Session of 2000
SENATE BILL No. 467
By Committee on Commerce
1-21
10 AN ACT relating
to telecommunications; eliminating revenue neutrality
11 requirements for
switched access rate rebalancing; amending K.S.A.
12 1999 Supp. 66-2005,
66-2007, 66-2008 and 66-2009 and repealing the
13 existing sections;
also repealing K.S.A. 1999 Supp. 66-2012, 66-2013
14 and 66-2016.
15
16 Be it enacted by the Legislature of the
State of Kansas:
17 Section
1. K.S.A. 1999 Supp. 66-2005 is hereby amended to read as
18 follows: 66-2005. (a) Each local exchange
carrier shall file a network in-
19 frastructure plan with the commission on or
after January 1, 1997, and
20 prior to January 1, 1998. Each plan, as a
part of universal service protec-
21 tion, shall include schedules, which shall
be approved by the commission,
22 for deployment of universal service
capabilities by July 1, 1998, and the
23 deployment of enhanced universal service
capabilities by July 1, 2003, as
24 defined pursuant to subsections (p) and (q)
of K.S.A. 1999 Supp. 66-1,187
25 and amendments thereto, respectively. With
respect to enhanced univer-
26 sal service, such schedules shall provide
for deployment of ISDN, or its
27 technological equivalent, or broadband
facilities, only upon a firm cus-
28 tomer order for such service, or for
deployment of other enhanced uni-
29 versal services by a local exchange
carrier. After receipt of such an order
30 and upon completion of a deployment plan
designed to meet the firm
31 order or otherwise provide for the
deployment of enhanced universal
32 service, a local exchange carrier shall
notify the commission. The com-
33 mission shall approve the plan unless the
commission determines that the
34 proposed deployment plan is unnecessary,
inappropriate, or not cost ef-
35 fective, or would create an
unreasonable or excessive demand on the
36 KUSF. The commission shall
take action within 90 days. If the commis-
37 sion fails to take action within 90 days,
the deployment plan shall be
38 deemed approved. This approval process
shall continue until July 1, 2000.
39 Each plan shall demonstrate the capability
of the local exchange carrier
40 to comply on an ongoing basis with quality
of service standards to be
41 adopted by the commission no later than
January 1, 1997.
42 (b) In order to
protect universal service, facilitate the transition to
43 competitive markets and stimulate the
construction of an advanced tel-
2
1 ecommunications infrastructure, each
local exchange carrier shall file a
2 regulatory reform plan at the same
time as it files the network infrastruc-
3 ture plan required in subsection (a).
As part of its regulatory reform plan,
4 a local exchange carrier may elect
traditional rate of return regulation or
5 price cap regulation. Carriers that
elect price cap regulation shall be ex-
6 empt from rate base, rate of return
and earnings regulation. However,
7 the commission may resume such
regulation upon finding, after a hearing,
8 that a carrier that is subject to
price cap regulation has: violated minimum
9 quality of service standards pursuant
to subsection (l) of K.S.A. 1999
10 Supp. 66-2002 and amendments thereto; been
given reasonable notice
11 and an opportunity to correct the
violation; and failed to do so. Regulatory
12 reform plans also shall include:
13 (1) A commitment
to provide existing and newly ordered point-to-
14 point broadband services to: Any hospital
as defined in K.S.A. 65-425,
15 and amendments thereto; any school
accredited pursuant to K.S.A. 72-
16 1101 et seq., and amendments thereto; any
public library; or other state
17 and local government facilities at
discounted prices close to, but not be-
18 low, long-run incremental cost; and
19 (2) a commitment
to provide basic rate ISDN service, or the tech-
20 nological equivalent, at prices which are
uniform throughout the carrier's
21 service area. Local exchange carriers shall
not be required to allow retail
22 customers purchasing the foregoing
discounted services to resell those
23 services to other categories of customers.
Telecommunications carriers
24 may purchase basic rate ISDN services, or
the technological equivalent,
25 for resale in accordance with K.S.A. 1999
Supp. 66-2003 and amendments
26 thereto. The commission may reduce prices
charged for services outlined
27 in provisions (1) and (2) of this
subsection, if the commitments of the
28 local exchange carrier set forth in those
provisions are not being kept.
