PRINTER'S NO. 14
No. 4 Session of 1993
INTRODUCED BY D. R. WRIGHT, VEON, ITKIN, M. COHEN, DeWEESE,
BELARDI, STEIGHNER, COY AND DURHAM, JANUARY 27, 1993
REFERRED TO COMMITTEE ON RULES, JANUARY 27, 1993
AN ACT
1 Amending Title 66 (Public Utilities) of the Pennsylvania
2 Consolidated Statutes, providing for an alternative form of
3 regulation of telecommunications services.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Title 66 of the Pennsylvania Consolidated
7 Statutes is amended by adding a chapter to read:
8 CHAPTER 30
9 ALTERNATIVE FORM OF REGULATION
10 OF TELECOMMUNICATIONS SERVICES
11 Sec.
12 3001. Declaration of policy.
13 3002. Definitions.
14 3003. Local exchange telecommunications company request for
15 alternative form of regulation.
16 3004. Commission review.
17 3005. Powers and duties.
18 3006. Infrastructure plans.
1 3007. Interexchange telecommunications carriers.
2 3008. Report to Governor and General Assembly.
3 3009. Regulations.
4 § 3001. Declaration of policy.
5 The General Assembly finds and declares that it is the policy
6 of this Commonwealth to:
7 (1) Maintain universal telecommunications services at
8 affordable rates.
9 (2) Ensure that customers pay only reasonable charges
10 for local exchange telecommunications services which shall be
11 available on a nondiscriminatory basis.
12 (3) Ensure that rates for noncompetitive
13 telecommunications services do not subsidize the competitive
14 ventures of providers of telecommunications services.
15 (4) Provide diversity in the supply of
16 telecommunications services and products in
17 telecommunications markets throughout this Commonwealth.
18 (5) Ensure the efficient delivery of technological
19 advances and new services throughout this Commonwealth.
20 (6) Encourage the deployment and availability of a
21 state-of-the-art telecommunications network in rural,
22 suburban and urban areas, including schools, businesses and
23 health care facilities.
24 § 3002. Definitions.
25 The following words and phrases when used in this chapter
26 shall have the meanings given to them in this section unless the
27 context clearly indicates otherwise:
28 "Alternative form of regulation." A form of regulation of
29 telecommunications services other than the traditional rate
30 base, rate-of-return regulation, to be determined by the
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1 commission. The term includes the use of any index, formula,
2 rate stability or rate freeze plan, zone of rate freedom or
3 streamlined ratemaking plan.
4 "Basic service elements." Those telecommunications services
5 provided by the local exchange telecommunications company which
6 are necessary for any competing service provider to offer
7 services to consumers.
8 "Competitive service." A service or business activity
9 determined to be competitive under this chapter or any
10 telecommunications service determined by the commission to be
11 competitive under this chapter.
12 "Interexchange telecommunications carrier." A carrier other
13 than a local exchange telecommunications company authorized by
14 the commission to provide long-distance telecommunications
15 services. The term does not include any carrier defined by the
16 Pennsylvania Public Utility Commission or the Federal
17 Communications Commission as a reseller or alternate operator
18 service provider.
19 "LATA." A Local Access Transport Area as defined by the
20 commission in conformance with applicable Federal law.
21 "Local exchange telecommunications company." A carrier
22 authorized by the commission to provide local telecommunications
23 services.
24 "Noncompetitive service." Includes any protected telephone
25 service as defined under this chapter or a service that has been
26 defined by the commission as not a competitive service.
27 "Protected telephone service." A telecommunications service
28 provided by a local exchange telecommunications company, unless
29 the commission determines, after notice and hearing, that the
30 service is competitive or should no longer be a protected
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1 telephone service. The term includes, but is not limited to,
2 telecommunications service provided to business or residential
3 customers for the purpose of completing a local call, touch tone
4 or similar service, access service other than a service that the
5 commission has previously found to be competitive, toll service
6 provided by a local exchange telecommunications company and the
7 ordering, installation and restoration of these services.
