Legislature(1997 - 1998)
05/04/1998 03:52 PM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
May 4, 1998
3:52 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Con Bunde, Vice Chairman
Representative Brian Porter
Representative Norman Rokeberg
Representative Jeannette James
Representative Eric Croft
Representative Ethan Berkowitz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 416
"An Act relating to competition in the provision of local exchange
telephone service; and providing for an effective date."
- HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE
HOUSE BILL NO. 434
"An Act requiring drug testing for applicants for and recipients of
assistance under the Alaska temporary assistance program; and
providing for an effective date."
- PASSED CSHB 434(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 158(L&C)
"An Act relating to motor vehicle liability insurance covering a
person who has had the person's driver's license revoked for
possession or consumption of alcohol while under 21 years of age."
- SCHEDULED BUT NOT HEARD
CS FOR SENATE BILL NO. 114(JUD)
"An Act relating to contributions from employee compensation for
political purposes; and prohibiting certain kinds of discrimination
against employees for political purposes."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 416
SHORT TITLE: LOCAL EXCHANGE TELEPHONE SERVICE
SPONSOR(S): REPRESENTATIVES(S) KELLY, Therriault, Mulder
Jrn-Date Jrn-Page Action
2/16/98 2332 (H) READ THE FIRST TIME - REFERRAL(S)
2/16/98 2332 (H) STATE AFFAIRS, FINANCE
2/18/98 2367 (H) COSPONSOR(S): THERRIAULT
3/11/98 2604 (H) JUD REFERRAL ADDED
3/12/98 (H) STA AT 8:00 AM CAPITOL 102
3/12/98 (H) MINUTE(STA)
3/26/98 (H) STA AT 8:00 AM CAPITOL 102
3/26/98 (H) MINUTE(STA)
3/26/98 2747 (H) STA RPT CS(STA) 1DNP 4NR
3/26/98 2747 (H) DNP: IVAN; NR: JAMES, HODGINS, RYAN,
3/26/98 2747 (H) ELTON
3/26/98 2747 (H) FISCAL NOTE (DCED)
3/26/98 2747 (H) REFERRED TO JUDICIARY
3/26/98 2761 (H) COSPONSOR(S): MULDER
5/04/98 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 434
SHORT TITLE: DRUG TESTING OF WELFARE RECIPIENTS
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG
Jrn-Date Jrn-Page Action
2/18/98 2354 (H) READ THE FIRST TIME - REFERRAL(S)
2/18/98 2354 (H) HES, JUDICIARY
4/23/98 (H) HES AT 3:00 PM CAPITOL 106
4/23/98 (H) MINUTE(HES)
4/28/98 (H) HES AT 3:00 PM CAPITOL 106
4/28/98 (H) MINUTE(HES)
4/29/98 (H) JUD AT 1:00 PM CAPITOL 120
4/29/98 (H) MINUTE(JUD)
4/30/98 (H) MINUTE(HES)
5/01/98 (H) JUD AT 1:00 PM CAPITOL 120
5/01/98 (H) MINUTE(JUD)
5/01/98 3394 (H) HES RPT CS(HES) NT 1DP 4NR 1AM
5/01/98 3394 (H) DP: DYSON; NR: GREEN, BUNDE, PORTER,
5/01/98 3394 (H) BRICE; AM: KEMPLEN
5/02/98 3484 (H) 2 FISCAL NOTES (DHSS)
5/04/98 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE PETE KELLY
Alaska State Legislature
Capitol Building, Room 411
Juneau, Alaska 99801-1182
Telephone: (907) 465-2327
POSITION STATEMENT: Testified as sponsor of HB 416.
JIMMY JACKSON, Attorney
General Communications, Inc.
2550 Denali Street
Anchorage, Alaska 99503
Telephone: (907) 265-5545
POSITION STATEMENT: Testified on HB 416.
JACK RHYNER, President and General Manager
TelAlaska, Inc.
2121 Abbott Road
Anchorage, Alaska 99507
Telephone: (907) 349-2400
POSITION STATEMENT: Testified on HB 416.
GREG BERBERICH, Vice President
of Corporate Services
Matanuska Telephone Association
1740 South Chugach
Palmer, Alaska 99645
Telephone: (907) 745-9466
POSITION STATEMENT: Testified on HB 416.
JIM ROWE, Executive Director
Alaska Telephone Association
201 East 56th Avenue
Anchorage, Alaska 9950
Telephone: (907) 563-4000
POSITION STATEMENT: Testified on HB 416.
ACTION NARRATIVE
TAPE 98-81, SIDE A
Number 0001
CHAIRMAN JOE GREEN called the House Judiciary Standing Committee
meeting to order at 3:52 p.m. Members present at the call to order
were Representatives Green, Porter and James. He noted there
wasn't a quorum, but the committee would take testimony.
Representatives Rokeberg and Croft arrived at 3:54 p.m. and
Representatives Berkowitz and Bunde arrived at 3:59 p.m. and 4:01
p.m., respectively.
HB 416 - LOCAL EXCHANGE TELEPHONE SERVICE
Number 0051
CHAIRMAN GREEN announced the first order of business was HB 416,
"An Act relating to competition in the provision of local exchange
telephone service; and providing for an effective date." He asked
Representative Kelly to come before the committee to introduce
HB 416.
Number 0066
REPRESENTATIVE PETE KELLY, Alaska State Legislature, said House
Bill 416 addresses the telecommunication needs of the state; more
specifically, rural areas that do not have the advantage of local
phone competition. He said there has been some concern with this
legislation and he would quickly address each of those concerns in
an attempt to put them to rest and explain how the bill has been
changed throughout the process. He said there had been some
questions about whether this bill would solve the cherry picking
issue. In fact, it will not. There is a provision in HB 416 that
any provider that comes into an incumbent area must provide service
to the entire area. He stated, "There were also some concerns
early on that some municipally owned utilities would be affected by
this bill and that they would lose their power to regulate them on
them on the local basis. That was also addressed in the bill as
were the proviso that we must address and (indisc.) universal
services." All those things are addressed in HB 434."
REPRESENTATIVE KELLY said HB 416 asks the Alaska Public Utilities
Commission (APUC) to make the calls they are best suited to make.
The commission is a regulatory body and under this legislation will
still have plenty of regulatory authority; however, he feels the
APUC under the current telecommunications arrangement has been
forced into making some policy calls. The policy call specifically
that he is speaking about is whether or not competition is a good
or a bad thing. That is within the legislature's purview and it is
his opinion the legislature is equipped to make those types of
decisions, not the regulator body. He explained that after the
legislature makes that call that competition is a good thing, the
APUC will still have plenty of regulatory decisions make. For
example, they will still have to determine whether a provider is
fit, willing and able; to determine whether it is technologically
feasible for the incumbent provider to take on their services if
there's a technological gap between the two providers; and
determine if it's economically feasible. By economically feasible,
he doesn't mean they will determine who are the winners and losers
in competition; it is simply a case of matching technologies -
whether it would cost too much to match up those technologies.
