[atlas:bill]

AN ACT Relating to rural telecommunications regulatory efficiency; 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 purpose of this act is to continue actions that have been taken in recent years at the national and state levels to promote competition in telecommunications and preserve and advance universal service. It is also the purpose of this act to promote continued investment in telecommunications infrastructure within the state of Washington, and to reduce the cost and extent of regulatory oversight of telecommunications firms operating in the state of Washington.

NEW SECTION. Sec. 2. The definitions in this section apply throughout sections 2 through 6 of this act unless the context clearly requires otherwise.

(1) "Access service" means the provision of communications between a customer's premises and an interexchange carrier's point of interconnection with a local carrier's network for the completion of end user calls to the public switched network for the origination or termination of interexchange long distance traffic.

(2) "Basic local exchange service" means the following services:

(a) Single party service;

(b) Voice grade access to the public switched network;

(d) Dual tone multifrequency signaling (touch-tone);

(e) Access to emergency services (911);

(f) Access to operator services;

(g) Access to interexchange services;

(h) Access to directory assistance; and

(i) Toll limitation services.

This definition may be amended from time to time by the commission by rule. However, no additional definition shall be added unless the commission finds that such a service is subscribed to by a majority of customers in urban areas and is consistent with the public interest. The cost to provide any additional service added to the definition set forth in this subsection shall be provided under the fund.

(3) "Federal act" means the communications act of 1934 (47 U.S.C. 151 et seq.), as amended.

(4) "Rural telephone company" means a local exchange carrier to the extent it qualifies as a rural telephone company as defined in the federal act.

NEW SECTION. Sec. 3. (1) As to any incumbent rural telephone company that has filed notice in accordance with section 4 of this act, or any competitive local exchange carrier, the commission shall not:

(a) Require the filing of any financial report, statement, or other document for the purpose of reviewing, monitoring, or regulating rate base, earnings, or rates of return; or

(b) Conduct any investigation of rate base, earnings, or rates of return.

(2) Consistent with the policy of telecommunications competition that is implemented in sections 2 through 6 of this act, other than the commission's adoption of rules required by sections 2 through 6 of this act, the commission shall adopt no new rule that increases regulatory burdens on telecommunications service providers, except upon a showing that the benefits of such a rule are clear and demonstrable and substantially exceed the cost of compliance by the affected telecommunications service providers. In determining the cost of compliance, the commission shall accept as prima facie correct the estimates of cost of compliance submitted by the affected telecommunications service providers.

(3) Not later than one hundred eighty days after the effective date of this section, the commission shall conduct a rule-making proceeding to identify and repeal all rules relating to the provision of telecommunications service that are inconsistent with, have been rendered unnecessary by, or have been superseded by either sections 2 through 6 of this act or the federal act.

NEW SECTION. Sec. 4. (1) Any rural telephone companies that file: (a) An infrastructure development plan that meets the requirements of section 5 of this act; and (b) notice with the commission of an election to be regulated in accordance with the provisions of this section, are authorized to determine and account for its revenues and expenses, including depreciation expenses, under generally accepted accounting principles, and, except as provided in this section, shall be subject to regulation only in accordance with this section and shall not be subject to any rate review or rate of return regulation by the commission. Any company making this election shall file rate lists for its telecommunications services, which rates shall be effective upon filing, except the rates for basic local exchange services and switched access services, which rates shall be effective upon compliance and in accordance with the procedures in this section.

(2) On the effective date of an election under this section, the tariffed rates of a company electing to be subject to the provisions of this section are deemed fair, just, and reasonable and shall continue to be deemed fair, just, and reasonable as long as any increases in the company's tariffed rates are in accordance with the provisions of this section.

(3) The company may increase its basic local exchange service rates after sixty days' notice to all affected subscribers. Rates for basic local exchange services may be reduced and be effective immediately upon filing or at such later time specified in such filing. Notice by the company to its subscribers shall be by regular mail and may be included in regular subscriber billings and shall include the following:

(a) A schedule of the proposed basic local exchange service rate change;

(b) The effective date of the proposed basic local exchange service rate change; and

(c) An explanation of the right of the subscriber to petition the commission for a public hearing on the rate increase and the procedure necessary to petition.

(4) The subscriber petitions provided for in this section shall contain the name, address, telephone number, and signature of each subscriber signing the petition and a description of the relief sought and the facts and basis for the petition. Only the subscriber in whose name the telecommunications service is listed shall be counted as a petitioner, and a subscriber with multiple telecommunications service lines is counted as a single petitioner. Every signature must be dated and shall have been affixed to the petition within sixty days preceding its filing with the commission.

(5) The commission has the authority to review basic local exchange service rates set by the company only upon a formal petition that complies with subsection (4) of this section and that is signed by at least fifteen percent of all affected subscribers. If a proper petition is presented to the commission within sixty days after the date of notice of the rate change was sent to affected subscribers, the commission shall accept and file the petition and, upon reasonable notice, may suspend the rates and charges at issue during the pendency of the proceedings and reinstate the rates and charges previously in effect and shall hold and complete a hearing on the issue within ninety days after filing to determine if the rates as proposed are just and reasonable. The commission may, within sixty days after close of the hearing, enter an order adjusting the rates and charges at issue, except that the commission may not set any rate or charge below the basic local exchange service rates in effect at the time the new rate at issue was proposed. A company subject to this section shall not increase its rates without the approval of the commission for six months after the date the commission enters such an order. If the commission fails to enter any order within sixty days after the close of the hearing, the petition shall be deemed denied and the rates and charges shall be deemed approved for all purposes, including the purposes of appeal.