29 (c) Subject to
the commission's approval, all local exchange carriers
30 shall reduce intrastate access charges to
interstate levels as provided
31 herein. Rates for intrastate switched
access, and the imputed access por-
32 tion of toll, shall be reduced over a
three-year period with the objective
33 of equalizing interstate and intrastate
rates in a revenue neutral, specific
34 and predictable manner. The commission is
authorized to rebalance local
35 residential and business service rates to
offset the intrastate access and
36 toll charge reductions. Any
remaining portion of the reduction in access
37 and toll charges not recovered
through local residential and business serv-
38 ice rates shall be paid out from
the KUSF pursuant to K.S.A. 1999 Supp.
39 66-2008 and amendments
thereto. Rural telephone companies shall re-
40 duce their intrastate switched access rates
to interstate levels on March
41 1, 1997, and every two years
thereafter, as long as amounts equal to such
42 reductions are recovered from the
KUSF.
43 (d) Beginning
March 1, 1997, each rural telephone company shall
3
1 have the authority to increase
annually its monthly basic local residential
2 and business service rates by an
amount not to exceed $1 in each 12
3 month period until such monthly rates
reach an amount equal to the
4 statewide rural telephone company
average rates for such services. The
5 statewide rural telephone company
average rates shall be the arithmetic
6 mean of the lowest flat rate as of
March 1, 1996 2000, for local
residential
7 service and for local business
service offered by each rural telephone
8 company within the state. In the case
of a rural telephone company which
9 increases its local residential
service rate or its local business service rate,
10 or both, to reach the statewide rural
telephone company average rate for
11 such services, the amount paid to the
company from the KUSF shall be
12 reduced by an amount equal to the
additional revenue received by such
13 company through such rate increase. In the
case of a rural telephone
14 company which elects to maintain a local
residential service rate or a local
15 business service rate, or both, below the
statewide rural telephone com-
16 pany average, the amount paid to the
company from the KUSF shall be
17 reduced by an amount equal to the
difference between the revenue the
18 company could receive if it elected to
increase such rate to the average
19 rate and the revenue received by the
company.
20 (e) For
regulatory reform plans in which price cap regulation has
21 been elected, price cap plans shall have
three baskets: Residential and
22 single-line business, including touch-tone;
switched access services; and
23 miscellaneous services. The commission
shall establish price caps at the
24 prices existing when the regulatory plan is
filed subject to rate rebalancing
25 as provided in subsection (c) for
residential services, including touch-tone
26 services, and for single-line business
services, including touch-tone serv-
27 ices, within the residential and
single-line business service basket. The
28 commission shall establish a formula for
adjustments to the price caps.
29 The commission also shall establish price
caps at the prices existing when
30 the regulatory plan is filed for the
miscellaneous services basket. The
31 commission shall approve any adjustments to
the price caps for the mis-
32 cellaneous service basket, as provided in
subsection (f).
33 (f) On or before
January 1, 1997, the commission shall issue a final
34 order in a proceeding to determine the
price cap adjustment formula that
35 shall apply to the price caps for the local
residential and single-line busi-
36 ness and the miscellaneous services baskets
and for sub-categories, if any,
37 within those baskets. In determining this
formula, the commission shall
38 balance the public policy goals of
encouraging efficiency and promoting
39 investment in a quality, advanced
telecommunications network in the
40 state. The commission also shall establish
any informational filing require-
41 ments necessary for the review of any price
cap tariff filings, including
42 price increases or decreases within the
caps, to verify such caps would
43 not be exceeded by any proposed price
change. The adjustment formula
4
1 shall apply to the price caps for the
local residential and single-line busi-
2 ness basket after December 31, 1999,
and to the miscellaneous services
3 basket after December 31, 1997. The
price cap formula, but not actual
4 prices, shall be reviewed every five
years.
