BILL REQ. #:  H-2193.1 

Read first time 03/04/2003.   Referred to Committee on Technology, Telecommunications & Energy.

     AN ACT Relating to telecommunications; amending RCW 80.36.300, 80.36.320, and 80.36.135; and adding a new section to chapter 80.36 RCW.

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

Sec. 1   RCW 80.36.300 and 1985 c 450 s 1 are each amended to read as follows:
     The legislature declares it is the policy of the state to:
     (1) Preserve affordable universal telecommunications service;
     (2) Maintain and advance the efficiency and availability of telecommunications service;
     (3) Ensure that customers pay only reasonable charges for telecommunications service;
     (4) Ensure that rates for noncompetitive telecommunications services do not subsidize the competitive ventures of regulated telecommunications companies;
     (5) Promote diversity in the supply of telecommunications services and products in telecommunications markets throughout the state; ((and))
     (6) Permit flexible regulation of competitive telecommunications companies and services; and
     (7) Ensure that rate of return, rate base regulation of telecommunications companies is commensurate with the level of competitive activity from alternative service providers in a company's service territory.

Sec. 2   RCW 80.36.320 and 1998 c 337 s 5 are each amended to read as follows:
     (1) The commission shall classify a telecommunications company as a competitive telecommunications company if the services it offers are subject to effective competition. Effective competition means that the company's customers have reasonably available alternatives and that the company does not have a significant captive customer base. In determining whether a company is competitive, factors the commission shall consider include but are not limited to:
     (a) The number and sizes of alternative providers of service;
     (b) The extent to which services are available from alternative providers in the relevant market;
     (c) The ability of alternative providers to make functionally equivalent or substitute services readily available at competitive rates, terms, and conditions; ((and))
     (d) The presence of all alternative service providers offering alternative services in competition with a telecommunications company without regard to the technology used by an alternative service provider in providing alternative service.
     (e) Other indicators of market power which may include market share, growth in market share, ease of entry, and the affiliation of providers of services.
     The commission shall conduct the initial classification and any subsequent review of the classification in accordance with such procedures as the commission may establish by rule.
     (2) Competitive telecommunications companies shall be subject to minimal regulation. Minimal regulation means that competitive telecommunications companies may file, instead of tariffs, price lists that shall be effective after ten days' notice to the commission and customers. The commission shall prescribe the form of notice. The commission may also waive other regulatory requirements under this title for competitive telecommunications companies when it determines that competition will serve the same purposes as public interest regulation. The commission may waive different regulatory requirements for different companies if such different treatment is in the public interest. A competitive telecommunications company shall at a minimum:
     (a) Keep its accounts according to regulations as determined by the commission;
     (b) File financial reports with the commission as required by the commission and in a form and at times prescribed by the commission;
     (c) Keep on file at the commission such current price lists and service standards as the commission may require; and
     (d) Cooperate with commission investigations of customer complaints.
     (3) When a telecommunications company has demonstrated that the equal access requirements ordered by the federal district court in the case of U.S. v. AT&T, 552 F. Supp. 131 (1982), or in supplemental orders, have been met, the commission shall review the classification of telecommunications companies providing inter-LATA interexchange services. At that time, the commission shall classify all such companies as competitive telecommunications companies unless it finds that effective competition, as defined in subsection (1) of this section, does not then exist.
     (4) The commission may revoke any waivers it grants and may reclassify any competitive telecommunications company if the revocation or reclassification would protect the public interest.
     (5) The commission may waive the requirements of RCW 80.36.170 and 80.36.180 in whole or in part for a competitive telecommunications company if it finds that competition will serve the same purpose and protect the public interest.

Sec. 3   RCW 80.36.135 and 2000 c 82 s 1 are each amended to read as follows:
     (1) The legislature declares that:
     (a) Changes in technology and the structure of the telecommunications industry ((may produce)) have produced conditions under which traditional rate of return, rate base regulation of telecommunications companies may not in all cases provide the most efficient and effective means of achieving the public policy goals of this state as declared in RCW 80.36.300, this section, and RCW 80.36.145. The commission should ((be authorized to)) employ an alternative form of regulation if that alternative is better suited to achieving those policy goals.
     (b) Because of the great diversity in the scope and type of services provided by telecommunications companies, including alternative services and alternative service providers whether or not the services or the providers are regulated by the commission, alternative regulatory arrangements that meet the varying circumstances of different companies and their ratepayers ((may be)) is desirable.
     (2) Subject to the conditions set forth in this chapter and RCW 80.04.130, the commission may regulate telecommunications companies subject to traditional rate of return, rate base regulation by authorizing an alternative form of regulation. The commission may determine the manner and extent of any alternative forms of regulation as may in the public interest be appropriate. In addition to the public policy goals declared in RCW 80.36.300, the commission shall consider, in determining the appropriateness of any proposed alternative form of regulation, whether it will:
     (a) Facilitate the broad deployment of technological improvements and advanced telecommunications services to underserved areas or underserved customer classes;
     (b) Improve the efficiency of the regulatory process;
     (c) Preserve or enhance the development of effective competition and protect against the exercise of market power during its development;
     (d) Preserve or enhance service quality and protect against the degradation of the quality or availability of efficient telecommunications services;
     (e) Provide for rates and charges that are fair, just, reasonable, sufficient, and not unduly discriminatory or preferential; and
     (f) Not unduly or unreasonably prejudice or disadvantage any particular customer class.
     (3) A telecommunications company or companies subject to traditional rate of return, rate base regulation may petition the commission to establish an alternative form of regulation. The company or companies shall submit with the petition a plan for an alternative form of regulation. The plan shall contain a proposal for transition to the alternative form of regulation and the proposed duration of the plan. The plan must also contain a proposal for ensuring adequate carrier-to-carrier service quality, including service quality standards or performance measures for interconnection, and appropriate enforcement or remedial provisions in the event the company fails to meet service quality standards or performance measures. The commission also may initiate consideration of alternative forms of regulation for a company or companies on its own motion. The commission, after notice and hearing, shall issue an order accepting, modifying, or rejecting the plan within nine months after the petition or motion is filed, unless extended by the commission for good cause. The commission shall order implementation of the alternative plan of regulation unless it finds that, on balance, an alternative plan as proposed or modified fails to meet the considerations stated in subsection (2) of this section.
     (4) Not later than sixty days from the entry of the commission's order, the company or companies affected by the order may file with the commission an election not to proceed with the alternative form of regulation as authorized by the commission.
     (5) The commission may waive such regulatory requirements under Title 80 RCW for a telecommunications company subject to an alternative form of regulation as may be appropriate to facilitate the implementation of this section. However, the commission may not waive any grant of legal rights to any person contained in this chapter and chapter 80.04 RCW. The commission may waive different regulatory requirements for different companies or services if such different treatment is in the public interest.
     (6) Upon petition by the company, and after notice and hearing, the commission may rescind or modify an alternative form of regulation in the manner requested by the company.
     (7) The commission or any person may file a complaint under RCW 80.04.110 alleging that a telecommunications company under an alternative form of regulation has not complied with the terms and conditions set forth in the alternative form of regulation. The complainant shall bear the burden of proving the allegations in the complaint.

NEW SECTION.  Sec. 4   A new section is added to chapter 80.36 RCW to read as follows:
     The commission shall obtain information on the number of customers as defined under RCW 82.04.065(6) receiving telephone service as defined under RCW 82.04.065(3) to determine the level of competition within each rate of return, rate base telecommunications company's service territory. This information shall be used in evaluating petitions by telecommunications companies and motions by the commission for competitive classification under RCW 80.36.320 and alternative forms of regulation under RCW 80.36.135.