PRINTER'S NO. 725
No. 668 Session of 1999
INTRODUCED BY WHITE, MADIGAN, FUMO, BELL, MELLOW, CONTI, BODACK,
CORMAN, WILLIAMS, HELFRICK, KITCHEN, EARLL, TARTAGLIONE,
RHOADES, BOSCOLA, STAPLETON, MUSTO, BELAN, COSTA, LAVALLE,
WOZNIAK, KASUNIC AND KUKOVICH, MARCH 24, 1999
REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE,
MARCH 24, 1999
AN ACT
1 Amending Title 66 (Public Utilities) of the Pennsylvania
2 Consolidated Statutes, providing for structural separation of
3 retail and wholesale operations and for a sales and marketing
4 code of conduct for local exchange telecommunications
5 companies.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. The heading of Chapter 29 of Title 66 of the
9 Pennsylvania Consolidated Statutes is amended to read:
10 CHAPTER 29
11 TELEPHONE AND TELEGRAPH WIRES
12 AND TELECOMMUNICATIONS SERVICES
13 Section 2. Section 2901 of Title 66 is amended by adding
14 definitions to read:
15 § 2901. Definitions.
16 The following words and phrases when used in this chapter
17 shall have, unless the context clearly indicates otherwise, the
18 meanings given to them in this section:
1 * * *
2 "Local exchange telecommunications company." A carrier
3 authorized by the Pennsylvania Public Utility Commission to
4 provide local telecommunications services.
5 * * *
6 "Telecommunications service." A utility service, involving
7 the transmission of messages, which is subject to this title.
8 Section 3. Chapter 29 of Title 66 is amended by adding a
9 subchapter to read:
10 SUBCHAPTER C
11 LOCAL EXCHANGE TELECOMMUNICATIONS COMPANIES
12 Sec.
13 2921. Declaration of policy.
14 2922. Structural separation.
15 2923. Code of conduct.
16 § 2921. Declaration of policy.
17 The General Assembly finds and declares as follows:
18 (1) It is necessary to take action to assure the
19 development and maintenance of vibrant and irreversible
20 competition in all intrastate telecommunications markets
21 throughout this Commonwealth.
22 (2) It is critical to explicitly recognize:
23 (i) The anticompetitive behavior of local exchange
24 telecommunications companies that seek to exploit their
25 status as an incumbent against their own customers in
26 providing local phone service to customers.
27 (ii) The importance of ensuring that steps are taken
28 to prevent monopolistic action on the part of incumbent
29 local exchange companies.
30 (iii) The link between a robust local phone service
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1 market and economic development opportunities in rural,
2 urban and suburban areas of this Commonwealth, as well as
3 the desire to ensure that phone service rates are
4 competitively priced.
5 (3) The introduction and consideration of this
6 legislative initiative shall not be construed or interpreted
7 by any administrative body or judicial tribunal to imply that
8 it is the judgment of the General Assembly that the
9 commission does not presently possess the legal authority to
10 impose, sua sponte, by rule or regulation similar terms and
11 conditions on local exchange telecommunications companies.
12 Rather, the introduction and consideration of this initiative
13 is a clear articulation by the General Assembly of the
14 significant public importance of this issue and an
15 affirmation of the legal authority of the commission to
16 guarantee that a level playing field for local intrastate
17 competition is established and irreversibly maintained.
18 § 2922. Structural separation.
19 In addition to any other requirements imposed under this
20 subchapter or by Federal law, local exchange telecommunications
21 companies serving more than 500,000 access lines in this
22 Commonwealth shall structurally separate their retail operations
23 from their wholesale operations in providing telecommunications
24 services within this Commonwealth in compliance with the
25 following provisions:
26 (1) All retail services and functions shall be provided
27 by a separate corporate affiliate which shall operate as a
28 competitive local exchange telecommunications company with
29 the exception of the provision of service to retail customers
30 who do not choose to subscribe to a competitive local
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1 exchange telecommunications company for a given service. All
2 wholesale functions as well as the ownership and operation of
3 all existing network facilities shall remain with the local
4 exchange telecommunications company.
5 (2) The local exchange telecommunications company shall
6 operate completely independently from its competitive local
7 exchange telecommunications company affiliate. The affiliated
8 companies shall not jointly own any network facilities or the
9 land, buildings, poles, conduits or rights-of-way on or
10 within which the facilities are located. The affiliated
11 companies shall not perform any operating, installation or
12 maintenance functions for each other.
13 (3) All transactions between affiliates shall be at
14 arm's length, shall be reduced to writing and shall be made
15 available for public inspection. All transactions between
16 affiliates shall comply with Chapter 21 (relating to
17 relations with affiliated interests). The commission shall
18 not approve a transaction between affiliates until all
19 interested parties have had an opportunity to be heard and
20 unless the commission makes a finding that the transaction is
21 not anticompetitive and that the transaction will not result
22 in any cross-subsidization between the affiliates.
23 (4) The affiliates shall maintain separate books,
24 records and accounts.
25 (5) The affiliates shall have separate officers,
26 directors and employees.
27 (6) The affiliates shall not discriminate in favor of
28 each other.