5 (g) The
price caps for the residential and single-line business service
6 basket shall be capped at their
initial level until January 1, 2000, except
7 for any increases authorized
as a part of the revenue neutral rate rebal-
8 ancing under
subsection (c) (e). The price caps for this
basket and for the
9 categories in this basket, if any,
shall be adjusted annually after December
10 31, 1999, based on the formula determined
by the commission under
11 subsection (f).
12 (h) The price cap
for the switched access service basket shall be set
13 based upon the local exchange carrier's
intrastate access tariffs as of Jan-
14 uary 1, 1997, except for any
revenue neutral rate rebalancing authorized
15 in accordance with subsection
(c). Thereafter, the cap for this basket shall
16 not change except in connection with any
subsequent revenue neutral
17 rebalancing authorized by the
commission under subsection (c) access
18 charge reduction authorized by the
commission.
19 (i) The price
caps for the miscellaneous services basket shall be ad-
20 justed annually after December 31, 1997,
based on the adjustment for-
21 mula determined by the commission under
subsection (f).
22 (j) A price cap
is a maximum price for all services taken as a whole
23 in a given basket. Prices for individual
services may be changed within
24 the service categories, if any, established
by the commission within a
25 basket. An entire service category, if any,
within the residential and single-
26 line business basket or miscellaneous
services basket may be priced below
27 the cap for such category. Unless otherwise
approved by the commission,
28 no service shall be priced below the price
floor which will be long-run
29 incremental cost and imputed access
charges. Access charges equal to
30 those paid by telecommunications carriers
to local exchange carriers shall
31 be imputed as part of the price floor for
toll services offered by local
32 exchange carriers on a toll service
basis.
33 (k) A local
exchange carrier may offer promotions within an exchange
34 or group of exchanges. All promotions shall
be approved by the commis-
35 sion and shall apply to all customers in a
nondiscriminatory manner within
36 the exchange or group of exchanges.
37 (l) Unless the
commission authorizes price deregulation at an earlier
38 date, intrastate toll services within the
miscellaneous services basket shall
39 continue to be regulated until the affected
local exchange carrier begins
40 to offer 1 + intraLATA dialing parity
throughout its service territory, at
41 which time intrastate toll will be price
deregulated, except that prices
42 cannot be set below the price floor.
43 (m) On or before
July 1, 1997, the commission shall establish guide-
5
1 lines for reducing regulation prior
to price deregulation of price cap reg-
2 ulated services in the miscellaneous
services basket, the switched access
3 services basket, and the residential
and single-line business basket.
4
(n) Subsequent to the adoption of guidelines pursuant to
subsection
5 (m), the commission shall initiate a
petitioning procedure under which
6 the local exchange carrier may
request rate range pricing. The commis-
7 sion shall act upon a petition within
21 days, subject to a 30-day suspen-
8 sion. The prices within a rate range
shall be tariffed and shall apply to all
9 customers in a nondiscriminatory
manner in an exchange or group of
10 exchanges.
11 (o) A local
exchange carrier may petition the commission to designate
12 an individual service or service category,
if any, within the miscellaneous
13 services basket, the switched access
services basket or the residential and
14 single-line business basket for reduced
regulation. The commission shall
15 act upon a petition for reduced regulation
within 21 days, subject to a
16 suspension period of an additional 30 days,
and upon a good cause show-
17 ing of the commission in the suspension
order, or within such shorter
18 time as the commission shall approve. The
commission shall issue a final
19 order within the 21-day period or within a
51-day period if a suspension
20 has been issued. Following an order
granting reduced regulation of an
21 individual service or service category, the
commission shall act on any
22 request for price reductions within seven
days subject to a 30-day sus-
23 pension. The commission shall act on other
requests for price cap ad-
24 justments, adjustments within price cap
plans and on new service offer-
25 ings within 21 days subject to a 30-day
suspension. Such a change will be
26 presumed lawful unless it is determined the
prices are below the price
27 floor or that the price cap for a category,
if any, within the entire basket
28 has been exceeded.
29 (p) The
commission may price deregulate within an exchange area,
30 or at its discretion on a statewide basis,
any individual service or service
31 category upon a finding by the commission
that there is a telecommuni-
32 cations carrier or an alternative provider
providing a comparable product
33 or service, considering both function and
price, in that exchange area.