REPRESENTATIVE KELLY concluded that if HB 416 were to pass, the
APUC would still make the regulations concerning universal
services; however, it would be done more promptly inasmuch as this
legislation calls for a date certain to come up with the
regulations. Also, the APUC will still be able to create a price
structure; still determine fit, willing and able providers; still
determine whether it's technologically feasible and still determine
whether it's an economic burden on the incumbent carrier.
Representative Kelly said those were the concerns raised in
previous committee hearings which have been addressed in the bill.
He said, "I have heard over and over and over again that the reason
people don't like this bill is that it will cause cherry picking.
That seems to be the worst of it. Because if people think this
will allow (indisc.) use the incumbent carrier's lines, take off
their best customers and then when they have done that, it will
cause the incumbent carrier to raise their rates or we'll have this
upward spiral that will cause higher and higher prices in the local
area by this bill. And that again as I say is the major problem
with the bill as being the major fear of it." He asked the
committee to give serious consideration to HB 416.
Number 0434
CHAIRMAN GREEN said it's his understanding that APUC has decided to
take this into some sort of a study period. In other words,
they're in sort of a limbo period.
REPRESENTATIVE KELLY replied, "Actually Mr. Chairman, they have
been working on the regulations for this, but what we found through
the long distance battle that went on years ago -- what we found is
that this particular decision on determining whether competition is
good or bad is the one that sticks them the most. It is as I said,
difficult for them to make those kinds of calls."
Number 0492
REPRESENTATIVE ERIC CROFT inquired, "So we make the determination
that competition is appropriate in which areas? All areas?
Fairbanks and Juneau, now?"
REPRESENTATIVE KELLY directed the committee's attention to page 2,
line 15, and said the areas where there are 6,000 lines or more.
REPRESENTATIVE CROFT said, "Normally, the APUC would make that
determination they're making now - we just say in areas of that
size, competition is appropriate and then you go ahead and look at
individual applications."
REPRESENTATIVE KELLY said that was correct and what's being
determined are the three things he mentioned earlier: fit, willing
and able to provide service; if it is technologically feasible for
the incumbent provider; and economically feasible. He explained
that not all the areas the APUC is able to do are listed; they are
nonetheless the regulatory purview of the APUC.
Number 0604
REPRESENTATIVE CROFT asked why Representative Kelly chose 6,000.
REPRESENTATIVE KELLY said one of the intents of HB 416 was to not
get into the "mom and pop" telephone systems where there are just
a few lines. The original number of 1,500 excluded most of the
small "mom and pop" systems, but it was modified because it was
feared that number was just too small. He said it was determined
that it was alright for Anchorage to have competition. Now,
Fairbanks and Juneau are the most logical steps to take. If the
argument can be made that Fairbanks and Juneau are large enough to
handle competition, which he thinks they are, then arguments don't
have to be heard about Nome, Barrow, and various other places if
that number is used.
Number 0681
REPRESENTATIVE CROFT said, "It's Fairbanks and Juneau?" Mat-Su and
Kenai - are they considered communities or ...."
REPRESENTATIVE KELLY replied Mat-Su, yes.
REPRESENTATIVE CROFT surmised it was done by the exchange, not by
the municipal area.
REPRESENTATIVE NORM ROKEBERG referred to the chart showing the
number of lines for the various phone companies and assumed the
111,620 lines indicated for PTI was not the local exchange, but
rather for the various different locations throughout the state.
REPRESENTATIVE KELLY replied the ATU Telecommunications, Anchorage,
for instance is the Anchorage, Alaska exchange.
REPRESENTATIVE ROKEBERG reiterated his inquiry about PTI.
REPRESENTATIVE KELLY deferred that question to Mr. Jim Jackson of
General Communications, Inc. who was standing by to testify via
teleconference.
Number 0819
JIMMY JACKSON, Attorney, General Communications, Inc., testified
via teleconference from Anchorage and said, "In part, I heard a
question regarding PTI and its access lines. The number that he
had is a little bit different from the number that I've got in
front of me and admittedly my numbers came out of a booklet from
the Alaska Telephone Association which was about a year old. The
numbers that I have show 28,000 lines for one portion of PTI which
is called Telephone Utilities of Alaska and that would be mostly
Juneau and Fort Wainwright and then it shows about 56,000 access
lines for the portion of PTI which is called Telephone Utilities of
the Northland and that would include quite a number of different
locations around the state."
REPRESENTATIVE CROFT inquired what communities, other than
Fairbanks and Juneau would be included in the 6,000.
REPRESENTATIVE JEANNETTE JAMES directed Representative Croft's
attention to the list in committee member packets.
REPRESENTATIVE ROKEBERG asked Mr. Jackson to explain the definition
in the utilities chapters, if any, of a local area exchange carrier
(LAEC), how the different geographic areas fit into the definition
of a LAEC, and the 6,000 number.
MR. JACKSON replied, "One of the complications that you have is
that at the Federal Communications Commission and in the Federal
Telecommunications Act(aka Telecom Act), most of the rules are
written in terms of the phone company study area - that's a term of
art called a study area - and for most of the phone companies in
the state, the entire phone company is their study area. And so
just to use an example, the Arctic Slope Company which serves, I
think, it's seven different communities outside of Barrow - all of
those communities make up one study area for Arctic Slope and the
decisions about whether -- the decisions under federal law about
whether or not there would be competition are generally made for
that entire study area. When you look at PTI, it becomes a good
bit more complicated because PTI within the state has both
Telephone Utilities of Alaska, it has Telephone Utilities of the
Northland, and it now has PTIC which is the old Fairbanks. Within
Telephone Utilities of Alaska, there are two separate study areas
for federal purposes. Within Telephone Utilities of the Northland,
there are two separate study areas for federal purposes. And
again, the decisions under the federal law are made on the study
area basis. Within Alaska, the local exchange carrier would be
Telephone Utilities of Alaska or Telephone Utilities of the
Northland and therefore, when it talks about local exchange
carrier, my interpretation of that, it would be the entire company,
but in PTI's case, it's separated by Telephone Utilities of Alaska,
Telephone Utilities of the Northland and PTIC which is Fairbanks."
Number 1118
REPRESENTATIVE ROKEBERG asked if it was Mr. Jackson's testimony
that Angoon which has a separate prefix and only 229 subscribers,
operating under PTI Telephone Utilities of the Northland, would be
a LAEC and for purposes of this legislation, that LAEC has a
subscriber base of 52,000 so they would be covered.
MR. JACKSON said Angoon would be an exchange which is part of
Telephone Utilities of the Northland, and Telephone Utilities of
the Northland would be covered because of the fact that that's the
way the federal legislation is written.
REPRESENTATIVE ROKEBERG assumed that based on Mr. Jackson's
comments, Angoon with its smaller population would be part of that
whole LAEC and therefore competition would be allowed in that area.
MR. JACKSON said that is correct.
Number 1177
REPRESENTATIVE BRIAN PORTER said that doesn't exactly square with
the wording on line 14 of the proposed committee substitute.
Number 1193
REPRESENTATIVE CON BUNDE made a motion to adopt the proposed
committee substitute, Version K as the working document.
CHAIRMAN GREEN asked if there was objection. There being none,
Version K was before the committee for discussion.
REPRESENTATIVE PORTER referred to the language beginning on page 2,
line 11, and said it would be his understanding that Angoon would
be one service area based on that language.