8 "Switched access service." A service which provides for the
9 use of common terminating, switching and trunking facilities of
10 a local exchange telecommunications company's public switched
11 network. The term includes common line carrier access service.
12 "Telecommunications service." A telecommunications service
13 which is subject to regulation by the commission.
14 § 3003. Local exchange telecommunications company request for
15 alternative form of regulation.
16 When a local exchange telecommunications company seeks to be
17 regulated under an alternative form of regulation, it shall
18 submit to the commission a petition requesting the alternative
19 form of regulation. In the petition, the company shall submit
20 its plan and supporting data for an alternative form of
21 regulation. The company shall also file its petition, plan and
22 supporting data concurrently with the Office of Consumer
23 Advocate and the Office of Small Business Advocate. At the same
24 time, the company shall give notice to its ratepayers through a
25 billing insert or bill message, to its employees and to the
26 public of the filing of its petition for an alternative form of
27 regulation in accordance with the commission's rules and
28 regulations.
29 § 3004. Commission review.
30 (a) Authorization.--In determining just and reasonable rates
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1 in accordance with section 1301 (relating to rates to be just
2 and reasonable), the commission may authorize a local exchange
3 telecommunications company to set rates based on an alternative
4 form of regulation pursuant to a plan approved by the commission
5 under this chapter.
6 (b) Review and approval of plan.--The commission shall
7 review and may approve the plan or approve it with modifications
8 or deny it as not reasonably designed to meet the requirements
9 of this chapter, after notice and hearing, within one year of
10 the filing date of the petition. If the commission does not act
11 within one year of the filing date of the petition, it shall be
12 deemed to be denied. If the commission denies the petition or
13 approves it with modifications, the commission shall set forth
14 in its order each specific reason for the denial or
15 modification. The commission shall approve the plan only if it
16 finds, after notice and hearing, that the petition:
17 (1) Ensures the affordability of protected telephone
18 services.
19 (2) Assures that the rates for protected services are
20 just, reasonable and not unduly discriminatory, and do not
21 yield excessive compensation.
22 (3) Assures that the rates for noncompetitive services
23 are just, reasonable and not unduly discriminatory and do not
24 yield excessive compensation.
25 (4) Will produce just and reasonable rates for
26 telecommunications services in accordance with section 1301.
27 (5) Will not unduly or unreasonably prejudice or
28 disadvantage a customer class or providers of competitive
29 services.
30 (6) Is in the public interest.
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1 (7) Enhances economic development in this Commonwealth
2 while maintaining affordable rates.
3 (8) Contains a comprehensive program of service quality
4 standards in accordance with section 1501 (relating to
5 character of service and facilities), including procedures
6 for commission review.
7 (9) Ensures that local exchange telecommunications
8 company ratepayers continue to receive the benefit of
9 contributions historically obtained from services such as
10 yellow pages, billing and collection, unless the commission
11 shall otherwise determine for good cause.
12 (10) Specifically identifies the benefits to be derived
13 from the alternative form of regulation, including, but not
14 limited to, the reduction of regulatory delays and costs.
15 (11) For local exchange telecommunications companies
16 serving more than 250,000 access lines in this Commonwealth
17 as of the effective date of this chapter, complies with the
18 following:
19 (i) Includes an effective per minute switched access
20 service price, including both originating and terminating
21 and excluding nonrecurring, that for five years from the
22 implementation date of the plan does not exceed 12¢
23 unless justified based on the total cost of switched
24 access or that includes a revenue-neutral phasedown in
25 the price to not more than 12¢ in not more than three
26 equal annual increments, commencing with the
27 implementation of the plan but concluding within five
28 years from the implementation date. Upon the sixth year
29 from the implementation date of the plan, the commission
30 shall review the per minute switched access service price
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1 and after notice and hearing determine a just and
2 reasonable per minute switched access service price.