34 The commission shall act upon a petition
for price deregulation within
35 21 days, subject to a suspension period of
an additional 30 days, and upon
36 a good cause showing of the commission in
the suspension order, or
37 within such shorter time as the commission
shall approve; provided that
38 no such petition shall be filed prior to
July 1997, unless the commission
39 otherwise authorizes. The commission shall
issue a final order within the
40 21-day period or within a 51-day period if
a suspension has been issued.
41 (q) Upon
complaint or request, the commission may investigate a
42 price deregulated service. The commission
shall resume price regulation
43 of a service provided in any exchange area
by placing it in the appropriate
6
1 service basket, as approved by the
commission, upon a determination by
2 the commission that there is no
longer a telecommunications carrier or
3 alternative provider providing a
comparable product or service, consid-
4 ering both function and price, in
that exchange area.
5 (r) The
commission shall require that for all local exchange carriers
6 all such price deregulated basic
intraLATA toll services be geographically
7 averaged statewide
and not be priced below the price floor established
8 in subsection (j).
9 (s) Cost
studies to determine price floors shall be performed as re-
10 quired by the commission in response to
complaints. In addition, not-
11 withstanding the exemption in subsection
(b), the commission may re-
12 quest information necessary to execute any
of its obligations under the
13 act.
14 (t) A local
exchange carrier may petition for individual customer
15 pricing. The commission shall respond
expeditiously to the petition within
16 a period of not more than 30 days subject
to a 30-day suspension.
17 (u) No audit,
earnings review or rate case shall be performed with
18 reference to the initial prices filed as
required herein.
19
(v) Telecommunications carriers shall not be subject to price
regu-
20 lation, except that: Access charge
reductions shall be passed through to
21 consumers by reductions in basic intrastate
toll prices; and basic toll prices
22 shall remain geographically
averaged statewide. As required under K.S.A.
23 66-131, and amendments thereto, and except
as provided for in subsec-
24 tion (c) of K.S.A. 1999 Supp. 66-2004 and
amendments thereto, telecom-
25 munications carriers that were not
authorized to provide switched local
26 exchange telecommunications services in
this state as of July 1, 1996,
27 including cable television operators who
have not previously offered tel-
28 ecommunications services, must receive a
certificate of convenience
29 based upon a demonstration of technical,
managerial and financial via-
30 bility and the ability to meet quality of
service standards established by
31 the commission. Any telecommunications
carrier or other entity seeking
32 such certificate shall file a statement,
which shall be subject to the com-
33 mission's approval, specifying with
particularity the areas in which it will
34 offer service, the manner in which it will
provide the service in such areas
35 and whether it will serve both business
customers and residential custom-
36 ers in such areas. Any structurally
separate affiliate of a local exchange
37 carrier that provides telecommunications
services shall be subject to the
38 same regulatory obligations and oversight
as a telecommunications car-
39 rier, as long as the local exchange
carrier's affiliate obtains access to any
40 services or facilities from its affiliated
local exchange carrier on the same
41 terms and conditions as the local exchange
carrier makes those services
42 and facilities available to other
telecommunications carriers. The com-
43 mission shall oversee telecommunications
carriers to prevent fraud and
7
1 other practices harmful to consumers
and to ensure compliance with
2 quality of service standards adopted
for all local exchange carriers and
3 telecommunications carriers in the
state.
4 Sec.
2. K.S.A. 1999 Supp. 66-2007 is hereby amended to read as
5 follows: 66-2007. (a) All local
exchange carriers and telecommunications
6 carriers providing long distance
service in Kansas shall reduce their state-
7 wide averaged basic
long distance rates to reflect the net reductions in
8 access charges; however, such
carriers shall be allowed to increase long
9 distance rates to reflect the KUSF
funding requirements set forth in
10 K.S.A. 1999 Supp. 66-2008 and amendments
thereto.
11 (b) The
commission shall approve, upon not more than 120 days'
12 notice, any basic local exchange price
increases that in the aggregate in
13 any one year are $1.50 or less per access
line per month, that are proposed
14 by any rural telephone company which is
subject to traditional rate of
15 return regulation and that comply with the
requirements of this section.