(6) The company may withdraw its proposed increase in basic local exchange service rates at any time.

(7) A company subject to this section may at any time file an application with the commission requesting the commission to prescribe just and reasonable rates for the company. Any rate so set may thereafter be adjusted as provided in this section.

(8) Nothing in this section shall restrict any customer's right to complain to the commission regarding quality of service or the commission's authority to enforce quality of service rules and standards that are equally imposed on all telecommunications providers who qualify for eligible telecommunications carrier status.

(9) The commission may, on its own motion, review basic local exchange service rates of any company subject to this section if the company has increased these rates by more than the greater of fifteen percent or two dollars per access line per month within any consecutive twelve-month period, excluding rate increases under subsection (14) of this section. The commission shall hold and complete a hearing on such rates within ninety days after first giving notice of the hearing to the company to determine if the rates as proposed are just and reasonable. The notice of hearing must be given to the company within ninety days of the date of an increase which itself, or cumulative with other increases, exceeds the threshold of fifteen percent or two dollars per access line per month within any consecutive twelve-month period. The commission may, within sixty days after close of the hearing, enter an order adjusting the rates and charges at issue, except that the commission may not require the company to set any rate or charge below the greater of the rates in effect at the time of the filing of the increase or the actual cost of providing such service as established by evidence received at the hearing. In such an order, the commission may order a refund of amounts collected in excess of the rates and charges as approved at the hearing which may be paid as a credit against billings for future services. If the commission fails to enter any order within sixty days after the close of the hearing, the rates and charges shall be deemed approved for all purposes, including for purposes of appeal.

(10) For purposes of this section, the commission may not require a company that is subject to this section to set its rates below the actual cost of the company providing the service. The actual cost shall, if requested by the company, be determined to include a ratable portion of administrative expenses and overhead incurred by the company in its operations, the company's established depreciation rates, and the appropriate amortization of previously deferred accounting costs.

(11) No rural telephone company subject to this section may change its basic local exchange service rates within ninety days after entry of a final order adjusting the rate under subsections (5) and (9) of this section.

(12) Notwithstanding the provisions of this section, if another telecommunications provider offers basic local exchange service or switched access service within a local exchange area of the company subject to this section, the company that is subject to this section may determine its rates for those service or services within the exchange or exchanges in which another telecommunications provider is providing the service or services, in the same manner that it determines its rates for other services under subsection (1) of this section.

(13) A rural telephone company electing to be regulated in accordance with this section may package any of its services with any other service it or its affiliates offer, with or without a discount, provided that basic local exchange services and switched access services may be purchased separately at the rates that are established in accordance with this section.

(14) A rural telephone company electing to be regulated in accordance with this section shall commit in its notice of election to the commission not to increase rates for basic local exchange service for two years from the date of election except for increases to an affordability benchmark established by the commission for universal service or for cost shifts mandated by federal or state governments or agencies or for costs imposed or required to be incurred by federal, state, or local governments or agencies, such as local number portability.

(15) A rural telephone company may terminate its election under this section on ninety days' written notice to the commission.

NEW SECTION. Sec. 5. (1) Each rural telephone company electing to be regulated under section 4 of this act shall file a network infrastructure plan with the commission at the time it files notice of its election. That plan must include a schedule for the deployment of advanced service capabilities by December 31, 2003. As used in sections 2 through 6 of this act, "advanced service" means the deployment of integrated services digital network (ISDN) or its technological equivalent or other broad band facilities. These facilities and services need only be deployed upon a firm customer order for the service. The plan must include a target for the company to have facilities available to provide enhanced universal service to at least fifty percent of the customers served by the company. However, if the density of customers served is less than five access lines per square mile in a wire center, the plan may exclude that wire center.

(2) As an alternative, a company's infrastructure deployment plan may include a commitment to provide investment for capital projects at a minimum level of at least eighty percent of a rolling five-year average investment in telecommunications plant within the state. The initial five years for calculation of this five-year rolling average shall be from January 1, 1993, through December 31, 1998. A company shall report to the commission any discrepancies and the reasons why it is not making investment at the minimum level contained in the plan.

(3) The infrastructure development plan shall include provisions for interoffice route diversity, with self-healing capabilities.

(4) The commission shall approve the plan if it complies with this section. The fact that the plan has not been approved shall not have any effect on a company's election to be regulated under section 4 of this act.

NEW SECTION. Sec. 6. If the commission acts to modify or remove an exemption held by a rural telephone company under the telecommunications act of 1996, coincident with the effective date of any modification or removal of such exemption, the commission shall grant that rural telephone company pricing flexibility. The rural telephone company is then authorized to convert its tariffs to price lists and, in all respects, shall be treated as though it were classified as a competitive local exchange company. The pricing flexibility granted to such rural telephone company shall affect only such exchanges served by the rural telephone company to which the modification or removal of the exemption applies. The pricing flexibility granted to the rural telephone company shall not allow it to price its services below long-run incremental cost, except for basic local exchange services which may be priced below long-run incremental cost, taking into account the amount of support calculated per access line for that exchange from the state and federal universal service funds.

NEW SECTION. Sec. 7. Sections 2 through 6 of this act are each added to chapter 80.36 RCW.