Number 1235
REPRESENTATIVE ROKEBERG pointed out there is a definition, but it's
a United States Code definition of an incumbent and local exchange
carrier.
REPRESENTATIVE PORTER suggested there needed to be a definition of
a service area in the bill.
REPRESENTATIVE CROFT said he was trying to reconcile the service
areas of local exchange carriers and the phone company study area
that was referred to in an attempt to figure out which study areas
or service areas would fall under this. In other words, where are
the lines drawn to get the 6,000 and secondly, what was the
criteria for setting it at 6,000.
CHAIRMAN GREEN suggested the committee take additional public
testimony at this time which may answer some of these questions.
He asked if Mr. Jackson had additional comments.
Number 1298
MR. JACKSON said that Representative Kelly had done a good job of
explaining most of the bill and what it's about. He noted the
legislation was prompted in large part by a decision of the Alaska
Public Utilities Commission that the local phone company in
Fairbanks and Juneau should be exempted from requirements of the
Federal Telecommunications Act which were designed to promote local
phone competition. In its decision just this past January, the
primary reason the APUC gave for exempting PTI was that the APUC,
itself had not adopted regulations on universal services and access
charges which are necessary for competitive markets. And it said
it would not revisit the issue until those regulations had been
adopted. He said that decision by the APUC came two years after
the Telecommunications Act of 1996 had been passed and signed into
law by the President making competition the policy of the nation.
The APUC had already had two years to put in place the regulations
which it found lacking when it maintained the exemption of PTI in
Fairbanks and Juneau.
MR. JACKSON further stated this bill actually does two things, as
Representative Kelly explained. It expresses the state
legislature's policy favoring competition and it gives the APUC a
deadline to adopt regulations to make that happen. The reason this
is important is that the economy is now entering the information
age and telecommunications is the driving force in that economy.
If the APUC had decided differently, GCI would be investing tens of
millions of dollars in Fairbanks and Juneau this summer to
construct a new, very modern, telecommunications network. That is
the type of investment which is required in Alaska, if Alaska is to
be part of the new economy in the information age. Investment and
the competition - which the competition will drive the investment -
which will improve services to customers and cause rates to go
down. He said history has demonstrated over and over that
competition in telecommunications will be delayed by incumbents who
fear competition and by regulators whose fear is encouraged by the
incumbents. But history also shows that once competition finally
happens, it brings better services and better rates. This
legislation will shorten the delay and accelerate the benefits to
Alaska, its economy and its citizens. For that reason, GCI urges
the committee to pass HB 416.
Number 1484
REPRESENTATIVE JAMES asked if Mr. Jackson had any knowledge of the
Federal Communications Commission (FCC) perhaps redefining
universal services.
MR. JACKSON replied the FCC is in a more or less continuing process
of re-examining both the definition of universal service and the
means to support it. In terms of defining what a universal service
is, the FCC adopted something on that within approximately the last
year and it will be re-evaluated in the future, but it isn't real
active now. In terms of the programs used to support universal
service, that is under continuing review.
REPRESENTATIVE JAMES remarked the universal services has always
been somewhat cloudy to her because she understands it is a subsidy
to provide the universal services for everyone. She also
understands those universal services funds are not available in
areas that are not considered rural, so Anchorage, for example
didn't have any restrictions about competition because they don't
have universal services. However, all the other areas of the state
do have universal services; therefore, that's why each situation is
supposedly to be considered on a case-by-case basis by the
utilities commission. She asked if her understanding was correct.
MR. JACKSON responded that is partially correct. Anchorage did not
have universal service funding and the rest of the state does -
that's not entirely equated to where there is the possibility of
this exemption, although it does largely overlap. In terms of this
case-by-case exemption, it calls for an examination by the
commission of whether something is technically feasible and whether
actually complying with the request is unduly burdensome. He said
the APUC does not even begin to address those questions in the
Fairbanks case which we had and we fully agree that should the APUC
decide that something is actually technically infeasible or that
the cost of complying with a particular request, they have every
reason to continue to grant the exemption. But the decision was
based on the lack of regulations in the much more bigger policy
question, which he believes is an appropriate question to be
addressed by the legislature. He said Representative Kelly also
drew a very appropriate distinction in terms of the economically
burdensome criteria that is not meant to be the question of who
will succeed once a competitive market develops. It is meant to be
the question of whether or not complying with particular
requirement is economically burdensome and the APUC in their
decision, got that quite backward.
Number 1661
REPRESENTATIVE ETHAN BERKOWITZ asked Mr. Jackson to comment on the
change from 1,500 lines in the earlier version to 6,000 lines in
the proposed Version K.
MR. JACKSON thought that was largely a legislative compromise. He
added that it started at 1,500 lines, then it went to 5,000 lines
and then to 6,000 lines based on just the feeling regarding
particular companies and whether or not the number was too low in
the original version.
REPRESENTATIVE BERKOWITZ asked Mr. Jackson to comment, from his
perspective, what the practical consequence is of making that
distinction. Aside from the communities that are served, is there
a reason why that distinction is being made.
MR. JACKSON said as was pointed out earlier, there is, he thought
unavoidable problems in selecting a number in that the federal law
really almost requires that the decisions be made on a study area
basis and some of the utilities in Alaska have a large location in
the same study area as other small locations and that admittedly,
makes the line drawing difficult. He said in the immediate future,
the competition if allowed any further, will naturally proceed in
Fairbanks and Juneau and then probably in the Mat-Su Valley and
Kenai, before it starts getting to the very small areas and the
smaller area are several years away at best, even if competition is
allowed to proceed in the natural market forces. So in the short
term, he thought there was not a great deal of significance to the
number being 6,000; however, in the longer run, it may begin to
matter.
Number 1775
REPRESENTATIVE BERKOWITZ asked if there were economies of scale
that associate with those numbers in terms of delivering service.
MR. JACKSON said GCI has not tried to identify any particular
economy of scale at this time. He added that GCI's ultimate
position is that the market place should make that determination.
There may be some economy of scale at a particular (indisc.) today
which in a few years from now with a different technology will be
irrelevant. He added that GCI is smart enough to know that if a
given location is too small to be served by two carriers and it's
being served by one, then we probably will not go there. That's a
market decision which really need not be imposed by the
legislation.
Number 1822
REPRESENTATIVE CROFT asked which communities would be under this
competitive mandate as it stands at 6,000.
MR. JACKSON said he does not have a list because it would have to
be by company and so he doesn't have a list of communities. He
added, "This gets back to the cherry picking argument that
Representative Kelly mentioned - if you did it based on community
size, that might for instance allow us to go to Dutch Harbor, which
has a fairly large population, but would prohibit us from going to
the other -- I don't have the exact number -- five or six exchanges
which are covered by the same utility. So, in essence it would
then mandate us to cherry pick Dutch Harbor and ignore the other
locations. By writing it in terms of the company what it says is,
'GCI, if you want to go serve Dutch Harbor, you've got to serve the
other four or five or six locations that company serves, too.'"
REPRESENTATIVE CROFT asked, "When the APUC, if they'd been acting
as speedily as you guys would have liked, when they look at whether
competition is warranted in a particular area, I guess, though
maybe -- yeah, service area or phone company study area or whatever
area -- do they solely look at the number of access lines or are
there other criteria that they consider before they determine
whether competition is warranted."
