![[Top]](/images/nav-top.gif)
![[Back]](/images/nav-back.gif)
![[Home]](/images/nav-home.gif)
October 4, 2005
Room 302, Capitol Building
Cheyenne, Wyoming
Senator Cut Meier, Co-Chairman
Representative Pete Illoway, Co-Chairman
Senator Cale Case
Representative Marty Martin
Representative Bruce Barnard
Senator John Hanes
Lynda Cook, Staff Attorney
Please refer to
Appendix 1 to review the Subcommittee Sign-in Sheet
for a list of other individuals who attended the meeting.
Co-Chairman Pete Illoway called the meeting to order at 8:30 am. The following sections summarize the Committee proceedings by topic.
The Subcommittee took testimony from various stakeholders present at the meeting.
Mr. Ellenbecker acted as the moderator for the working group negotiations attempting to attain consensus on necessary statutory changes. The working group represents the interests of the Wyoming Telephone Association, independent phone companies, incumbent phone companies, rural providers, wireless providers, the Public Service Commission and the Office of Consumer Advocate.
Mr. Ellenbecker provided written testimony regarding the progress of the working group. (Appendix 2). Although the group got off to a strong start, he believes it has come to a weak finish. They have had good intentions, have been working diligently and have made some concessions, but the stakeholders have been unwilling to accept any real pain on the parts of their clients.
Technological changes are going to make the 1995 Telecommunications Act obsolete in the next few years, but the act was comprehensively put together and can be used to move telecom regulation forward for at least a little longer. Mr. Ellenbecker encouraged the subcommittee to focus on retail pricing proposals and consider whether they really put downward pressure on prices. The three items that need to be addressed are downward retail price pressure, wholesale prices and the universal service fund. If a proposal is strong in one area but weak in another then it leaves too much unanswered.
Ms. Levin presented a draft bill that incorporates the statutory changes that the working group has been discussing. (See Appendix 3).
The specific changes that were agreed upon, and areas where agreement could not be gained, are provided in an overview outline. (Appendix 4).
Mr. Asay provided a draft bill incorporating suggestions from his clients (Appendix 5). He addressed only two changes on which his clients differ substantially from the group proposal. In section 104, rather than specifying what is not covered, he believes the statute should specify what is regulated, i.e. universal service fund, non-competitive essential services and assessments levied. His second issue is the need for some recognition of regulation by other jurisdictions. Companies that are "border anomalies" in that they have the majority of their customers in one state, but only a few that span the border in Wyoming, should be regulated by the state where most of their clientele exists.
When asked about regulation of switched access without cost based pricing by Senator Case, Mr. Asay suggested that the issue will be dealt with on the federal level and the state should leave it to the federal government to figure out. Sen. Case stated that he had no intention of proactively surrendering jurisdiction to the federal government.
Mr. Freeman stated that he saw differing philosophies creating the differences between the stakeholders. Some believe the market is currently competitive, but OCA does not believe the competition is pervasive or effective enough yet to protect consumers. They believe that the standard in section 202 of "effective competition should continue to be the standard for determining if deregulation should occur. He believes it give companies the ability to have downward price flexibility, but protects consumers. He noted that the starting price for wireless services is around $40 per month. If that is considered competition then wire line services would have no trouble raising their prices to that level before market competition would kick in in a deregulated market.
He sees the PSC role changing from regulator to market monitor over time and believes that the market should control downward price pressure, but the PSC should review any request to increase prices.
Mr. Freeman responded to Mr. Asay's request to change the focus of section 104 from exclusive to inclusive by suggesting that the change would create a rebuttable presumption that something is not regulated, and that presumption would hinder protection of consumers.
Ms Zerga advocated that one size does not fit all for deregulation. Access rates are where there is the biggest area of disparity. When asked by Sen. Meier if there could be downward price pressure without eliminating TSLRIC, Ms. Zerga stated that there could be in most cases.
Rep. Illoway pointed out that Qwest pricing is reasonably in balance right now – if they raise prices it would encourage too much competition, and if they lowered prices too far to discourage competition, they would lose necessary revenues required to support their debt structure.
Ms. Zerga agreed that if access rates were capped at a low rate, then eliminating TSLRIC would be acceptable. If access rates are set too high then competition is discouraged because incumbents have revenue streams that others don't have.
When asked by Sen. Meier whether wireless companies are willing to do cost studies like the land based companies, Ms Zerga suggested that such studies are not necessary because wireless is competitive within every market it enters.
Mr. Ceballos outlined the language in Qwest proposal (Appendix 6) and how that differed from the working group draft. With respect to the suggested changes in Section 202, Mr. Ceballos provided the example of Qwest's request for determination of competition in the Afton exchange. The request was filed in 1997 with the PSC when a new competitor entered the market and Qwest had 95% of the market share. The case is still not decided and in the meantime the competitor has whittled Qwest's market share down to 40% of the available phone numbers. He also pointed out that while there may be pockets within a larger area where there is no competition, Qwest prices to larger areas and the downward price pressure allowed by deregulation would cause lowered prices even in those pocket areas without direct competition.