16 Any such proposed price increases shall be
presumed reasonable and not
17 subject to commission investigation and
review if the rural telephone
18 company has followed the notice
requirements set forth below. However,
19 the commission shall initiate an
investigation if more than 15% of the
20 subscribers subject to the rate increase
request such an investigation
21 within 60 days of the date of distribution
of the notice of the proposed
22 change. Upon filing such an application for
a rate increase, any rural
23 telephone company seeking expedited
approval of the proposed rate un-
24 der this section shall send a notice to its
subscribers by regular mail, which
25 may be included with regular subscriber
mailings. Such mailings shall
26 include the name, mailing address and
telephone number of the com-
27 mission. The notice shall include a
schedule of the proposed local
28 exchange rates, the effective date of the
rates and a description of the
29 procedures by which the subscribers can
petition the commission to de-
30 termine the reasonableness of the proposed
rates, including a provision
31 specifically stating that protest by 15% or
more of subscribers subject to
32 the proposed rate increase would require
the commission to initiate an
33 investigation concerning the reasonableness
of the proposed rate
34 increase.
35 (c) The
commission shall have the right to investigate and determine
36 the reasonableness of an increase in local
exchange rates and charges
37 under subsection (b) by any rural telephone
company within one year of
38 the time local exchange rates or charges
are increased. If the commission
39 determines such rate or charge increases
are unreasonable, the commis-
40 sion shall have the authority to order a
rate hearing and, after such hear-
41 ing, shall have the authority to rescind
all or any portion of the increases
42 found to be unreasonable.
43 Sec.
3. K.S.A. 1999 Supp. 66-2008 is hereby amended to read as
8
1 follows: 66-2008. On or before
January 1, 1997, the commission shall
2 establish the Kansas universal
service fund, hereinafter referred to as the
3 KUSF.
4 (a) The
initial amount of the KUSF shall be comprised of local
5 exchange carrier revenues lost as a
result of rate rebalancing pursuant to
6 subsection (c) of K.S.A. 1999 Supp.
66-2005 and amendments thereto
7 and subsection (a) of K.S.A. 1999
Supp. 66-2007 and amendments
8 thereto. Such revenues shall be
recovered on a revenue neutral basis. The
9 revenue neutral calculation shall be
based on the volumes and revenues
10 for the 12 months prior to September 30,
1996, adjusted for any rate
11 changes.
12 (b) The
commission shall require every telecommunications carrier,
13 telecommunications public utility and
wireless telecommunications serv-
14 ice provider that provides intrastate
telecommunications services to con-
15 tribute to the KUSF on an equitable and
nondiscriminatory basis. Any
16 telecommunications carrier,
telecommunications public utility or wireless
17 telecommunications service provider which
contributes to the KUSF may
18 collect from customers an amount equal to
such carrier's, utility's or pro-
19 vider's contribution , except that before
January 1, 2000, no such carrier,
20 provider or utility shall collect from
customers an amount in excess of
21 8.89% of its intrastate retail revenues as
provided in commission docket
22 no. 190-492-U but such carrier, provider or
utility may collect a lesser
23 amount from its customer.
24 Prior to January 1,
2000, with respect to wireless telecommunications
25 service providers, an equitable and
nondiscriminatory rate shall be an
26 amount equal to the rate of contributions
of wireline telecommunications
27 service providers, as determined by the
commission, reduced by the per-
28 centage minutes of usage initiated and
terminated entirely over the wire-
29 less network as determined by the
commission. The commission shall
30 establish such rate for wireless
telecommunications service providers no
31 later than December 31, 1998. Any
contributions in excess of distributions
32 collected in any reporting year shall be
applied to reduce the estimated
33 contribution that would otherwise be
necessary for the following year.
34 (c) Pursuant to
the federal act, distributions from the KUSF shall be
35 made in a competitively neutral manner to
qualified telecommunications
36 public utilities, telecommunications
carriers and wireless telecommuni-
37 cations providers, that are deemed eligible
both under subsection (e)(1)
38 of section 214 of the federal act and by
the commission.