3 (ii) Local exchange telecommunications companies
4 with an effective per minute switched access service
5 price at or below 12¢, including both originating and
6 terminating and excluding nonrecurring, may not increase
7 switched access rates either in conjunction with the
8 years from the approval date of a petition, not to extend
9 beyond December 31, 1999, unless the company can show
10 that, absent an increase, total switched access revenues
11 would be below total switched access cost. Revenue-
12 neutral access tariff rate changes and restructures may
13 be proposed subject to commission approval.
14 (iii) Continues in effect any existing limits, by
15 tariff or otherwise, on the amount of revenue that a
16 local exchange telecommunications company may recover
17 from the common line carrier rate. At the conclusion of
18 any phasedown period as provided in subparagraph (i), the
19 annual revenues to be derived from common line carrier
20 rates shall be no more than the total common line carrier
21 revenues applicable to the final 12 months of any
22 phasedown period.
23 (12) Will permit the deployment of new voice, data and
24 video services to rural, suburban and urban areas throughout
25 the local exchange carrier's service territory to the extent
26 the deployment is deemed to be in the public interest and if
27 containing a depreciation schedule or formula, the schedule
28 or formula is based upon a just and reasonable standard.
29 (13) Assures that all customers of the local exchange
30 telecommunications company shall be afforded the maximum
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1 practicable extended area calling without application of
2 toll.
3 (14) Assures that low-income individuals are able to
4 connect to and maintain in-home access to protected telephone
5 service.
6 (c) Burden of proof.--The burden of proof shall be on the
7 local exchange telecommunications company requesting an
8 alternative form of regulation.
9 (d) Restriction.--A local exchange telecommunications
10 company may not use revenues earned or expenses incurred in
11 conjunction with noncompetitive services to subsidize or support
12 any competitive services. The commission shall establish
13 regulations which must be followed by local exchange
14 telecommunications companies for the purpose of allocating costs
15 for accounting and ratemaking among telephone services in order
16 to prevent subsidization or support for competitive services.
17 (e) Audit.--The commission shall have the power to require
18 an audit of the accounting and reporting systems of local
19 exchange telecommunications companies and their affiliates in
20 accordance with the commission's present or future rules and
21 regulations to provide a proper allocation of investments, costs
22 or expenses for all telecommunications services, competitive and
23 noncompetitive.
24 (f) Prohibition.--The commission shall not fix or prescribe
25 the rates, tolls, charges, rate structures, rate base or rate of
26 return of competitive services. The commission shall require
27 that the local exchange telecommunications company file and
28 maintain tariffs for competitive telecommunications services.
29 (g) Excessive rates.--The commission may rescind or modify
30 any order permitting an alternative form of regulation if it
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1 determines, after notice and hearing, that customer rates for
2 protected services are excessive in comparison to those rates
3 approved by the commission under rate base/rate-of-return
4 regulation or that a local telephone company is engaging in
5 practices which are harmful to fair competition or for other
6 good cause shown. Any interested party, including providers of
7 competitive services, may request the commission to take action
8 pursuant to this chapter.
9 § 3005. Powers and duties.
10 (a) Competitive service determination.--The commission is
11 authorized to determine, after notice and hearing, whether a
12 telecommunications service offered by a local exchange company
13 is a competitive service. In making the determination, the
14 commission shall consider all evidence submitted to it,
15 including evidence presented by providers of competitive
16 services.
17 (1) In determining whether a service is competitive, the
18 commission shall make findings which, at a minimum, shall
19 include evidence of ease of market entry; presence and
20 viability of other competitors; the ability of competitors to
21 offer those services at competitive prices, terms and
22 conditions; the availability of like or substitute services
23 in the relevant geographic area; the effect, if any, on
24 protected services; the overall impact of the proposed
25 regulatory change on the continued availability of existing
26 services; whether the consumers of the service would receive
27 an identifiable benefit from the provision of the service on
28 a competitive basis; the degree of regulation necessary to
29 prevent abuses or discrimination in the provision of the
30 service and any other relevant factors which are in the
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1 public interest. If a local exchange telecommunications
2 company introduces a telecommunications service that has not
3 previously been offered, the service will not be deemed
4 competitive unless it is so determined by the commission
5 under this chapter.
