Bill No.: SF0078                     Drafter:  LGC

LSO No.:   07LSO-0064                 Effective Date:  7/1/2007

Enrolled Act No.:    SEA0057

Chapter No.:

Prime Sponsor:       Joint Corporations, Elections and Political Subdivisions Interim Committee

Catch Title:         Telecommunications.

Subject:              Regulation of telecommunications providers.

Summary/Major Elements:

· The act revises and updates telecommunications regulation in the state to reflect broader competition in the industry.

· The public service commission may no longer regulate the location and charges for public telephones.  The commission must grant certificates of public convenience and necessity to provide local exchange service if it finds that the applicant possesses adequate resources, regardless of the number of access lines.

Competitive services:

· In determining whether there are competitive services available for purposes of deregulating prices, the commission must consider alternative providers including wireless, cable providers and any other technology using phone numbers.  The commission must determine the extent to which those providers are functionally equivalent for equivalent services and may be substituted at reasonably comparable prices and conditions.  The commission must find a service competitive if:

o At least 75% of the class of customers in the area have access to at least one landline carrier and one wireless carrier unaffiliated with the applicant or, if the company does not differentiate between residential and business classes of service then the service is competitive if at least 60% of customers have access to at least one landline carrier and one wireless carrier unaffiliated with the applicant;

o The applicant agrees to provide prices throughout the area that do not vary by geographic location or access to competitors and to continue to provide stand alone basic residential services at a price less than the price for the same service bundled with other services; and

o The applicant agrees to provide until July 1, 2009, stand alone basic residential service at a price that does not exceed the price in effect on July 1, 2006, and agrees after July 1, 2009, not to increase the price by an amount that exceeds an amount based on federal gross domestic price index.  This amount may be increased if the provider demonstrates that the maximum price allowed would not allow the applicant a reasonable opportunity to recover its prudently incurred costs.  The applicant may discontinue offering stand alone basic residential service if a successor agrees to continue the service or the company proves that the service is obsolete due to lack of customers subscribing.

· The commission may find retail services which were previously found competitive to be noncompetitive if the commission finds that competition does not exist due to merger, acquisition, predatory pricing or marketing practices or withdrawal of offerings.

Noncompetitive essential services:

· Prices for noncompetitive essential services may be set at no more than the price for those services as of July 1, 2006.  A company may seek approval for revenue neutral adjustments.  A company may seek approval to increase the price based on changes in the local calling area, changes in access charges, changes affecting the service or increases in the cost of providing the service.  The increases shall be judged on the increases in the federal gross domestic product price index unless the applicant proves specific cost increases are disproportionately affecting its cost of providing the service.  The commission may allow for incentive and innovative or nontraditional price regulation including price indexing.

· Noncompetitive switched access shall not be priced above 3 cents a minute after January 1, 2010.  The act provides for transition to that price.

Other provisions:

· The commission is granted authority to exercise those authorities expressly delegated to it under the federal communications act of 1934.

· The act prohibits a telecommunications company from engaging in anti-competitive behavior and provides for a complaint procedure.

· The act eliminates mandatory quality of service studies and limits the annual report required of the commission.

Comments:

· Creates/amends major program – Amends Telecommunications Act of 1995.

· Contains delayed effective/repeal date – Title 37, Chapter 15 is repealed effective July 1, 2015.