burden gets put on the other utilities, so their charges will
increase.
SENATOR MICCICHE said since that has been removed in Section 4
now, it maintains the current RCC funding mechanism. Nothing
will change, but he should be on the lookout for a change in the
future that could unfairly distribute that cost to other
utilities.
MS. SCHUBERT answered yes.
MR. PARRISH said this was something the commission addressed at
the public meeting. The current draft is fairer. One of the
interesting things is that when other utility sectors become
deregulated, the commission generally does no work for them.
With telecommunications it's a strange beast because they have
lots of delegated authority from the FCC to provide ongoing
regulation even of deregulated carriers. Bringing back a
requirement for otherwise economically deregulated entities that
they do perform regulatory work for to pay some of those costs
would be an improvement over the current landscape.
MS. O'CONNOR said their legal expert can speak to the concerns
about interconnection disputes.
10:04:21 AM
JAMES JACKSON, Legal Counsel, GCI, Anchorage, Alaska, said he is
not sure what raised the concern from Mr. Parrish and Mr.
McAlpine regarding joint use and interconnection. The statute is
confusing on this issue. The sections on joint use and
interconnection are AS 42.05.311 and AS 42.05.321. "It's true
that those are not listed as sections which will still apply to
us," he said. That is because the statute is somewhat strange.
It is stated within those sections that they still apply to
utilities that are exempt under AS 42.05.711. Specifically, AS
42.05.321 which is entitled Failure to Agree upon Joint Use or
Interconnection, gives the commission the authority to resolve
those disputes. Subsection (d) of AS 42.05.321 says this section
and AS 42.05.311 apply to all utilities, whether or not they are
exempt from other regulation under AS 42.05.711. Since the
exemption this bill grants is under AS 42.05.711, the section on
joint use will still apply.
10:07:01 AM
CHAIR COSTELLO stated her intention to hold SB 205 for further
consideration.