6 (2) The burden of proving that a telecommunications
7 service is competitive rests on the party seeking to have the
8 service classified as competitive.
9 (3) The commission shall establish regulations to
10 prevent local exchange telecommunications companies from
11 engaging in unfair competition and require that a local
12 exchange telecommunications company provide reasonable
13 nondiscriminatory access to competitors for all services and
14 facilities necessary to provide competing services to
15 consumers.
16 (b) Reports.--The commission shall determine by rule,
17 regulation or order what reports are necessary to monitor the
18 accounting for and competitiveness of a telecommunications
19 service.
20 (c) Reclassification.--The commission shall have the
21 authority to reclassify telecommunications service that it has
22 previously found to be competitive if, after notice and hearing,
23 it determines that sufficient competition is no longer present,
24 upon application of the criteria set forth in this chapter. If
25 the commission finds that a reclassification is necessary, the
26 commission must determine whether the rate for the
27 telecommunications service is just and reasonable in accordance
28 with section 1301 (relating to rates to be just and reasonable).
29 If the telecommunications service subsequently becomes
30 competitive, the local exchange telecommunications company shall
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1 petition the commission to make a determination of
2 competitiveness for the service under this chapter.
3 (d) Earnings.--Earnings from competitive services shall be
4 excluded from regulation by the commission subject to the
5 safeguards set forth in this chapter.
6 (e) Additional determinations.--The commission shall
7 determine whether local exchange telecommunications companies
8 are complying with the following provisions:
9 (1) The local exchange telecommunications company shall
10 unbundle each basic service element which is incorporated in
11 the competitive service and shall make all basic service
12 elements separately available to any customer under tariffed
13 terms and conditions, including price, that are identical to
14 those used by the local exchange telecommunications company
15 in providing its competitive service.
16 (2) The rate which a local exchange telecommunications
17 company charges itself for a basic service element necessary
18 to provide a competitive service shall not be less than the
19 rates charged to others for such basic service elements.
20 (3) The rate which a local exchange carrier charges for
21 a competitive service shall not be less than the rates
22 charged to others for the basic service elements used by the
23 local exchange carrier to provide the competitive service.
24 (4) Tariffs for competitive services filed with the
25 commission shall either be in the public records or, if the
26 commission determines that the rates are proprietary, be
27 filed under seal and made available under the terms of an
28 appropriate protective agreement, such as those used in cases
29 before the commission.
30 (f) Discriminatory activity.--Nothing in this chapter shall
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1 limit the authority of the commission to ensure that local
2 exchange telecommunications companies do not make or impose
3 unjust preferences, discriminations or classifications for
4 noncompetitive services.
5 (g) Additional requirements.--The commission shall establish
6 additional requirements and regulations as it determines to be
7 necessary to ensure the protection of consumers and to prevent
8 unfair competition.
9 (h) Safety, adequacy, reliability and privacy.--
10 Notwithstanding any other provision of this chapter, all
11 services provided by a local exchange telecommunications company
12 shall remain subject to all provisions of this title and other
13 laws of this Commonwealth regarding the safety, adequacy,
14 reliability and privacy of telecommunications services. Nothing
15 in this chapter shall affect the commission's authority to
16 regulate competitive services with respect to the ordering,
17 installation, suspension, termination and restoration of
18 services.
