BILL REQ. #:  S-0849.1 

Read first time 02/01/11.   Referred to Committee on Environment, Water & Energy.

     AN ACT Relating to preserve and advance telecommunications service and connectivity in the state through regulatory parity for incumbent local exchange companies; amending RCW 80.36.610 and 80.36.450; adding new sections to chapter 80.36 RCW; creating a new section; and repealing RCW 80.36.135.

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

NEW SECTION.  Sec. 1   The legislature finds that changes in technology and the structure of the telecommunications industry have produced conditions under which traditional regulation of local exchange companies may not in all cases provide the most efficient and effective means of achieving the public policy goals of universal service as declared in RCW 80.36.300. In light of these changes, the legislature finds and declares that local exchange companies should have the option to elect to be regulated under the optional form of regulation and pricing flexibility contained in this act.

NEW SECTION.  Sec. 2   (1)(a) A local exchange company serving two percent or more of the access lines in the state of Washington may elect to be regulated under the minimal form of regulation set forth in this section by filing with the commission a "notice of election of minimal regulation" and specifying an effective date for the election, which may not be less than sixty days from the date the notice is filed with the commission. The local exchange company shall file supporting data with the notice to demonstrate that it meets the public interest test. If the election of minimal regulation meets the public interest test set out in (b) of this subsection, the commission shall approve the election within the sixty-day review period.
     (b) The election of minimal regulation is deemed to be in the public interest if the local exchange company demonstrates that:
     (i) Its number of access lines served has decreased over the preceding five calendar years when comparing the first and fifth years; and
     (ii) The number of access lines the company serves has decreased over the same comparison period as a percentage of the population of the zip codes, looking at whole zip codes, associated in whole or in part with exchanges served by that local exchange company, taking into account transfers and acquisitions during that period.
     (2) Except as provided in subsection (3) of this section, a local exchange company electing under this section is subject to the same level of regulation as companies classified as competitive under RCW 80.36.320. In approving an election, the commission shall grant the local exchange company the same waivers from regulatory requirements that are granted to companies classified as competitive under RCW 80.36.320, other than a waiver from chapter 80.12 RCW. After the approval of the election of minimal regulation, the local exchange company is not required to file reports or data with the commission, except the company must file an annual report that allows for calculation of the annual regulatory fee.
     (3) A local exchange company that has made an election under this section shall offer basic residential service throughout the area in which the company has served as an incumbent local exchange company as of the date the notice is filed under this section.
     (4)(a) Until July 1, 2013, the local exchange company may not increase its monthly charge for basic residential service above the charge existing in tariff as of July 1, 2010, unless there has been: (i) A change in local calling areas; (ii) a change in access charges; or (iii) other changes affecting basic residential service, in which case the local exchange carrier may increase the monthly charge for basic residential service if the increase is approved by the commission.
     (b) After July 1, 2013, upon request by a local exchange company, the commission shall review whether any person is offering a service that includes, alone or as part of a bundle or package of services, the essential components of basic residential service that is comparable to the local exchange company's basic residential service in an exchange served by the local exchange company. The commission shall consider intermodal forms of competition including, but not limited to, wireless service, cable telephony, and interconnected voice over internet protocol service. If the commission determines that a person is offering a service that includes, alone or as part of a bundle or package of services, the essential components of basic residential service comparable to the local exchange company's basic residential service in the exchange served by the local exchange company, then basic residential service for that area is subject to minimal regulation as set forth in this section.
     (5) The commission shall retain full authority to regulate the local exchange company's applicable wholesale obligations under 47 U.S.C. Secs. 251 and 252.
     (6) The commission may terminate minimal regulation under this section in full or in part for a specific service, and may impose conditions on a local exchange company's pricing flexibility for that service only if it determines, after notice and hearing, that the local exchange company has materially violated statutes or rules applicable to the specific service and that revocation of or the imposition of conditions or restrictions on the local exchange company's pricing flexibility is in the public interest. In such a proceeding, the complainant bears the burden of proving the allegations in the complaint.
     (7)(a) A local exchange company serving two percent or more of the access lines in the state of Washington shall reduce its intrastate switched access rates to the level of its interstate switched access rates in equal twenty-five percent increments, regardless of whether such a local exchange company has elected to file a notice under this section. The first reduction must occur one hundred eighty days after the effective date of this section with additional twenty-five percent reductions occurring in annual increments over the following three years.
     (b) All originating access minutes of use associated with calls to 800-type numbers must be treated as terminating switched access minutes of use for the purpose of intrastate switched access compensation.
     (8) Notwithstanding the provisions of this section, the commission retains authority to consider and resolve individual customer complaints for a local exchange company subject to minimal regulation under this section, and a local exchange company subject to minimal regulation under this section shall cooperate with any commission investigations of customer complaints. Except for basic residential service as provided in subsection (3) of this section or wholesale obligations as provided in subsection (5) of this section, actions or transactions for a local exchange company subject to minimal regulation under this section may not be deemed actions or transactions otherwise permitted, prohibited, or regulated by the commission for the purposes of RCW 19.86.170.

