Authority of the Public Service Commission over certain telecommunications utilities, telecommunications access charges, universal service fund contributions based on interconnected voice over Internet protocol service, tandem switching provider electronic call records, granting rule-making authority, and making an appropriation

Under current law, TUs are subject to varying degrees of regulation by the PSC, depending on certain factors, such as whether the TU has elected price regulation, under which the PSC regulates the rates charged by a TU, but not the TU's rate of return. The degree of PSC regulation also depends on whether a TU is a cooperative association, or whether the TU is a "small TU," which is a TU that had fewer than 50,000 access lines in this state on January 1, 1984. With certain exceptions, current law exempts an ATU from PSC regulation, except that, if certain conditions are satisfied, the PSC may impose on an ATU a requirement that otherwise applies to a TU or other public utility.

With respect to ATUs, the bill limits the requirements that the PSC may impose. Under the bill, the PSC may impose requirements on an ATU that relate only to the following: 1) submission of stockholder and other business management information; 2) PSC examination of accounting and other business records; 3) use of and connection to transmission equipment and property by other telecommunications providers; 4) confidential treatment of records by the PSC; 5) rates and costs of unbundled network elements; 6) interconnection agreements and other interconnection requirements; 7) telephone caller identification, pay-per-call, and toll-free services; 8) PSC privacy rules; 9) universal service and contributions to the state universal service fund; 10) impairment of speed, quality or efficiency of services, products, or facilities offered to consumers; 11) access to telecommunications emergency services; 12) compliance with price lists, contracts, and PSC rules and orders regarding providing consumers with service, products, or facilities; 13) discrimination in favor of affiliates and other entities; 14) restrictions on resale or sharing certain services, products, and facilities; 15) violations of rules of the Department of Agriculture, Trade and Consumer Protection regarding advertising and sales and collection practices; 16) transfer of local exchange customers to other telecommunications providers; 17) late payment charges; 18) PSC questionnaires and other information requests; 19) PSC hearings on consumer complaints; 20) changes to PSC orders and reopening PSC cases; 21) PSC-required tests; 22) conditional, emergency, and supplemental PSC orders; 23) timing of effect of PSC orders; 24) court review of PSC orders; 25) injunction procedures; 26) enforcement duties of the PSC, the attorney general, and district attorneys and related court venues; 27) penalties related to information and record requests; 28) forfeitures; 29) abandonment or discontinuance of lines, services, and rights-of-way; 30) assessments for reimbursement of PSC expenses; 31) assessments for telephone relay service; and 32) issuance of securities. The bill also provides that if the PSC imposes any of the foregoing requirements on an ATU, the PSC must impose the same requirement at the same level of regulation on all other ATUs, as well as all other TUs.

The bill also provides that certification as an ATU is on a statewide basis and that any ATU certification issued by the PSC before the bill's effective date is considered amended to be a statewide certification. However, the foregoing does not apply to an ATU owned or operated by a city, village, or town. In addition, with certain exceptions, the bill allows the PSC to deny certification as an ATU if the PSC finds that the applicant for certification does not have the financial, managerial, or technical capabilities to provide service or comply with requirements imposed by the PSC.

With respect to TUs, the bill exempts TUs from requirements relating to all of the following: 1) PSC classification of public utility service; 2) PSC valuation of utility property; 3) accounting requirements, including depreciation rates and new construction accounting; 4) reporting of expenses, profit, and other items; 5) PSC reports of utility property values and other financial data; 6) filing of rates and PSC approval of rates (except for access service charges, as described below); 7) PSC investigations of rates and services; 8) construction, installation, or operation of new facilities; 9) PSC approval of certain contracts; 10) certain municipal authority to regulate public utilities; and 11) dissolution and reorganization. The bill makes changes to current law to ensure that small TUs, and TUs that are cooperatives, are subject to the foregoing exemptions. In addition, the bill repeals the requirements that apply to TUs under current law that apply to the following: 1) offering new telecommunications services, or services jointly offered with other TUs; 2) classification of TU service; 3) promotional rates; and 4) consolidations and mergers.

Also, the bill repeals price regulation of TUs and terminates any requirements imposed by the PSC on price-regulated TUs.

The bill also allows a TU to terminate its certification as a TU and require the PSC to certify the TU as an ATU. The PSC must issue an order certifying a TU as an ATU no later than 30 days after receiving notice from the TU to terminate its TU certification. The order must also terminate all regulatory requirements related to the TU certification. Upon certification as an ATU, the formerly certified TU is subject to the same requirements as an ATU, as described above. In addition, the bill allows a TU to retain its certification as a TU but require the PSC to regulate the TU in the same manner as an ATU. The PSC must issue an order that accomplishes this result no later than 30 days after receiving notice from the TU.

Access service charges The bill creates requirements that apply to access charges, which the bill defines as dedicated access charges and switched access charges. "Dedicated access charges" is defined as the rates and rate elements that a local exchange carrier charges a telecommunications provider for wholesale access service to a local exchange network for the purpose of enabling the telecommunications provider to originate or terminate telecommunications service within the local exchange.

"Switched access charges" is defined as the rate and rate elements that a local exchange carrier charges a telecommunications provider for the provision of switched access to a local exchange network for the purpose of enabling the telecommunications provider to originate or terminate telecommunications service within the local exchange.