19 (i) Service on advocates.--At the time that a local exchange
20 telecommunications company files its petition requesting an
21 alternative form of regulation to classify any service as
22 competitive or proposing reclassification of an existing service
23 as competitive, the local exchange telecommunications company
24 shall serve a copy on all interexchange telecommunications
25 carriers as well as the Office of Consumer Advocate and the
26 Office of Small Business Advocate. At the same time, the local
27 exchange telecommunications company shall give notice to the
28 public and its ratepayers in accordance with the commission's
29 rules and regulations.
30 (j) Resale restrictions prohibited.--The local exchange
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1 telecommunications company shall not maintain or impose any
2 resale restrictions on any service which the commission finds to
3 be competitive.
4 (k) Subsidiaries.--All competitive services shall be
5 provided through a subsidiary which is fully separated from the
6 local exchange carrier unless the commission finds that the
7 provision of service on a nonseparated basis will provide
8 identifiable net benefits to consumers and will not result in
9 unfair competition.
10 § 3006. Infrastructure plans.
11 (a) Filing of plan.--Within one year after the effective
12 date of this chapter, each local exchange carrier serving more
13 than 250,000 access lines within this Commonwealth shall file
14 with the commission its future plan to construct new facilities
15 and provide new voice, data and video services to the public.
16 Local exchange telecommunications carriers serving less than
17 250,000 access lines shall have two years to file with the
18 commission its future plan to construct new facilities and
19 provide new voice, data and video services to the public. The
20 commission may order staggered filings of the deployment plan as
21 it deems necessary.
22 (b) Plan components.--The plan shall identify the local
23 exchange telecommunications company's present and projected
24 deployment of the following:
25 (1) Digital switches in central offices.
26 (2) Fiber optic trunk line capability between central
27 offices.
28 (3) Intelligent network signaling capability.
29 (4) Integrated Services Digital Network (ISDN)
30 availability in central offices.
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1 (5) The capability of providing to customers full-motion
2 video transmission in central offices.
3 (6) The capability of providing interactive switched
4 full-motion video transmission in central offices.
5 (7) The proposed deployment and location of the new
6 facilities and services to hospitals and schools.
7 (8) The proposed availability of new services and
8 facilities for business and residential uses.
9 (9) Any other services and facilities that the local
10 exchange telecommunications companies have deployed or
11 propose to deploy and desire to include in their plan.
12 (10) Any other services and facilities that the
13 commission determines should be included in the plan.
14 (c) Additional plan components.--The plan shall include the
15 capital construction program and projected costs for deployment
16 of new facilities necessary to support the future deployment,
17 the anticipated rates to be charged for new services and any
18 expected changes in rates to be charged for existing services, a
19 forecast of the revenues required to support the costs related
20 to the services and facilities set forth in the plan and a
21 schedule of deployment of the new facilities and dates when any
22 new services will be offered.
23 (d) Submission of plan.--The plans shall be submitted by
24 local exchange telecommunications companies serving 250,000
25 access lines or more at least every two years and by local
26 exchange carriers serving less than 250,000 access lines at
27 least every three years.
28 (e) Copies.--At the time that a local exchange
29 telecommunications company files its deployment plan with the
30 commission, the company shall serve a copy on the Office of
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1 Consumer Advocate and the Office of Small Business Advocate and,
2 if requested, all interexchange telecommunications companies.
3 (f) Rules and regulations.--The commission shall promulgate
4 rules and regulations for appropriate public notice of the
5 filing of the plans and for the receipt of comments on the plans
6 by any interested parties.
7 (g) Reports.--The commission shall submit a report to the
8 Governor and the General Assembly on a periodic basis
9 summarizing the plans filed by the local exchange carriers and
10 any comments on the plans submitted by interested parties.
11 Copies of this report shall be provided to the local exchange
12 carriers, the Office of Consumer Advocate, the Office of Small
13 Business Advocate and other interested parties as designated by
14 the commission.
