Regulation of telecommunications utilities and alternative telecommunications utilities; telecommunications provider of last-resort obligations; telecommunications intrastate switched access rates; interconnected voice over Internet protocol service; and use of transmission equipment and property by video service providers

In general, the PSC has certified as TUs those telecommunications providers that are incumbent local exchange carriers (ILECs) under federal law, which are telecommunications providers that resulted from the breakup of the Bell System pursuant to a federal antitrust action. In general, the PSC has certified as ATUs those telecommunications providers that are competitive local exchange carriers (CLECs) under federal law, which are telecommunications providers that compete with ILECs to provide basic local exchange service.

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. In addition, ATUs, like certain other persons who provide active retail voice communications service, must collect from customers and remit to the PSC a monthly police and fire protection fee that is used for shared revenue payments.

ATUs.

Under this bill, ATUs are subject to the intrastate switched access rate, tariff, and interconnected VOIP requirements described below, and to the monthly police and fire protection fee described above. In addition, the bill limits the additional requirements that the PSC may impose on an ATU. Under the bill, the PSC may impose requirements 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 related requirements; 7) telephone caller identification, pay-per-call, and toll-free services; 8) PSC privacy rules; 9) universal service and contributions to the state's universal service fund; 10) access to telecommunications emergency services; 11) restrictions on resale or sharing certain services, products, and facilities; 12) violations of rules of the Department of Agriculture, Trade and Consumer Protection (DATCP) regarding advertising and sales and collection practices; 13) transfer of local exchange customers to other telecommunications providers; 14) PSC questionnaires and other information requests; 15) changes to PSC orders and reopening PSC cases; 16) PSC-required tests; 17) conditional, emergency, and supplemental PSC orders; 18) timing of effect of PSC orders; 19) court review of PSC orders; 20) injunction procedures; 21) enforcement duties of the PSC, the attorney general, and district attorneys and related court venues; 22) penalties related to information and record requests; 23) forfeitures; 24) abandonment or discontinuance of lines, services, and rights-of-way; 25) assessments for reimbursement of PSC expenses; 26) assessments for telephone relay service; and 27) assessments for enforcement of certain consumer protection requirements by DATCP.

As under current law, the bill allows the PSC to impose a requirement specified above if the PSC finds that the imposition is in the public interest. The bill also provides that, if the PSC imposes such a requirement on an ATU, the PSC must impose the same requirement at the same level of regulation on all other ATUs. The bill allows the PSC, based on the public interest, to impose other requirements on an ATU related to the reasonableness and adequacy of intrastate switched access service and wholesale telecommunications service. However, the PSC is not required to impose the same requirement at the same level on all other ATUs.

In addition, the bill provides that, except for a local government ATU, 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. Also, with certain exceptions, the bill allows the PSC to deny certification as an ATU only 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 applicable to ATUs. The bill also allows an ATU to require the PSC to grant recertification as an ATU. Upon recertification, the ATU is subject to the requirements for ATUs described above. However, the recertification terminates all regulatory requirements related to the prior certification that were previously imposed on the ATU by the PSC and that are inconsistent with the bill's requirements, unless the ATU requests to remain subject to certain of those requirements.

TUs.

The bill exempts TUs from requirements relating to all of the following:

1) PSC classification of public utility service; 2) PSC authority regarding production of records, audits of accounts, service measurement standards, and test results; 3) PSC authority to enter premises; 4) PSC valuation of utility property; 5) accounting requirements, including depreciation rates and new construction accounting; 6) reporting of expenses, profit, and other items; 7) PSC reports of utility property values and other financial data; 8) filing of rates and PSC approval of rates; 9) prohibition against unjust discrimination among customers; 10) certain prohibitions regarding the provision of service to customers; 11) construction, installation, or operation of new facilities; 12) affiliated interest requirements; 13) certain municipal authority to regulate public utilities; 14) dissolution and reorganization; 15) liability for treble damages; 16) PSC enforcement of certain unfair trade practice orders; 17) private causes of actions by persons injured by certain violations of law by TUs; and 18) alternate dispute resolution requirements of the PSC. Except for wholesale telecommunications service, the bill also exempts TUs from certain enforcement authority of the PSC.