MR. JACKSON said it's technically a little more complicated than
that. He added, "We requested from PTI, which includes Fairbanks
and Juneau and some of their smaller portions also, we requested
certain specialized arrangements which are allowed under the
Telecom Act. For instance, one's called co-location which allows
us to put our equipment in the same location where they have their
equipment if there's room for it. And under the federal law, once
we file that request, the APUC was required to determine whether or
not that request was unduly economically burdensome, whether or not
it was technically feasible and whether it was consistent with some
other portions of the federal law having to do with universal
service. So, it didn't directly have anything to do with the
number of access lines at all; it just had to do with economically
burdensome and technically feasible and consistent with some
universal service provisions. In ruling upon our request,
essentially the only thing the APUC said was 'We haven't yet
adopted the new regulations which are necessary for universal
service and access charges in a competitive market and therefore,
the competition which results if we grant this request may be
economically burdensome to PTI.'"
Number 1977
REPRESENTATIVE CROFT queried, "So when this says on page 2, lines
11 and following, you've got to adopt regulations for universal
service, it's doing that by access lines -- doesn't the federal law
make a rural distinction?"
MR. JACKSON said he understood the point Representative Croft was
getting at and added the federal law classifies all the utilities
in Alaska, except for Anchorage, as rural. The part that
classifies them as rural says those utilities are exempt from co-
location which he had just mentioned, until the APUC makes the
determination which he just described relating to unduly
economically burdensome, technical feasibility. He further
explained, "So the way the federal law is set up is if you took the
companies in Alaska, except for ATU, are exempted from the special
arrangements such as co-location, but they're only exempted until
we file a specific request for them at which time the APUC must
make the determination regarding the request being economically
burdensome, technically feasible. And that was the determination
that the APUC was (indisc.) in the decision that came out in
January."
Number 2049
REPRESENTATIVE JAMES said in looking at the Telephone utilities of
the Northland with 64 communities for example, the language in the
proposed committee substitute says the commission may require the
applicant to offer service throughout the study area of the
existing local exchange telephone utilities, which is what
Representative Kelly had said doesn't allow cherry picking. She
noted that Mr. Jackson had mentioned just Fairbanks and Juneau, but
in reviewing the list of communities served by Telephone Utilities
of the Northland, there are some fairly good sized communities;
e.g., Homer, Delta Junction, Kodiak. She asked if GCI were to
compete with the Telephone Utilities of the Northland, would it be
required to offer service throughout the study area?
MR. JACKSON said that was correct, but amended it slightly in that
Telephone Utilities of the Northland is technically two different
study areas, so the APUC could make that determination separately
for the two study areas. He explained, "Just to give you a general
idea, one of the study areas is the Kenai Peninsula, North Pole and
a few other places, Nenana, Kodiak, Homer, Delta Junction and Fort
Greely and then the other half is Sitka and all the little places -
the real little places - and so the APUC might make that decision
by those two separate study areas, or it might make it for the
entire (indisc.) and when they make that determination, both under
federal law and under this legislation, they have the right to
require us to serve all of the areas and we fully expect that
that's what they would do."
Number 2144
REPRESENTATIVE BERKOWITZ remarked that if he understood Mr. Jackson
correctly, the APUC should have predicated its decision based on a
determination of whether the change was economically burdensome,
technologically feasible and consistent with federal law. He asked
if that was correct?
MR. JACKSON said yes, consistent with some universal service
provisions of federal law.
REPRESENTATIVE BERKOWITZ inquired if this committee shouldn't be
contemplating those three criterion, as well.
MR. JACKSON replied, "The question of, for instance, technical
feasibility and whether or not complying with particular requests
would be economically burdensome are questions which we think, of
necessity, have to be answered by the APUC on a case-by-case
basis." He said this legislation leaves that to the APUC to decide
in a particular case. He added, "The more general question of
whether or not the APUC should rely on its own failure to adopt
regulations as a reason that it can't have competition, as it were
a general policy question on competition, are the questions which
to us seem to be very appropriate for the legislature to address."
REPRESENTATIVE CROFT said if that's the case, it appeared to him
the only really salient feature of this bill is the portion on
page 2, lines 11-14, directing the APUC to adopt regulations
ensuring universal service. The rest of it really isn't needed.
He added, "When we start putting numbers in like 1,500 or 6,000 or
5,000 or whatever legislative compromise we come up with, we're
essentially standing in the stead of the APUC and we're standing in
the stead of the APUC without having done the three-part homework
that they're supposed to do."
MR. JACKSON agreed that subsection (b) is the heart of the bill;
however, he pointed out the portion in subsection (c) which
reaffirms the right for the APUC to require any competitor to offer
service throughout the service area was inserted as a protection
against cherry picking or cream scamming. So, many people would
consider that portion to be very important, but he agreed the meat
of the bill is in subsection (b).
Number 2254
REPRESENTATIVE BERKOWITZ reiterated that it's not even within the
entirety of subsection (b). He said "Line 15 is particularly
troublesome to me. When we make a determination of 6,000 or
whatever number we hit on, we're in essence predetermining the
number the APUC should reach and we're doing that without having
studied whether that's economically burdensome, technologically
feasible and consistent with federal law. And to me that's
somewhat problematic."
MR. JACKSON replied that he didn't view this legislation as taking
the technical feasible decision away from the APUC, even for LAECs
that are greater than whatever the number is. In other words, even
for LAECs that are greater than 6,000 or whatever number is
decided, the APUC will still have the technical, feasible questions
to address.
REPRESENTATIVE BERKOWITZ remarked that if they were to determine a
higher number or a lower number brought in economically burdensome
or consistency with federal law, this bill would impede the APUC's
ability to implement a decision that arrived at a different number.
Number 2327
MR. JACKSON commented if that's the question, he didn't believe GCI
would have a problem placing a period [.] after the parenthetical
Telecommunications Act of 1996 in subsection (b)(2).
CHAIRMAN GREEN noted that Mr. Jackson was working from a different
version. He asked Mr. Jackson to stay on line while the committee
heard testimony from the other three witnesses. He asked Jack
Rhyner to come forward to present his comments at this time.
Number 2390
JACK RHYNER, President and General Manager, TelAlaska, Inc.,
testified that TelAlaska, Inc., operates two local telephone
companies in the state of Alaska - Interior Telephone and Mukluk
Telephone which serve in 21 communities across the state. He said
Mr. Jackson had explained that all areas outside Anchorage are
considered rural areas. The Chairman of the Federal Communication
Commission in a speech last week said, "If it ain't broke, don't
fix it." The balance of his speech went on to say the FCC has
identified the difficulties in addressing access charge reform in
the universal service portions of the Telecom Act and have
discovered there are a lot of problems with the big companies.
However, the solutions arrived at for the big companies are not
translating well for small companies and basically the Chairman
has indicated they're not going to go any further with
implementation of the Telecom Act for rural communities until some
of the problems have been shaken out.
TAPE 98-81, SIDE B
Number 0001
MR. RHYNER continued .... basically there's about three different
definitions; it starts with areas under 50,000 access lines and
finishes off with a company that's serving less than 2 percent of
the access lines nationwide.