NEW SECTION.  Sec. 3   (1) A local exchange company serving less than two percent of the access lines in the state of Washington may elect pricing flexibility as set forth in this section. The local exchange company shall notify the commission of its election by filing with the commission a notice of election of pricing flexibility. Such a notice will serve to transfer the local exchange company to pricing flexibility on the thirtieth day after filing with the commission.
     (2) Upon election of pricing flexibility, a local exchange company may file changes to its retail tariff on not less than three calendar days' prior notice. Notwithstanding other provisions to the contrary in this title, such tariff filings may not be subject to rejection, suspension, or modification by the commission. However, if an increase is proposed to basic residential service, the local exchange company shall provide its retail subscribers to such a service written notice of the proposed increase at least thirty days prior to the effective date. If a petition, brought by ten percent of the then current subscribers, or five hundred subscribers, whichever is less, to the basic residential service, is filed with the commission at least ten days prior to the proposed effective date of the proposed increase to basic residential service, the commission may exercise all or part of the powers and procedures under RCW 80.04.130 and 80.36.110(1) for such a filing. The local exchange company may withdraw the proposed increase to basic residential service at any time prior to the commission's issuance of a final determination on whether the proposed increase to basic residential service rates is fair, just, reasonable, and sufficient.
     (3) In addition to the authority specified in RCW 80.36.332 regarding packaging or bundling of telecommunications services, a local exchange company making an election under subsection (1) of this section may package or bundle any tariffed service with any nontariffed service or any combination of services as long as the tariffed services in the package or bundle are readily and separately available to customers at the separately tariffed rates and the availability and rates of the tariffed services on a stand-alone basis are displayed in the company's tariff and on its web site consistent with commission rules.
     (4) The pricing flexibility provided under this section does not extend to the access charges assessed by a local exchange company under its tariffs or the tariffs of the Washington exchange company association in which it concurs or for any applicable wholesale obligations under 47 U.S.C. Secs. 251 and 252.

NEW SECTION.  Sec. 4   The commission shall not enter any order requiring any reduction to any access charges assessed by a local exchange company serving less than two percent of the access lines in the state of Washington without the prior written consent of such a company, unless or until such time as there is adopted, implemented, and funded an explicit state universal service program that includes all incumbent local exchange companies serving less than two percent of the access lines in the state of Washington. Such a state universal service program must meet and fulfill the purposes of RCW 80.36.300(1) through (3) and be consistent with 47 U.S.C. Sec. 254. Nothing in this section may be construed as limiting the commission's authority over tariff filings that have the effect of increasing access rates or limiting any person's ability to intervene in such a proceeding.

Sec. 5   RCW 80.36.610 and 1998 c 337 s 2 are each amended to read as follows:
     (1) The commission is authorized to take actions, conduct proceedings, and enter orders as permitted or contemplated for a state commission under the federal telecommunications act of 1996, P.L. 104-104 (110 Stat. 56), but the commission's authority to either establish a new state program or to adopt new rules to preserve and advance universal service under section 254(f) of the federal act is limited to the actions expressly authorized by RCW 80.36.600. The commission may establish by rule fees to be paid by persons seeking commission action under the federal act, and by parties to proceedings under that act, to offset in whole or part the commission's expenses that are not otherwise recovered through fees in implementing the act, but new fees or assessments charged telecommunications carriers to either establish a state program or to adopt rules to preserve and advance universal service under section 254(f) of the federal act do not take effect until the legislature has approved a state universal service program.
     (2) The legislature intends that under the future universal service program established in this state:
     (a) Every telecommunications carrier that provides intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the preservation and advancement of universal service in the state;
     (b) The contributions shall be competitively and technologically neutral; and
     (c) The universal service program to be established in accordance with RCW 80.36.600 shall not be inconsistent with the requirements of 47 U.S.C. Sec. 254.
     (3) The commission is authorized to accept and exercise any authority delegated to it from the federal communications commission arising out of the national broadband plan, or any successor plan, and to implement rules and orders of the federal communications commission, but only to the extent necessary to implement such delegated authority.

Sec. 6   RCW 80.36.450 and 2003 c 134 s 6 are each amended to read as follows:
     The Washington telephone assistance program shall limit reimbursement to one residential switched access line per eligible household, which may be part of a package or bundle of services offered by a provider, or one discounted community service voice mailbox per eligible person.

NEW SECTION.  Sec. 7   Sections 2 through 4 of this act are each added to chapter 80.36 RCW.

NEW SECTION.  Sec. 8   RCW 80.36.135 (Alternative regulation of telecommunications companies -- Waiver of provisions during state of emergency) and 2008 c 181 s 414, 2000 c 82 s 1, 1995 c 110 s 5, & 1989 c 101 s 1 are each repealed.

NEW SECTION.  Sec. 9   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.