The bill makes changes to current law to ensure that small TUs, and TUs that are cooperatives, are subject to the foregoing exemptions. The bill also eliminates the PSC's authority to order an applicant for certification as a TU to satisfy any conditions the PSC considers necessary to protect the public interest. In addition, the bill repeals the requirements that apply to TUs under current law that apply to the following: 1) the offering of new telecommunications services or jointly offering services with other TUs; 2) classification of TU service; 3) promotional rates; 4) PSC authority regarding contracts between TUs and individual customers; 5) cross-subsidization requirements for nonlocal government TUs; and 6) consolidations and mergers. Also, the bill repeals price regulation of TUs and terminates any requirements imposed by the PSC on price-regulated TUs, as well as repeals the PSC's authority to impose partial deregulation and other types of alternative regulation on TUs. However, if a TU is subject to an alternative regulation plan under current law, the bill provides that, unless the TU terminates the plan, the TU remains regulated pursuant to the plan, except to the extent that the plan is inconsistent with the bill's tariff or intrastate switched access rates requirements.

The bill allows a TU to terminate its certification as a TU and have the PSC certify the TU as an ATU. Upon certification as an ATU, all regulatory requirements related to the former TU certification that are inconsistent with the bill's requirements are terminated, unless the TU requests to remain subject to certain of the requirements. In addition, the formerly certified TU is subject to the same requirements as an ATU. Also, the formerly certified TU's wholesale telecommunications services and rates are subject to the PSC's authority regarding reasonable rates and adequate service, and the formerly certified TU is subject to the basic voice requirements discussed below. In addition, if the formerly certified TU was subject to price regulation under current law, its intrastate dedicated access rates must mirror its interstate dedicated access rates.

The bill allows a TU to require the PSC to issue an order recertifying the TU as a TU, but generally regulating the TU like an ATU, except that the recertified TU is also subject to the basic voice requirements discussed below. Such a recertification terminates the TU's prior certification, and all regulatory requirements related to the prior certification that are inconsistent with the bill's requirements, unless the TU requests to remain subject to certain of those requirements.

If the PSC issues an order certifying a TU as an ATU, or recertifying a TU as a TU that is regulated like an ATU, the order operates as a limited waiver of the TU's right to the following: 1) an exemption from certain interconnection requirements under federal law that apply to ILECs that are rural telephone companies; and 2) suspension or modification of certain interconnection requirements under federal law. The bill provides that, except for the foregoing limited waivers, the state's telecommunications law is not intended to reduce or expand the scope and application of federal telecommunications law, including the PSC's authority under federal law.

Intrastate switched access rates The bill imposes requirements on intrastate switched access rates that depend on whether a telecommunications provider is a large or small ILEC, new nonincumbent, or large or small nonincumbent, as defined in the bill. The bill defines "switched access rates" as rates charged for providing switched access to a local exchange network for enabling the origination or termination of telecommunications service within the local exchange. In general, federal law provides that the Federal Communications Commission regulates interstate rates and the states regulate intrastate rates.

Large ILECs.

The bill defines "large ILEC" as an ILEC that, with any ILEC affiliates, had 150,000 or more access lines in this state as of January 1, 2010. No later than two years after the bill's effective date, a large ILEC must reduce its intrastate switched access rates by an amount equal to 25 percent of the difference between its intrastate and interstate switched access rates. No later than three years after the bill's effective date, a large ILEC must further reduce its intrastate switched access rates by an amount equal to 33 percent of the difference between its intrastate and interstate switched access rates. No later than four years after the bill's effective date, a large ILEC must further reduce its intrastate switched access rates by an amount equal to 50 percent of the difference between its intrastate and interstate switched access rates. No later than five years after the bill's effective date, a large ILEC must further reduce its intrastate switched access rates to mirror its interstate switched access rates and, beginning on that date, may not charge intrastate switched access rates that are higher than its interstate switched access rates.