The bill prohibits an ILEC from increasing its intrastate access charges so that they exceed the ILEC's interstate access charges allowed under federal law. Also, no later than six months after the bill's effective date, an ILEC must make any reductions in its intrastate access charges that are necessary to ensure that they do not exceed the ILEC's interstate access charges allowed under federal law. The bill creates requirements for an ILEC to recover from the state universal service fund certain portions of the reduction in revenues that result from making the required reductions in intrastate access rates. During the first year following the reductions, an ILEC must recover 95 percent of its reduction in revenues each month; during the second year following the reductions, an ILEC must recover 85 percent of its reduction in revenues each month; and, except as described below, during the third year following the reductions and each year thereafter, an ILEC must recover 75 percent of its reduction in revenues each month. The exception applies if an ILEC fails to provide access to broadband service to at least 85 percent of its customers in any month during the sixth year following the reductions and in any year thereafter.

If the exception applies, an ILEC must recover 50 percent of its reduction in revenues in the relevant month, rather than 75 percent as required above. The bill defines "broadband service" for purposes of the exception as a service that provides access to the Internet that is capable of transmitting data packets or Internet signals at upstream or downstream average minimum speeds of 200 kilobits per second, except that the PSC may promulgate rules specifying greater upstream or downstream average minimum speeds if such speeds are consistent with any definition established by the Federal Communications Commission (FCC).

The bill requires the PSC to make disbursements from the state universal service fund for ILECs to make the recoveries described above. The bill also includes requirements for determining the reductions in revenues. In addition, the bill allows an ILEC to increase its monthly non-access service rates in order to recover reductions in revenues that are not recovered from the state universal service fund as described above.

The bill also creates requirements for telecommunications providers that are not ILECs. Under the bill, such a telecommunications provider's intrastate access charges for a local exchange may not exceed the intrastate access charges of the ILEC that provides telecommunications service in the local exchange. However, if the telecommunications provider's intrastate access charges on the bill's effective date exceed the ILEC's intrastate access charges that were in effect on October 1, 2009, the bill requires the telecommunications provider to reduce its intrastate access charges over a five-year period as follows: 1) no later than two months after the bill's effective date, the telecommunications provider must reduce its intrastate access charges by 20 percent of the difference between its charges in effect on the effective date of the bill and the ILEC's charges in effect on October 1, 2009; 2) no later than 24 months after the bill's effective date, the telecommunications provider must reduce its charges by 40 percent of such difference; 3) no later than 36 months after the bill's effective date, the telecommunications provider must reduce its charges by 60 percent of such difference; 4) no later than 48 months after the bill's effective date, the telecommunications provider must reduce its charges by 80 percent of the difference; and 5) no later than 60 months after the bill's effective date, the telecommunications provider must reduce its charges by 100 percent of the difference. In addition, at the end of the five-year period, the telecommunications provider's intrastate access charges may not exceed the ILEC's intrastate access charges. As a result, the telecommunications provider may have to make additional reductions to ensure that the telecommunications provider complies with the prohibition.

Interconnected VOIP service With two exceptions, the bill provides that interconnected VOIP service is exempt from PSC regulation. The bill provides that interconnected VOIP has the same meaning as under federal law, which is a service requiring a broadband connection and Internet protocol-compatible customer premises equipment that allows the user to engage in real-time, two-way communication over the public switched telephone network. The first exception to the exemption is that a telecommunications provider that provides interconnected VOIP service must make contributions to the state universal service fund based on its revenues from providing the service. The bill specifies the methods for calculating the revenues.

The second exception is that, unless otherwise provided under federal law, access charges for interconnected VOIP service are subject to the access service charge requirements described above.

Universal service Current law requires the PSC to promulgate rules that define a basic set of essential telecommunications services that must be available to all customers at affordable prices and that are a necessary component of universal service. Current law also requires the PSC to promulgate rules that define a set of advanced service capabilities that must be available to all areas of this state at affordable prices within a reasonable time and that are a necessary component of universal service. The essential services and advanced service capabilities must be based on market, social, economic development, and infrastructure development principles rather than on specific technologies or providers.

This bill repeals the foregoing requirements and requires instead that certain telecommunications providers must make available to their customers all essential telecommunications services. The bill defines "essential telecommunications services" as services or functionalities determined by the FCC to be eligible for support by federal universal service support mechanisms. The bill's requirement applies to a telecommunications provider that provides basic local exchange service or that is designated under federal law as a telecommunications carrier eligible to receive support from the federal universal service fund. Also, the bill provides that a telecommunications provider may provide essential telecommunications services itself or through an affiliate or through the use of any available technology or mode.

Electronic call detail records The bill requires a telecommunications provider that provides tandem switching service (tandem switching provider) to make certain electronic call detail records available to other telecommunications providers. The requirement applies to calls originated by wireless providers (which are referred to as commercial mobile radio service providers) and CLECs, and subsequently routed by the tandem switching provider to another telecommunications provider's network for termination. A tandem switching provider must make the electronic call detail records available no later than 24 months after the bill's effective date. The bill provides that a tandem switching provider complies with the foregoing requirements if an electronic call detail record that is made available contains the information provided by the telecommunications provider that originated the call. The bill also provides that it does not otherwise change the record creation, record exchange, or billing processes for traffic carried by interexchange carriers that are in effect on the bill's effective date.