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