New nonincumbents.

The bill defines "new nonincumbent" as a telecommunications provider that is not an ILEC and that was initially certified as a TU or an ATU on or after January 1, 2011, except that "new nonincumbent" does not include an ATU that was formerly certified as a TU. Within 30 days after the bill's effective date, the bill prohibits a new nonincumbent from charging intrastate switched access rates that are higher than its interstate switched access rates.

Large nonincumbents.

The bill defines "large nonincumbent" as a telecommunications provider, other than an ILEC, that had 10,000 or more access lines in the state as of January 1, 2010, and that was initially certified as a TU or an ATU before January 1, 2011. The bill prohibits a large nonincumbent from charging intrastate switched access rates that are higher than the rates it charged on January 1, 2011, except for increases that result in mirroring interstate switched access rates.

No later than four years after the bill's effective date, a large nonincumbent must reduce its intrastate switched access rates by an amount equal to 33 percent of the difference between its intrastate and interstate switched access rates. No later than five years after the bill's effective date, a large nonincumbent must further reduce its intrastate switched access rates by an amount equal to 50 percent of the difference between its intrastate and interstate switched access rates. No later than six years after the bill's effective date, a large nonincumbent must further reduce its intrastate switched access rates to mirror its interstate switched access rates and, beginning on that date, may not charge intrastate rates that are higher than its interstate rates.

Other requirements.

The bill provides that, except to enforce the above requirements, the PSC may not investigate, review, or set intrastate switched access rates for large ILECs, new nonincumbents, or large nonincumbents. Also, during the four-year period beginning on the bill's effective date, the PSC is prohibited from investigating, reviewing, or setting the intrastate switched access rates of a "small ILEC," which the bill defines as an ILEC that, with any ILEC affiliates, had fewer than 150,000 access lines in this state as of January 1, 2010. In addition, during the three-year period beginning on the bill's effective date, the PSC is prohibited from doing the same with respect to a "small nonincumbent," which the bill defines as a telecommunications provider, other than an ILEC, that had fewer than 10,000 access lines in the state as of January 1, 2010, and that was initially certified as a TU or an ATU before January 1, 2011. However, the bill allows the PSC to enforce reductions in intrastate switched access rates ordered by the PSC prior to the bill's effective date. Also, the bill allows the PSC to approve certain increases in intrastate switched access rates that are included in tariff revisions, which are discussed below.

Tariffs In general.

The bill allows, but does not require, a TU or an ATU to do any of the following: 1) retain on file with the PSC tariffs showing the service rates, tolls, and charges the TU or ATU has established for some or all services that the TU or ATU performs in the state; 2) file new tariffs with the PSC for some or all of such services; 3) withdraw tariffs for any service, except for intrastate switched access service; and 4) file revised tariffs that change the rates, tolls, charges, or terms and conditions under tariffs on file with the PSC. Except for changes that constitute increases in intrastate switched access rates, tariff revisions are effective at the time specified in the revised tariff as filed with the PSC. Except for new tariffs for intrastate switched access services, a new tariff is effective on the date specified in the tariff, unless the PSC, within ten days after the new tariff is filed, suspends the new tariff. If the PSC suspends a new tariff, the PSC may modify the new tariff only to the extent that the new tariff violates certain requirements that apply to the TU or ATU, and only after granting the TU or ATU an opportunity for a hearing. If the PSC fails to modify the new tariff within deadlines specified in the bill, the new tariff is effective as filed.

The bill also allows a tariff for a service that permits a TU or an ATU to enter into an individual contract with an individual customer under rates, terms, or conditions that are different from those specified for the service in the tariff. Except for such an individual contract, the bill prohibits a TU or an ATU from receiving for a service more or less compensation than that specified for the service in a tariff, and prohibits a TU or an ATU from receiving compensation for a service that is not specified in a tariff. Also, copies of tariffs filed under the bill must be made available to consumers in a form and place readily accessible to the public.