MR. RHYNER said, "Throughout this process, in their support of this
legislation, GCI has claimed that competition in local service will
reduce rates. Well, I live in Anchorage and we've had local
competition for 19 months and my local service bill hasn't been
reduced by one penny. What's worse is that over the next 12 to 18
months, I fully expect the rates in Anchorage to go up. As is
happening across the country, every place that's served by these
larger companies who've already gone through the process of access
charge reform, they're already experiencing local rate increases.
There's a charge on your bill that's called subscriber line charge.
You pay that every month - that's a federal charge that's on your
local service bill. To a customer it's part of your monthly bill.
Those charges have gone up across the nation - you now pay $3.50
for your primary line - you will pay $5.00 for a secondary
residential line - and business lines, the subscriber line charge
or "SLC" (ph) as it's known is going from $6.00 to $9.00 per line.
Those are increases which are in effect today. They went into
effect January 1."
MR. RHYNER asked the question of who really benefits from local
competition? It's the long distance companies like GCI because
they'll get reduced rates for their use of the local networks, but
unfortunately the local customer will make up the difference.
MR. RHYNER said one of the things that keeps coming up is how well
competition worked in the long distance industry and that it
reduced rates. He said that's right - it did. The reason for that
was that the price for long distance service was 200 percent to 300
percent above the cost of producing the service. So competition
had every opportunity to reduce that price to the consumer. He
directed the committee's attention to a chart which shows a cost
for small rural companies which unfortunately does not include
Juneau, Fairbanks or the Matanuska Valley. However, the chart
indicates the cost structure for these areas very much resemble the
OTZ numbers on the chart. He pointed out the actual cost on a per
access line basis, ranges from $101 to well over $200 a month. The
cost of recovery from local rates - those are the percentages that
the local customer actually pays for the total cost of local
service on a monthly basis - ranges from 16 percent to 22 percent
of the actual total cost and competition is not going to reduce
those rates. He said what's in question here when you bring
competition into the local loop are all of those revenues that are
indicated by the gray shaded area on the chart and if those
revenues go away, obviously rates are going to go up, not down.
The telephone companies in place have already gone to the expense
of building the infrastructure and have to recover those costs, so
costs don't go away.
MR. RHYNER further stated competition doesn't reduce the costs of
the companies that are competing. General Communications, Inc.
lost $4.3 million in 1997 in their local operation in Anchorage and
the Anchorage Telephone Utility has become so unprofitable that the
people of Anchorage have decided to sell the utility. He asked if
that sounds like a situation where the company is going to be able
to continue to give 80 percent to 90 percent discounts on local
service rates?
MR. RHYNER noted that Mr. Jackson had said GCI was prepared to
invest millions and millions of dollars in Fairbanks and Juneau to
improve services. He pointed out that GCI could do that today -
there is absolutely no restriction that would prevent GCI from
coming in and actually competing on a level playing field. He said
what GCI is searching for is the ability to do unbundled loops and
co-location which means basically using the existing company's
facilities, buildings and property at something less than what the
costs are.
MR. RHYNER through the use of slides explained the process of a
local network starting at the telephone through the local switch
through the toll facilities and then assumably on the other side
the process is reversed. The next slide showed the unbundled
elements which breaks that portion down. He said GCI or any other
competitor wants to come in and isolate the local loop - the
section from the switch to the customer - which is the part that's
so expensive to build. By doing that, the competitor installs
their switch, runs it to their facilities which pretty much takes
all the revenue out of it for the local company who has installed
the switch and built the facilities. The next slide depicted the
break down on a cost basis, assuming different loop lengths in the
plant. It's a complicated process and one that the APUC will have
to go through. He said the numbers are arbitrary, but assume that
an incumbent LEAC's cost numbers break down for an average cost of
$18 per month per loop. A competitive company comes in and
installs their own switch and constructs the short loops near the
switch because it's not that expensive; however, the more expensive
longer loops are leased from the local company which gives the
competitive company an average cost of about $12 per loop. That's
how unbundling works. The next slide shows those customers who
have gone to the competitive company and the remaining customers
stay with the incumbent carrier and indicates the costs have gone
up even with 100 percent variable costs for the LAEC. The reason
for that is the more expensive longer loops are being subsidized by
the shorter loops within that same service area.
Number 0358
CHAIRMAN GREEN asked "You mentioned earlier in your discussion that
long distance operators had 200 to 300 percent margin that
therefore allowed them to come down. Would that have come down if
it hadn't been for competition?"
MR. RHYNER replied that it was already coming down - technology was
bringing it down.
MR. RHYNER, continuing his testimony, said, "As I've shown you, the
exact opposite will happen for local service because what you're
currently paying is considerably less than what the real cost is.
The other thing that gets touted all the time is the fact that the
toll rates have come down and the continued decreases in toll rates
are all associated with calling plans. You have to sign up with a
toll carrier for a calling plan to get the lower toll rates.
Calling plans by the long distance companies are a concerted effort
by them to thwart competition in the long distance industry. The
calling plans are nothing but a strategy so that the long distance
companies can sell retail services below the wholesale rates which
they charge their competitors for the same services. Another barb
that's come up in the statewide advertising promoting this piece of
legislation is a constant harangue that the only thing that the
local telephone companies are concerned with is maintaining their
monopoly. If competition means that my company gets to operate
like GCI with no cost justification for our rates, no
responsibility to serve anybody who wants service in our service
area, with no restriction on cross-subsidizing different
businesses, and with a reduction in hundreds of thousands of
dollars that I pay for regulatory costs every year, I say bring on
the competition. But that's not what this is all about. And I
don't believe that the public can afford to pay the bill. The
truth is that what you're currently paying for local service is the
best deal you're ever going to get. Universal service and
competition are diametrically opposed concepts. Universal service
is the policy which has provided affordable rates for over 60
years. Competition in the telecommunications industry is the
policy which will provide you with a choice of who sends you your
bill with a higher rate." He thanked the committee for the
opportunity to testify and offered to answer questions at this
time.
Number 0485
REPRESENTATIVE ROKEBERG asked, "Would it be fair to draw an analogy
between GCI, AT&T and the other long distance carriers up here in
the (indisc.) box of the regional Bell operating companies in terms
of the Telecom Act of 1996?" And if not, why not?
MR. RHYNER replied no, because all of the Bell companies are local
exchange companies - they're trying to get back into the long
distance business.
Number 0511
REPRESENTATIVE ROKEBERG observed the Telecommunications Act of 1996
was to break down the barriers between long distance and local
exchanges; however, this legislation doesn't appear to follow the
tenure of the Telecommunications Act of 1996 in terms of
implementing that.
MR. RHYNER replied that when Congress passed the Telecommunications
Act of 1996, it believed the long distance industry was fully
competitive. So there isn't a lot of reference in the
Telecommunications Act of 1996 to long distance services.
REPRESENTATIVE ROKEBERG asked if he was correct that every phone
subscriber in the country pays an amount to a universal service
fund.
MR. RHYNER replied yes, in a number of different ways.
Number 0559
REPRESENTATIVE ROKEBERG referred to Mr. Rhyner's statement that the
costs could be as much as $229 and only 12 percent is recovered in
local charges and inquired about the difference.