Qwest proposes a dollar cap on the universal service fund to be set in the statute. Rep. Illoway pointed out that setting a dollar figure in statute would be cumbersome to change. Mr. Ceballos noted that the number they suggest is based on current numbers that haven't changed substantially in the last seven years. Ultimately the statute could be changed to give the PSC authority to change the base dollar amount based on specific criteria, but much work needs to be done to determine what criteria should be used. For now, putting the amount in statute is something that works.
Senator Case pointed out that the cable television company Bresnan has introduced local phone service in many areas of the state and has been certified by the PSC. He stated that Bresnan is going to hammer Qwest in the market because Bresnan is not regulated and Qwest is. He also stated that the Afton scenario is an excellent example of why the Act needs to be changed. Even if the changes are only necessary to save Qwest from failure it would be worth it because Qwest is a good corporate citizen, and because the people of the state rely on getting service throughout the state, even in areas where Qwest does not have competition picking off its customers. Rep. Barnard stated that all the new competitors run off the back of the infrastructure of Qwest and the ILECs and that the legislature must be careful not kill that base. If Qwest is not viable then the competitors would not be able to connect calls into every home.
Mr. Jackson stated that the goal of the working group was simple – lower rates, protect competition and deal with the universal service fund. Mr. Jackson provided a simplified option for the subcommittee to consider. (Appendix 7). This simple bill would lower rates and provide limitations.
Mr. Jackson also provided a second bill at the request of Senator Meier. (Appendix 8). The bill tries to reflect what is happening on the federal level relative to access charges. Under this proposal local rates would be set at the nationwide average local rate in urban areas, which is currently $14.95 per month. Access rates would be set at two cents per minute. An end user fee could be assessed at no more than $3.50 per month. Anything else necessary to cover costs for companies would come from the universal service fund.
Steve Ellenbecker cautioned the subcommittee that customers do not react well when charges are just moved around on the bill. The second proposal would require an increase in USF charges that would offset the savings consumers would see on the base local rate. He also pointed out that the group has been working hard toward consensus and to just jump on the bandwagon of a bill that has not been thoroughly discussed within the working group would be a problem in an upcoming budget session.
The committee broke from 11:40 until 1:00 pm.
The committee took limited testimony regarding the two bills proposed by Don Jackson. Upon motion by Rep. Illoway, the committee decided to move ahead and work only on the draft submitted by the working group as a whole. (Appendix 3). Senator Case preferred to see a bill that was not one size fits all, and Rep. Martin was concerned that the committee not proceed with a bill that is not fully agreed upon during a budget session. The motion passed 3 (Illoway, Meier, Barnard) to 2 (Case, Martin)
The committee agreed to the following language:
Section 101: Remove reference to 1995.
Section 102: Repeal legislative intent.
Section 103: Repeal definition of "affiliated telecommunications companies" and "local access transport area" as no longer necessary. Include new definition of "consumer choice". Define "essential telecommunications service" to include only one line and limit it to voice services. Accept minor language change in emergency service definition. Repeal section (b) dealing with aggregation of companies.
Section 104: Remove reference to regulation of public terminal equipment. Remove regulation of nonvoice data services that are operated by local exchange companies.
Section 201: Remove distinction of local exchange companies based on number of access lines. Remove barriers to entry into markets.
Section 202: Change system from determination of competition to a determination of whether consumer choice exists. Define characteristics to be considered in consumer choice determination. Clarify that all other services except switched access and wholesale services are considered competitive for purposes of deregulation.
Section 203: Remove TSLRIC basis for prices. Allow downward flexibility. Provide cap based on current prices. Allow petition to PSC for increase in prices.
Section 204: Provide streamlined and electronic filing for price schedules.
Section 301: Remove quality of service requirements for inter exchange companies.
Section 401: Limit PSC authority to require reports to specific statutory requirements. Specify that the PSC has the authority delegated to the state under federal telecommunications law.
Section 402: Limit use of TSLRIC to switched access charges above 2 cents per minute. Otherwise TSLRIC does not apply anymore.
Section 403: Minor language clean up, no major changes.
Section 404: Clarify that this section does not prohibit promotional offerings, special incentives and short term competitive discounts which are not predatory in nature.
Section 405: No changes
Section 406: Repeal section (a) requiring customer satisfaction surveys.
Section 407: Have PSC describe what items should be put in annual report given limited reporting requirements and amend accordingly.
Section 408: Clarify that act does not apply to merger statutes.
Section 409: No changes.
Section 410: Repeal because the provision is fully implemented.
Section 411: Repeal because the provision is fully implemented.
Section 412: No changes.
Section 501 and 502: Return to the working group to proposed further changes.
The working copy of the changes approved by the subcommittee is attached. (Appendix 9).
There being no further business, Co-Chairman Illoway adjourned the meeting at 5:30 pm.
Respectfully submitted,
Pete Illoway, Co-Chairman