15 (h) Rates.--Neither the submission to the commission of the
16 plan required under this section or the issuance of a report
17 regarding the plan shall be determinative as to whether the
18 costs associated with any elements of the plan may be included
19 in the rates charged by the local exchange telecommunications
20 carrier. The commission shall consider the contents of the plan
21 and any deployment of facilities in establishing rates under
22 section 1301 (relating to rates to be just and reasonable) or
23 any alternative form of regulation of this chapter.
24 (i) Review of deployment.--Within two years after the
25 effective date of this chapter, and periodically as the
26 commission shall determine, the commission shall institute a
27 proceeding to review the present and future deployment of all
28 telecommunications services by local exchange telecommunications
29 carriers in order to ensure that local exchange carriers do not
30 unfairly discriminate against certain customers by failing to
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1 evenly deploy services throughout rural, suburban and urban
2 areas of this Commonwealth. Through this proceeding, the
3 commission shall make certain determinations as follows:
4 (1) The commission shall apply a rebuttable presumption
5 that it shall be deemed unreasonably discriminatory under
6 section 1502 (relating to discrimination in service) for a
7 local exchange carrier to deploy telecommunications services
8 if the services are not evenly deployed throughout rural,
9 suburban and urban areas throughout its service territory.
10 The commission may take action required to remedy
11 unreasonable discrimination.
12 (2) The commission shall further determine whether
13 certain local exchange telecommunications carriers have not
14 deployed services in their service territory which have been
15 deployed by other local exchange carriers in other parts of
16 this Commonwealth and whether the local exchange carriers
17 should be required to deploy the services.
18 § 3007. Interexchange telecommunications carriers.
19 (a) Competitive and noncompetitive services.--Except as
20 provided in this section, telecommunications services provided
21 by interexchange telecommunications carriers shall be deemed to
22 be competitive services after January 1, 1995. The commission
23 shall not fix or prescribe the rates, tolls, charges, rate
24 structures, rate base, rate of return, operating margin or
25 earnings for competitive services or otherwise regulate
26 competitive services except as set forth in this chapter.
27 Nothing in this chapter shall limit the authority of the
28 commission to regulate privacy in connection with the services
29 provided by interexchange telecommunications carriers.
30 Notwithstanding the classification of such telecommunications
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1 services as competitive, interexchange carriers shall not be
2 permitted to deaverage standard message toll service rates
3 unless authorized to do so by the commission.
4 (b) Service quality standards.--The commission may establish
5 service quality standards for interexchange telecommunications
6 carriers. Nothing in this chapter shall limit the authority of
7 the commission to promulgate service quality standards for
8 interexchange telecommunications carriers or to resolve
9 complaints regarding the quality of interexchange
10 telecommunications carrier service.
11 (c) Reclassification.--The commission shall have the
12 authority to reclassify any interexchange telecommunications
13 service in whole or in part that is classified as competitive
14 under this chapter.
15 (d) Authority of commission not limited.--Nothing in this
16 chapter shall limit the authority of the commission to determine
17 whether an interexchange telecommunications carrier should be
18 extended the privilege of operating within this Commonwealth.
19 § 3008. Report to Governor and General Assembly.
20 Not later than two years following the effective date of this
21 chapter, the commission shall submit a report to the Governor
22 and the General Assembly reviewing the implementation of this
23 chapter, which shall include, but not be limited to, an
24 evaluation of any alternative form of regulation approved by the
25 commission and the success of the deregulation of competitive
26 services permitted by this chapter. In its recommendations, the
27 commission may also propose any legislative or other changes to
28 the Governor and the General Assembly which it deems
29 appropriate.
30 § 3009. Regulations.
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1 The commission may promulgate rules and regulations to
2 administer and enforce this chapter.
3 Section 2. The provisions of this act are severable. If any
4 provision of this act or its application to any person or
5 circumstance is held invalid, the invalidity shall not affect
6 other provisions or applications of this act which can be given
7 effect without the invalid provision or application.
8 Section 3. This act shall take effect immediately.
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