BP BHEAD INT S [atlas:bill]

AN ACT Relating to promoting telecommunications network investment by encouraging the modernization of the telecommunications infrastructure; adding new sections to chapter 80.36 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that it is in the public interest to assure that all telecommunications providers adequately invest in telecommunications infrastructure throughout the state.

The legislature further finds that the investment will not occur unless all providers are allowed to charge service prices which cover the actual cost of service.

Therefore, the legislature declares it is the policy of the state to promote investment in Washington's telecommunications infrastructure and foster facilities-based competition in the provision of telecommunications services regulated by the utilities and transportation commission by requiring that all telecommunications service prices, including prices for services and facilities provided to other carriers, cover their cost of service unless the costs are explicitly recovered from a state or federal universal service fund.

NEW SECTION. Sec. 2. The definitions in this section apply to sections 2 through 5 of this act unless the context clearly requires otherwise.

(1) "Commission" means the utilities and transportation commission created under this title.

(2) "Cost of service" to be used by the commission in setting prices or rates for both wholesale and retail services means the actual cost, as opposed to hypothetical cost, that must at a minimum include as cost inputs:

(a) Depreciation lives, methodologies, and parameters that must provide incentives for investment and modernization of the state-wide telecommunications infrastructure and must be the same as used for financial reporting to the federal securities and exchange commission by telecommunications companies, whether or not classified as competitive under RCW 80.36.320;

(b) A reasonable markup for actual joint and common costs, but the cost of a loop must be considered a direct cost of exchange and access service and not a joint or common cost of all services; and

(c) Investment costs using actual network design, and reflecting actual deployment of plans to meet future growth, if those costs have not been found by the commission on an adequate record to be unreasonable or imprudent.

NEW SECTION. Sec. 3. In determining the revenue requirement for a telecommunications company, and in implementing RCW 80.04.350, the commission shall prescribe depreciation lives, methodologies, and parameters designed to provide incentives for investment and modernization of the state-wide telecommunications infrastructure, that must be the same as used for financial reporting to the federal securities and exchange commission by telecommunications companies, whether or not classified as competitive under RCW 80.36.320.

NEW SECTION. Sec. 4. (1) The price for a service may be set below the cost of service:

(a) To the extent a service receives support from a state or federal universal service fund; or

(b) By a telecommunications company choosing to do so, if the price is at or above long run incremental cost.

(2) The commission shall conduct a proceeding to set the price for each service above the cost of service for each telecommunications company requesting the proceeding. The proceeding must be concluded by a final order of the commission setting the price for each service above the cost of service within six months of the filing of the request by the telecommunications company, but the commission may as part of that final order set a schedule for phasing in any required price increase on a pro rata basis not to exceed three years.

(3) Nothing in this section and sections 2, 3, and 5 of this act requires a rural telephone company as defined by the federal telecommunications act of 1996 to set prices for a service or services at or above the cost of service.

NEW SECTION. Sec. 5. By December 31, 1997, the commission shall establish by rule a state universal service fund that must be consistent with the federal fund to be established by the federal telecommunications act of 1996, including, but not limited to, the separate treatment of rural telephone companies as defined by the federal telecommunications act of 1996.

NEW SECTION. Sec. 6. Sections 2 through 5 of this act are each added to chapter 80.36 RCW.