39 (d) The
commission shall periodically review the KUSF to determine
40 if the costs of qualified
telecommunications public utilities, telecommu-
41 nications carriers and wireless
telecommunications service providers to
42 provide local service justify modification
of the KUSF. If the commission
43 determines that any changes are needed, the
commission shall modify
9
1 the KUSF accordingly.
2 (e) Any
qualified telecommunications carrier, telecommunications
3 public utility or wireless
telecommunications service provider may re-
4 quest supplemental funding
from the additional funding from the KUSF
5 based upon a percentage increase in
access lines over the 12-month pe-
6 riod prior to the request. The
supplemental additional funding shall
be
7 incurred for the purpose of providing
services to and within the service
8 area of the qualified
telecommunications carrier, telecommunications
9 public utility or wireless
telecommunications service provider. Supple-
10 mental Additional
funding from the KUSF shall be used for infrastructure
11 expenditures necessary to serve additional
customers within the service
12 area of such qualifying utility, provider
or carrier. All affected parties shall
13 be allowed to review and verify a request
of such a qualified utility, carrier
14 or provider for supplemental funding from
the KUSF, and to intervene
15 in any commission proceeding regarding such
request. The commission
16 shall issue an order on the request within
120 days of filing. Additional
17 funding also may be requested for:
The recovery of shortfalls due to
18 additional rebalancing of rates to
continue maintenance of parity with
19 interstate access rates; shortfalls
due to changes to access revenue
20 requirements resulting from changes
in federal rules; additional invest-
21 ment required to provide universal
service and enhanced universal serv-
22 ice, deployed subject to subsection
(a) of K.S.A. 66-2005, and amend-
23 ments thereto; and for
infrastructure expenditures in response to facility
24 or service requirements established
by any legislative, regulatory or ju-
25 dicial authority. Such requests
shall be subject to simplified filing pro-
26 cedures and the expedited review
procedures, as outlined in the stipu-
27 lation attached to the order of
November 19, 1990 in docket no.
28 127,140-U (Phase IV).
29
(f) Additional supplemental funding from the KUSF, other than
as
30 provided in subsection (e) of this
section, may be authorized at the dis-
31 cretion of the commission. However,
the commission may require ap-
32 proval of such funding to be based
upon a general rate case filing. With
33 respect to any request for
additional supplemental funding from the
34 KUSF, the commission shall act
expeditiously, but shall not be subject to
35 the 120 day deadline set forth in
subsection (e).
36 Sec.
4. K.S.A. 1999 Supp. 66-2009 is hereby amended to read as
37 follows: 66-2009. (a) Local
exchange carriers that provided switched local
38 exchange services in the state
prior to January 1, 1996, or their successors,
39 shall serve as the carrier of last
resort in their exchanges and shall be
40 eligible to receive KUSF funding.
However, with respect to the Hill City
41 exchange area in which multiple
carriers were certified prior to January
42 1, 1996, the commission's
determination, subject to court appeals, shall
43 determine which authorized carrier
shall serve as carrier of last resort.
10
1 The local exchange carrier
serving as the carrier of last resort shall remain
2 the carrier of last resort
and shall be entitled to recover the costs of serving
3 as carrier of last
resort. The commission shall determine a process
for
4 selecting a carrier of last resort
for switched local exchange services for
5 all exchange areas in the state.
The local exchange carrier serving as the
6 carrier of last resort may be
eligible to recover the cost of providing last
7 resort service as determined by
the commission.
8
(b) Beginning March 1, 1997, the amount of KUSF funds
owed to
9 each qualifying
telecommunications carrier, telecommunications public
10 utility or wireless
telecommunications service provider in the state,
based
11 upon the revenue requirements
assigned to the funds for such qualifying
12 utility, carrier or provider, shall
be allocated by the fund administrator in
13 equal monthly
installments.
14 Sec. 5. K.S.A. 1999 Supp.
66-2005, 66-2007, 66-2008, 66-2009, 66-
15 2012, 66-2013 and 66-2016 are hereby
repealed.
16 Sec. 6. This act shall
take effect and be in force from and after its
17 publication in the statute book.