Legislature(2001 - 2002)
04/06/2001 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 186-911 SURCHARGE ON WIRELESS TELEPHONES Number 0097 CHAIR MURKOWSKI announced that the committee would hear HOUSE BILL NO. 186, "An Act relating to a municipal enhanced 911 surcharge on wireless telephones." REPRESENTATIVE HALCRO made a motion to adopt the proposed committee substitute (CS), version 22-LS0381\J, Cook, 4/5/01, as the working document. There being no objection, Version J was before the committee. Number 0216 REPRESENTATIVE MEYER, speaking as the sponsor of HB 186, told members that a lot of concerns expressed during the previous hearing had to do with the Federal Communications Commission (FCC) docket. The ruling is contained in the handout from BellSouth, found on the Internet; he said AT&T agrees that it explains the ruling fairly well. REPRESENTATIVE MEYER pointed out that the ruling says carriers are entitled to recover costs of providing 911 service. The change in [Version J] is that the legislative findings are put in Section 4, page 3, of the bill. The FCC ruling makes it clear that a cost recovery needs to be in place before a carrier is obligated to provide 911 services. Both Anchorage and Fairbanks have expressed a desire to begin this service as early as this fall, which is why he would like the bill to pass this session, if possible. REPRESENTATIVE MEYER explained that carriers will recovery a 50- or 75-cent surcharge. In the Lower 48 some carriers have not been passing on cost recovery, and AT&T anticipates the cost to be around 10 cents. The rest [of the surcharge] would go to the municipalities to provide revenue to pay for equipment and staff for the service. He noted that Mr. Rogers, during the previous hearing on the bill, said the current surcharge for land phones covers about 40 percent of the total cost of the 911 service for the Municipality of Anchorage (MOA). Number 0434 REPRESENTATIVE MEYER said it is going to be up to the municipalities and the carriers to work out who gets what of that 50-cent surcharge, and [the committee] may hear from AT&T that it has an agreement with the municipality to split the surcharge. CHAIR MURKOWSKI referred to Section 4 of the bill. She indicated that unlike current statute, [the ruling] spells out an entitlement to recover the cost of operation for phase 1. She asked for verification that [Version J] is not making a distinction between cost recovery for the different phases. REPRESENTATIVE MEYER affirmed that. He said he has spoken with AT&T, the MOA, and indirectly with ACS, and the intent is not to visit this again. Unfortunately, the cost for phase 2 is not known yet, but the belief is that as [Alaska] gets closer to phase 2, the technology costs will diminish and the current surcharge would be adequate to cover both phases. Number 0593 DANIEL YOUMANS, AT&T Wireless Services, Inc., came forth and said AT&T supports the proposed CS [Version J] and finds the cost-recovery language an improvement over the previous bill. When asked for verification that this is specified as cost recovery for phase 1, he replied affirmatively. It is too early to address the issue of phase 2 until both the 911 operators and the carriers have a better idea of what those costs will be, he added. The legislation should just address phase 1, since there are solid numbers on those costs. REPRESENTATIVE MEYER mentioned that he and Mr. Youmans had spoken, and he asked for clarification that AT&T works out agreements with the municipalities. MR. YOUMANS replied affirmatively. This process is a partnership between the wireless carriers and the 911 operators, he said; essentially, the networks have to interconnect to provide this service. Typically, a service agreement will be signed with the municipalities that lays out every thing [AT&T] will provide and what cost recovery will be requested. Nationwide, AT&T's cost-recovery amount with the municipalities is about 11.8 cents per customer a month, he said. Number 0705 REPRESENTATIVE HALCRO referred to the first bill hearing, in which a letter was submitted by Mr. Youmans expressing concern that something should be more unified. He asked Mr. Youmans whether Anchorage and Fairbanks are objecting to changing this from 75 to 50 cents, or whether they want to maintain the 75 cents. He also asked whether there has been discussion about leveling that out and making it an across-the-board 50 cents. MR. YOUMANS replied that initially he got the feeling that the municipalities wanted to make the surcharge at parity with wire line [phones], which is why they chose the 50- and 75-cent levels. [AT&T] had expressed that wireless [phones] are different from wire-line phones because of the ability to use 911 anywhere in the state; therefore, there should be an equitable surcharge. He said [AT&T] understands the other side of the argument, but continues to hold that it should be equitable. Number 0800 STEVE O'CONNOR testified via teleconference and encouraged the committee to keep the fee set at 50 cents and 75 cents, because the local government needs to have a say. He said [local governments] know best what the costs are to operate their enhanced 911 systems, which may vary from [place to place]. Kenai Peninsula Borough supports keeping [the surcharge] at 50 and 75 cents, he added. MR. O'CONNOR said he thought [Mr. Youmans] was probably correct when he said [AT&T] sits down with the municipalities and boroughs and negotiates a cost-recovery [amount] for the phase 1 costs. He asked whether the bill would be revisited if the phase 2 costs are more than expected, because he thought he'd heard earlier that there was no intent to revisit this bill. REPRESENTATIVE MEYER surmised that if phase 2 costs are a lot more than anticipated, legislators could revisit it; however, he [personally] didn't intend to do so. He expressed hope that the phase 2 [costs] would be less than anticipated because as technology progresses, it becomes less expensive. MR. O'CONNOR said he would support the proposed CS [Version J], leave the wire-line fees based on population, and let the municipal government set the surcharges. Number 0949 REPRESENTATIVE HALCRO asked Mr. O'Connor for the rationale behind the cost differential between the 50 cents and the 75 cents. For example, why would Anchorage be limited to [charging] 50 cents, when a smaller community such as Kenai or Fairbanks can charge up to 75 cents? He asked whether there would be less demand on systems in smaller communities. MR. O'CONNOR replied that the demand may be less; however, the per-capita cost to smaller communities to install enhanced 911 systems is greater when compared to the larger municipalities, which may be the reason [for the language in the] original legislation. RAY MILLER, Fairbanks Police Department, testified via teleconference that he would support municipalities' having split rates; a lot of the smaller municipalities have a higher amount than the local governments and can adjust that for their communities. He expressed concern about allowing the wireless telephone company to use that money to recover costs, however, because over time the 75 cents a month is going to be eroded by the telephone companies' cost, and it won't be available on the other end of the 911 system to operate and pay for the equipment and staff for which it was originally set up. Number 1107 "SCOOTER" WELCH, Chief, Fairbanks Police Department testified via teleconference in favor of the legislation and the modification, saying he continues to support the difference in the fee structure allowing municipalities to collect 50 or 75 cents, depending on size. He, too, is concerned that if phone companies are set up to recover costs, those dollars may be eroded in future years as business costs increase. He recognized that [phone companies] need to be able to recover some costs for operations also. REPRESENTATIVE HALCRO commented that he supports the bill, but has reservations about the 25-cent price differential. Smaller communities mean smaller systems, fewer cell-phone users, and a diminished impact on the system. He said he isn't sure why smaller communities are able to charge a higher rate. REPRESENTATIVE MEYER explained that this came up as a proposed amendment, which failed unanimously, in the House Community and Regional Affairs Standing Committee. He surmised that it failed because the rural areas don't have as many people paying into the system, although the system costs are the same. It is a matter of economies of scale, he said, and it also makes it easier to understand because it is being kept the same as the [surcharge for the] landline [phones]. Number 1280 REPRESENTATIVE HALCRO made a motion to move the CS for HB 186, version 22-LS0381\J, Cook, 4/5/01, from committee with individual recommendations and the attached fiscal note. There being no objection, CSHB 186(L&C) moved from the House Labor and Commerce Standing Committee.
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