MR. RHYNER referred to the chart and said, "That's the portions
that are in the shaded area - interstate universal service funding.
That's the portion that's paid by the universal service fund. The
other charges that are involved here are the inter- and intrastate
access charges. Those are the charges that the local company
charges the long distance company to use the local network. Part
of what's in this legislation also is access charge reform which is
aimed at reducing those charges to the long distance company. And
those revenues will again have to be made up from the local
customer."
REPRESENTATIVE ROKEBERG asked if Fairbanks or Juneau are a positive
or negative in terms of impact - are they subsidized in terms of
the universal service fund?
MR. RHYNER replied yes they are, but Anchorage is not.
Number 0631
REPRESENTATIVE CROFT asked, "Is it a fundamental problem with
unbundling or is it an accounting formulae problem; that is - on
the slide that is behind that one - can you change the -- the
before and after competition one -- can you change the structure -
the formula so that they are paying a fair amount for the set
equipment costs?"
MR. RHYNER said those are the issues the APUC and the FCC are
having to grapple with. Currently, everything is calculated based
on averages, even the universal service funding is based on
averages, so everything has to be thrown into the mix. That's one
of the problems that goes back to the difference with study areas
and service areas. He explained that some of the companies
involved all of their exchanges are certified as one service area.
Some of the companies are certified on an exchange-by-exchange
area. So there's not only the different definition of study area
which is the entire area within a single state that a telephone
company operates out of as opposed to the service area that the
APUC certifies, but there's also a difference in how those
companies are certified within the state. In response to the
question about how to do the formula, he said a calculation would
have to be done based on the individual loop lengths to be able to
get a commensurate rate for the actual cost of having to build
that. Otherwise, you end up with a situation where the competitor
that comes in and gets the average rate is going to get an unfair
and unbeatable competitive advantage.
REPRESENTATIVE BERKOWITZ said assuming the sole criteria the
committee is confronting today dealing with the federal
Telecommunications Act and other federal laws, does this bill raise
questions of consistency with federal law in Mr. Rhyner's mind.
MR. RHYNER said it does in his mind.
REPRESENTATIVE BERKOWITZ asked Mr. Rhyner to expand on what those
questions might be.
MR. RHYNER explained, "What the Telecom Act says is that the
[Alaska] Public Utilities Commission -- the federal law part that
you're talking about that must be in compliance -- is compliance
with Section 254 of the federal act which is the universal service
section of the act. And what goes into this is the case-by-case
determination is whether or not competition is in the public
interest in these locations. That's what this bill is trying to do
away with. It isn't a matter of just a technical end economically
feasible; it is whether or not it is in the public interest to do
this in those rural areas. That's what the exemption is."
REPRESENTATIVE BERKOWITZ inquired, "So, if we assign any number
that would possibly raise a problem with the necessity for
competition in the federal law, putting us in violation with
federal law, we're basically stripping this bill of any utility
whatsoever."
MR. RHYNER responded he's not an attorney, but in his opinion, it
most certainly does.
CHAIRMAN GREEN thanked Mr. Rhyner for his testimony and called Greg
Berberich to come before the committee.
Number 0920
GREG BERBERICH, Vice President of Corporate Services, Matanuska
Telephone Association (MTA), read the following statement:
MTA is a member-owned co-operative that provides local
exchange service to approximately 28,000 member owners
from Eagle River to Clear/Anderson. MTA service area
encompasses over 10,000 square miles. I'm speaking in
opposition to HB 416. I believe this legislation is a
self-serving attempt by some to circumvent the mandates
adopted by Congress in the 1996 Telecommunications Act.
Congress made it clear that in rural areas, state
commissions will determine on a case-by-case basis
whether to lift a rural company's exemption to provide
unbundled inter-connection to competitors.
MR. BERBERICH offered some background for the committee on the
Telecom Act. He said, "The Telecom Act allowed competitors to
enter the market in four ways: 1) the competitor can build their
own facilities, similar to what Mr. Jackson referred to earlier and
what Jack backed up - if GCI wanted to go into Fairbanks or Juneau
today, they can go in there and build those facilities with no
restrictions; 2) they can resell the services of the local exchange
company purchased at retail rates; 3) they can resell the services
of a local exchange company purchased at wholesale rates; and 4)
they can compete through co-location in the purchase of unbundled
network elements. And it's important to understand and remember as
you listen to the testimony today, competitors can use methods 1
and 2 today - no restrictions, no approvals required, other than a
certification - fit, willing and able certification. We also
believe that method 3 is available to them through the combination
of Telecom Act and existing state laws. However, Congress did
recognize that it may not be appropriate to require the fourth
method and that was co-location in the purchase of unbundled
networks in the rural high cost areas. That's why they set out in
the law, a rural exemption and mandated that state commissions
review and make a determination on a case-by-case basis, the
competition through the purchase of unbundled networks, as we heard
earlier, is technically feasible, is not economically burdensome
and is consistent with the universal service provisions of the act.
And as Representative Berkowitz noted, technical and economically
burdensome - get over those two - it's really the universal service
issue that we're talking about. Mr. Rhyner's testimony about if
you drive these prices to cost, they're going to go up because
that's what we have."
MR. BERBERICH continued, "GCI's mounted a campaign (indisc.)
argument the Alaska Public Utilities Commission has stopped
competition. This is just not true. Rural companies are not
exempted from competition. What is true and what Congress did
recognize was that in rural high cost areas, one form of
competition - unbundled network elements - may not be consistent
with the universal service provisions of the act. Remember the
Telecommunications Act had two objections: one to open all the
local exchange markets to competition; and two to maintain
universal service - that is affordable telephone service throughout
the country. As Jack mentioned, those are on opposite ends of the
spectrum here. This legislation is in response to a recent ruling
by the APUC to not require PTI to provide unbundled network
elements. I'd just like to note that they did not -- PTI had the
exemption going in and what GCI petitioned was for them to lift
that and what the commission did, because there's significant
issues regarding universal service and access reform which are
still not resolved at the federal level, decided to wait. They
didn't say we're not going to lift that exemption - they said
there's still a number of rule makings that need to be done. And
they decided to hold off. The FCC is still in the rule making
process. Rural telephone companies in Alaska receive over $50
million in universal service and access charge support. The FCC's
current proposal that's on the table today, would shift 75 percent
of that support to the states. I'd like to know where that support
is going to come from. As you all know, that's going to have to
come from the citizens that pay those local phone bills."