29 (7) A local exchange telecommunications company shall
30 make all products, services and service functions, including,
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1 but not limited to, network elements, facilities, interfaces
2 and systems, available to each competitive local exchange
3 telecommunications company at prices and conditions available
4 to its affiliate. All products, services and service
5 functions shall be made available to an affiliated or
6 unaffiliated competitive local exchange telecommunications
7 company either through its tariff or through an
8 interconnection agreement. Within 180 days of enactment of
9 this subchapter, the commission shall by order or regulation,
10 establish a code of conduct, as provided in section 2923
11 (relating to code of conduct), governing the relationship
12 between the affiliates which assures that the competitive
13 local exchange telecommunications company does not receive
14 any competitive advantage from its relationship with its
15 affiliated local exchange telecommunications company.
16 § 2923. Code of conduct.
17 The commission shall promulgate rules and regulations
18 establishing a code of conduct applicable to the sales and
19 marketing activities of all local exchange telecommunications
20 companies' business and residential local services, including
21 vertical services, high speed data services and private-line
22 services by an affiliate, division or internal unit of a local
23 exchange telecommunications company, otherwise known as a sales-
24 marketing arm, that meets or exceeds the following minimum
25 standards:
26 (1) No local exchange telecommunications company shall
27 give to any sales marketing arm a preference over a
28 competitor in the provision of goods and services such as
29 requesting or ordering of service, interconnection services
30 and response to service interruptions, nor shall a local
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1 exchange telecommunications company provide to its sales-
2 marketing arm any forecasting, repair history or any other
3 planning or operating information provided to a local
4 exchange telecommunications company from competitors.
5 (2) No local exchange telecommunications company shall
6 provide goods or services to any sales-marketing arm below
7 the cost or market price, whichever is higher, nor shall the
8 local exchange telecommunications company purchase goods or
9 services from any sales-marketing arm at a price above the
10 market price for the goods or services. Further, no
11 transaction between the local exchange telecommunications
12 company and any sales-marketing arm shall involve an
13 anticompetitive cross-subsidy and all of these transactions
14 shall comply with applicable Federal and State law.
15 (3) The local exchange telecommunications company shall
16 simultaneously make available to any competitor any market
17 information not in the public domain that is supplied to any
18 sales-marketing arm. Market information includes customer
19 requests to initiate, change or terminate service.
20 (4) A local exchange telecommunications company's local
21 network operations and the operation of its sales-marketing
22 arm shall be functionally and operationally separate as
23 provided in section 2922 (relating to structural separation).
24 Employees or agents of a local exchange telecommunications
25 company who are responsible for the processing of orders for
26 service and the operation of the local network, such as
27 receiving requests for service, processing orders, billing,
28 and those services deemed by the commission to be essential
29 to the provision of competitive service, shall not be shared
30 with sales-marketing arm employees and their offices shall be
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1 physically separated from the offices used by those working
2 for the sales-marketing arm. Transfers are permitted so long
3 as they are not for circumventing this section. Any sales-
4 marketing arm shall have its own direct line management. Any
5 shared facilities shall be fully and transparently allocated
6 between the local exchange telecommunications company and any
7 sales-marketing arm. All local exchange telecommunications
8 company accounts shall be kept so that the costs incurred
9 shall be fully identifiable. The local exchange
10 telecommunications company shall not give preference for
11 services rendered to a sales-marketing arm over that of any
12 competitor.
13 (5) No employee or agent of a local exchange
14 telecommunications company, while engaged in the installation
15 of equipment or the rendering of any services on behalf of a
16 competitor, shall promote any service of the local exchange
17 telecommunications company or any sales-marketing arm.
18 (6) No employee or agent of a local exchange
19 telecommunications company, while processing an order for the
20 repair or restoration of service or engaged in the actual
21 repair or restoration of service to any customer, shall
22 either directly or by implication, represent that the repair
23 or restoration of service would have occurred sooner if the
24 customer had obtained service from a sales-marketing arm.
25 (7) No local exchange telecommunications company shall
26 condition the provision of any commission-regulated services
27 on the purchase of services from an affiliate division or
28 unit of a local exchange telecommunications company.
29 (8) No local exchange telecommunications company, or any
30 employee thereof, may directly or by implication represent
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1 that:
2 (i) The services provided by the local exchange
3 telecommunications company are of a superior quality when
4 purchased from the local exchange telecommunications
5 company.
6 (ii) The service rendered by a competitor may not be
7 reliable.
8 (iii) The continuation of certain services from the
9 local exchange telecommunications company are contingent
10 upon taking the full range of services by the local
11 exchange telecommunications company.
12 (9) To the extent that a local exchange
13 telecommunications company markets or jointly packages its
14 commission-regulated service, including local services
15 provided by a sales-marketing arm, with any other service, it
16 shall offer the same opportunity to competitors.
17 Section 4. The provisions of this act are severable. If any
18 provision of this act or its application to any person or
19 circumstance is held invalid, the invalidity shall not affect
20 other provisions or applications of this act which can be given
21 effect without the invalid provision or application.
22 Section 5. This act shall take effect in 60 days.
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