Intrastate switched access service.

No later than 90 days after the bill's effective date, a TU or an ATU that provides intrastate switched access service must have on file with the PSC a tariff showing the rates, tolls, and charges for the service.

The bill provides that the absence of such a tariff before that deadline does not prohibit a TU or an ATU from charging intrastate switched access rates that comply with the requirements for intrastate switched access rates described above or that are charged pursuant to a prior order of the PSC. If a TU or an ATU must file a new tariff to comply with the foregoing requirement, and the tariff includes intrastate switched access rates that are higher than the rates the TU or ATU charged on January 1, 2011, the PSC must approve the tariff, unless certain exceptions are satisfied.

The PSC is authorized to enforce payment of rates specified in a tariff for intrastate switched access rates. Once such a tariff is in effect, the bill prohibits a TU or an ATU from withdrawing the tariff. However, under certain circumstances, a TU or an ATU may revise the tariff to increase intrastate switched access rates.

The PSC must approve the increase, except for certain specified increases that are effective at the time specified in a revised tariff.

Interconnected VOIP service With certain exceptions, the bill provides that interconnected VOIP service is exempt from PSC regulation. Under the bill, "interconnected VOIP service" 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.

One exception to the exemption is that an entity that provides interconnected VOIP service must make contributions to the state's universal service fund based on the entity's revenues from providing intrastate interconnected VOIP service. The bill specifies the methods for calculating such revenues. Under the other exceptions to the exemption, a provider of interconnected VOIP service must do the following, which apply to other telecommunications providers under current law: 1) impose a monthly police and fire protection fee on its customers; 2) pay assessments for DATCP enforcement of certain consumer protection requirements; and 3) pay assessments for a statewide telecommunications relay service. In addition, interconnected VOIP service is subject to the PSC's authority over interconnection agreements under current law. The bill also provides that, unless otherwise provided under federal law, an entity that provides interconnected VOIP service must pay intrastate switched access rates. Also, unless otherwise provided under federal law, if the entity provides intrastate switched access service in connection with the interconnected VOIP service, the entity is allowed to charge intrastate switched access rates for the service.

Universal service Under current law, the state's universal service fund is used for, among other things, supporting programs that promote access to essential and advanced telecommunications services. Current law requires the PSC to promulgate rules that define the essential and advanced telecommunications services that must be available to all customers at affordable prices as a necessary component of universal service. The essential and advanced telecommunications services 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 regarding PSC rules and requires instead that certain telecommunications providers make available to their customers all essential telecommunications services. In addition, the bill eliminates advanced telecommunications services from the programs supported by the state's universal service fund. The bill defines "essential telecommunications services" as services or functionalities listed in a regulation by the Federal Communications Commission as of January 1, 2010. The bill's requirements apply to a telecommunications provider 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. In addition, the bill limits the requirements that the PSC may impose on a wireless telecommunications provider that receives support from the federal universal service fund but does not receive support from the state's universal service fund.

Basic voice service The bill requires an ILEC to make basic voice service available to all residential customers within the ILEC's local exchange area. "Basic voice service" is defined, in part, as two-way voice communication service within a local calling area. The bill allows an ILEC to provide basic voice service through an affiliate or through the use of any available technology or mode.

The bill also allows an ILEC to apply to the PSC for a waiver from the foregoing requirements. The PSC must grant a waiver if the waiver is in the public interest or effective competition exists in the local exchange area. If the PSC fails to meet a 120-day deadline for the waiver request, the waiver request is considered granted by operation of law. In addition, the PSC must grant a waiver if the PSC previously found that effective competition existed. However, the PSC may not grant a waiver based on a previous finding of effective competition until after June 1, 2012. If the PSC fails to meet a 20-day deadline for a waiver request based on a previous finding of effective competition, the waiver request is considered granted by operation of law.