MR. BERBERICH further stated, "What impact will these changes have
on our rural companies who invested hundreds of millions of dollars
in Alaska's telecommunications infrastructure? MTA has over $200
million invested in infrastructure to serve our area - over 10,000
square miles. We made that with a social compact. You go out and
serve everybody - we'll make sure that you remain whole. The
Telecommunications Act changed that compact and now what we're
saying is, 'Okay folks, we're going to change the rules - let's
make sure that I don't get harmed here or at least I'm on a fair
level playing field.' These and many of the other issues are why
Congress mandated state commissions be involved as we introduce
competition. It's the role of the APUC to develop a competitive
marketplace while ensuring we maintain affordable telephone service
throughout Alaska. The commission has opened the rule making
dockets on the universal service and access charges and have set an
aggressive schedule to complete these rule makings by the end of
the year. GCI will argue the process is too slow; that the
commission will not promote competition; that without this bill we
will not see competition. The fact is, they can compete now. What
they really want is an unfair advantage. As a rural high cost
company, MTA is very concerned that competition truly bring real
choices while maintaining affordable prices to all consumers. This
legislation is GCI's attempt to structure the playing field so they
gain the advantage. Allowing the APUC to maintain their role, as
Congress intended, is the right thing to do. They are the
appropriate body, charged with and responsible for the welfare of
the consumers. They should be allowed the opportunity to do their
job. This is not an issue about whether GCI can or will be allowed
to compete. As I said, they can compete today if they want using
methods 1 or 2. The issue is about ensuring that we don't
substitute one competitor for another, but rather develop a market
place that assesses the impact of competition in rural areas, is
fair to all competitors but most of all continues to bring
affordable telecommunication services throughout the state." He
urged committee members to vote no on HB 416.
Number 1280
REPRESENTATIVE ROKEBERG noted that Mr. Berberich had testified that
GCI could compete now if they wanted to establish their own
distribution, switching and other infrastructure in a local area.
MR. BERBERICH said that was correct.
REPRESENTATIVE ROKEBERG inquired about case law in the state of
Alaska (indisc.-mumbling).
MR. BERBERICH replied not that he was aware of. He thought it was
just the opposite and added that MTA just placed some fiber between
Anchorage and the Mat-Su Valley and one of the conditions was that
MTA do it along with GCI.
REPRESENTATIVE BERKOWITZ commented he didn't know about the
specificity of the case law, but one of the underlying theories of
why we have the utilities commission is to prevent duplication of
services for capital projects (indisc.) expense because then you
wind up with excess capacity ....
REPRESENTATIVE ROKEBERG interjected that was pre-deregulation
theory.
Number 1390
REPRESENTATIVE CROFT asked why is unbundling unfair in rural
Alaska, but worked okay in the urban area.
MR. BERBERICH said he thought the obvious answer is just the
economies of scale that the larger companies had.
REPRESENTATIVE CROFT referred to the chart and commented there are
a lot of long lines and very few short lines and the short line
problem doesn't hit as hard in urban areas.
MR. BERBERICH said that was correct. For example, the city of
Palmer has a general populous of 3,000, but the actual switch has
probably close to 9,000. It goes all the way up Sheep Mountain,
all the way out to the Butte, across the rivers, so there's a lot
of long loops out there.
Number 1486
REPRESENTATIVE ROKEBERG asked if MTA receives federal funding as
part of the universal service charge to subsidize their services?
MR. BERBERICH said MTA receives almost $10 million in universal
service support to maintain their rates. The local rate generates
about $6 million or $8 million.
Number 1559
REPRESENTATIVE BERKOWITZ asked if he had heard correctly that
unbundling might not support universal service.
MR. BERBERICH replied that's the one thing Congress said that may
not be appropriate in rural areas - to require small companies to
unbundle the network element. He reiterated that it gets down to
some of the layers which he spoke about earlier in terms of the
price that has to be charged for these unbundled network elements.
Number 1630
CHAIRMAN GREEN thanked Mr. Berberich for his comments and asked Mr.
Rowe to come forward to present his comments.
Number 1647
JIM ROWE, Executive Director, Alaska Telephone Association, thanked
the committee for the opportunity to testify in opposition to
HB 416. He said the Alaska Telephone Association has 22 members
incumbent local exchange carriers throughout the state of Alaska.
He said, "I'm going to take just a little bit of time and I think
it will perhaps address a couple of the questions that have been
asked so far. I'm going to read you a couple short passages out of
the 1996 Telecommunications Act and this is under development of
competitive markets. This is Section 251(c)(3) additional
applications of incumbent local exchange carriers (indisc.) talking
about unbundled access.
The duty to provide to any requesting telecommunications
carrier for the provision of a telecommunication service
nondiscriminatory access to the network elements on an
unbundled basis.
MR. ROWE continued reading from subsection (f), exemptions,
suspensions and modifications.
Subsection 1. Exemption for certain rural telephone
companies. Exemption - subsection (c) of this section
shall not apply to a rural telephone company until the
party making a bonafide request of a rural telephone
company for inter-connection services or network elements
shall submit a notice of its request to the state
commission. The state commission shall conduct an
inquiry for the purpose of determining whether to
terminate the exemption.
MR. ROWE explained that's what happened last winter here in the
state of Alaska - GCI asked to go in and serve in PTI territories.
They asked for unbundled access and co-location as one of the
methods they wished to compete with. The APUC heard it and made a
determination that until they had more information, they would not
remove the exemption that PTI already had as a rural provider to
allow unbundled elements and co-location in that area. He referred
to section (b) of HB 416 and said it absolutely prevents the
[Alaska] Public Utility Commission from determining that a rural
exemption cannot be maintained. It's not a matter of time frame -
it's not a matter of having to do it in 90 days or by the end of
1998 - it's irrelevant. It's a matter that they cannot make the
determination that some entity coming in to compete will not be
allowed to have unbundled access co-location.
MR. ROWE referred to an earlier question from Representative
Berkowitz about whether or not the number was critical and said the
number is irrelevant. The opportunity for the [Alaska] Public
Utilities Commission to decide that we shouldn't have unbundled
competition in an area is what's pertinent. And the federal
legislation very specifically spells out what a rural area is.
It's not simple - it's federalese, but it is there and there are
three or four different opportunities to fit in the rural
categories. All of the state, except for Anchorage, does so. In
Chairman Kennard's speech that Mr. Rhyner referred to, he talked
enthusiastically about recently having seen a rural
telecommunications operation - he was in Roanoke, Virginia. The
perception while sitting in Juneau isn't very rural, but to people
in Washington D.C. who worked on this legislation and other bills
that didn't make it, it's a complex piece of legislation. He said,
"I assure you that there was a lot looked at here - that they have
concern - that there can be an adverse impact in rural areas and I
don't think that we want to say we need to make that threshold
lower."
MR. ROWE concluded that if the Alaska Public Utilities Commission
determines that competition is going to serve the public well in
Angoon for example - that's wonderful - let them make that
determination. But that determination should be made before
there's competition in Angoon. He stated, "But I think to write in
legislation that they shouldn't make that consideration in
individual cases is inappropriate and lacks foresight and can
seriously disadvantage the people in Alaska."
Number 2070
REPRESENTATIVE ROKEBERG expressed concern with Mr. Berberich's
comments regarding the FCC's current proposal to shift about 75
percent of the support on universal service and access charges to
the states. That means the state would have to pick up about $35
million out of the state service areas to redistribute to the state
universal requirements.
MR. ROWE responded there has been a lot of activity on this because
of the concern of a potential increase of $9 or $10 on each
telephone customer in the state on local rates. That's not taking
into account any change in access; that's just the universal
service.
Number 2157
REPRESENTATIVE PORTER asked if the $9 or $10 increase was per
month?
MR. ROWE responded affirmatively.
REPRESENTATIVE PORTER asked if Mr. Rowe had any idea of what the
timing might be on that decision.
MR. ROWE said it is his hope the timing on that decision will be
that it never happens. He doesn't have any feeling on the timing,
but added the FCC Chairman Kennard, may be in Alaska this summer
and he hopes to have an opportunity to explain their concern
personally.
Number 2217
REPRESENTATIVE JAMES asked if there was any chance the FCC in its
wisdom, may redefine universal services. She noted that currently
what must be provided is very basic, but she's concerned that more
may be required.
MR. ROWE said, "I think that is in the federal act, yes. And let
me say it's one that can be continually changing as what is the
national standard (indisc.) universal service, which - and I'm
talking about the products that come with the package of universal
service - there's universal service in the sense everybody gets it,
there's also what is it we get with universal service. Is it only
voice (indisc.) access, is it fax, is it bandwidth?
REPRESENTATIVE JAMES reiterated her concern that more intense
services are going to be required to have everyone equal.
REPRESENTATIVE ROKEBERG asked, "Back on the point - access versus
universal service of this $50 million amount. Do you have any
understanding of what -- would the access charges also be affected
or is it just the universal service portion that's in play right
now ...."
MR. ROWE said he didn't mean to mislead the committee by saying
access. He had been talking about the universal service fund money
being about $50 million per year to this state; he's wasn't talking
about access reform at all.
Number 2407
REPRESENTATIVE BERKOWITZ said it appears the FCC has a fairly wide
net definition of rural and asked exactly what the definition of
rural is that's used by the FCC.
MR. ROWE said he could read it for the committee and added that's
it's federal law, not FCC determination.
TAPE 98-82, SIDE A
Number 0001
MR. ROWE offered to have copies made for committee members for
their perusal.
CHAIRMAN GREEN asked if there were any other questions of Mr. Rowe.
Hearing none, he confirmed that Mr. Jackson was still available on-
line.
Number 0088
REPRESENTATIVE CROFT said it seems to him that one of the key
elements is not so much the number of lines as the density of the
lines. He added what worries him about setting the number at 6,000
is if it's just that number and depending on how the area is
defined, there could be a huge area that qualifies for 6,000 with
a very low density. He asked if a counter-argument can be made
that it's the absolute number, not the density that matters.
MR. JACKSON said he believed it's probably both. He agreed that
density is a factor and one of the ironic things about Alaska
actually is that many of the smaller locations have fairly dense
and fairly short loop lines in the rural areas.
REPRESENTATIVE CROFT noted that HB 416, as drafted, sets the number
not the density as a criteria.
MR. JACKSON agreed that HB 416 just sets a number. He added, "One
of the things which we had played with which doesn't totally get to
your concern, but was to define it in terms of the number of lines
in a particular exchange of a utility."
Number 0238
REPRESENTATIVE ROKEBERG asked, "Why does a profit making company,
investor-owned like GCI want to go into an area that's
fundamentally subsidized by the government? Does the APUC allow a
rate of return if you will, profit on your investment or activities
in those areas over and above the subsidized amount? Is that how
that works in a utility regulated formula or what is your objective
in doing it?"
MR. JACKSON responded there is no set formula. The intent would be
to make it profit, clearly. The GCI believes the universal service
fund and competition can actually be structured to work together in
order to reduce the cost of universal service, which is essentially
a tax on every consumer's phone bill. Some of those universal
service charges are going to start to be passed on and this year,
GCI is paying something like $5 million to support universal
service. The universal service can be structured with competition
in various ways to drive down the cost of universal service. In
part, that would be accomplished by the fact that a new carrier,
such as GCI, may be eligible in part for universal service; not
based on its cost, but based on providing services to customers.
Number 0372
REPRESENTATIVE ROKEBERG referenced the Supreme Court case regarding
electric utility lines and asked if that had any impact in the
telephone area.
MR. JACKSON said he was somewhat familiar with that case which was
between Chugach and [Anchorage] Municipal Light &Power. He
believed the posture in that case was that the APUC had decided the
duplicate facility should be eliminated and the Supreme Court
upheld the APUC's decision that the duplicate facilities ought to
be eliminated in that instance. It's not a general bar for all new
facilities. He added, "We are to some extent able to build our own
facilities and with the unbundled network elements to sort of round
that out. I think a portion of what was left out from the earlier
comments is that we, in fact, have to pay the cost of the unbundled
network elements. So, when we use a loop from the local exchange
company, so far ATU, we pay the cost of that loop. The federal
legislation was actually quite wise in recognizing that that piece
of the network could not be very readily duplicated and it would
tear up everybody's backyard if we did. And so rather than having
that extra loop put into every house, they allowed someone like us
to use it if we paid the existing company to use it. And that is
the structure of the act."
Number 0516
CHAIRMAN GREEN said there have been arguments made which have given
the committee second thoughts about moving too far, too fast.
Therefore, HB 416 would be placed in a subcommittee to be reviewed
over the interim. Representative Porter and Representative Croft
would serve on the subcommittee to be chaired by Chairman Green.
HB 434 - DRUG TESTING OF WELFARE RECIPIENTS
Number 0601
CHAIRMAN GREEN announced the next order of business was HB 434, "An
Act requiring drug testing for applicants for and recipients of
assistance under the Alaska temporary assistance program; and
providing for an effective date." He asked bill sponsor,
Representative Rokeberg, to address HB 434.
Number 0613
REPRESENTATIVE ROKEBERG explained the House Health, Education and
Social Services Committee had removed the wording "elimination of
benefits" which he considered to be the heart of the bill and
requested the Judiciary Committee to reinsert that wording by
adopting the proposed amendment P.1, Lauterbach, 5/4/98.
Number 0672
REPRESENTATIVE JAMES made a motion to adopt amendment P.1, dated
5/4/98.
REPRESENTATIVE BERKOWITZ objected for purposes of discussion.
Number 0696
REPRESENTATIVE ROKEBERG explained that lines 16-17 of the amendment
adds language to existing law and reinserts language in the title.
It brings the language back to the original draft.
REPRESENTATIVE CROFT remarked, "There was reductions alone before,
then it was changed to elimination, and now you're doing reduction
or elimination?"
REPRESENTATIVE ROKEBERG said he believed that was the last form of
the bill. That was a committee substitute presented to the House
HESS committee.
REPRESENTATIVE CROFT inquired if that was the only substantive
change of the amendment.
REPRESENTATIVE ROKEBERG confirmed that and added it inserts
language bringing it back to the language in the original draft.
He said, "The reason for that is that there was testimony from the
department that they could do that, but my objection was to make
sure that they do it because they have what's called sanctions now.
But this provision here would require that the person who was
signing a family self-sufficiency plan would (indisc.-mumbling)."
Number 0839
REPRESENTATIVE BERKOWITZ withdrew his objection.
CHAIRMAN GREEN asked if there was further objection? Hearing none,
Amendment 1 was adopted.
Number 0850
REPRESENTATIVE JAMES made a motion to move CSHB 434(HES) as amended
with individual recommendations. There being no objection, CSHB
434(JUD) was moved from the House Judiciary Standing Committee.
ADJOURNMENT
Number 0890
CHAIRMAN GREEN adjourned the House Judiciary Standing Committee at
5:40 p.m.
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