HF 3498

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to telecommunications; promoting competition 
  1.3             within the local exchange marketplace; requiring 
  1.4             structural separation of retail and wholesale 
  1.5             activities of large incumbent local exchange carriers 
  1.6             into affiliated companies; providing criteria for 
  1.7             structural separation and continuing operations of the 
  1.8             affiliates, including standards of conduct applicable 
  1.9             to the resulting separate affiliates, in conducting 
  1.10            business with new entrants; providing for approval by 
  1.11            public utilities commission of certain transactions; 
  1.12            providing for implementation and enforcement by 
  1.13            commission and department of commerce; defining 
  1.14            certain terms; requiring the completion of structural 
  1.15            separation by a date certain; proposing coding for new 
  1.16            law in Minnesota Statutes, chapter 237. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  [237.82] [DEFINITIONS.] 
  1.19     Subdivision 1.  [SCOPE.] The terms in sections 237.82 to 
  1.20  237.85 have the meanings given them in this section. 
  1.21     Subd. 2.  [COMMISSION.] "Commission" means the Minnesota 
  1.22  public utilities commission. 
  1.23     Subd. 3.  [COMPETITIVE LOCAL EXCHANGE 
  1.24  CARRIER.] "Competitive local exchange carrier" means a telephone 
  1.25  company that is authorized by the commission to provide retail 
  1.26  local exchange telecommunications service after February 8, 
  1.27  1996, but not before, and that is not affiliated with a large 
  1.28  incumbent local exchange carrier. 
  1.29     Subd. 4.  [DEPARTMENT.] "Department" means the Minnesota 
  1.30  department of commerce. 
  1.31     Subd. 5.  [LARGE INCUMBENT LOCAL EXCHANGE CARRIER.] "Large 
  2.1   incumbent local exchange carrier" means a person, or an 
  2.2   affiliate, successor, or assign of the person, engaged in 
  2.3   providing telephone exchange service or exchange access as of 
  2.4   February 8, 1996, and serving more than 250,000 local exchange 
  2.5   subscribers within the state of Minnesota as of that date.  This 
  2.6   term does not include a person insofar as the person is engaged 
  2.7   in providing a commercial mobile service under United States 
  2.8   Code, title 47, section 332, subsection (c). 
  2.9      Subd. 6.  [RETAIL AFFILIATE.] "Retail affiliate" means a 
  2.10  telephone company created by the structural separation of the 
  2.11  incumbent local exchange carrier required under section 237.83 
  2.12  to provide retail local exchange telecommunications services. 
  2.13     Subd. 7.  [RETAIL OPERATIONS.] "Retail operations" means 
  2.14  the provision, by the retail affiliate of a large incumbent 
  2.15  local exchange carrier, of telecommunications services to end 
  2.16  users. 
  2.17     Subd. 8.  [WHOLESALE AFFILIATE.] "Wholesale affiliate" 
  2.18  means a telephone company created by the structural separation 
  2.19  of a large incumbent local exchange carrier required under 
  2.20  section 237.83 to provide wholesale telecommunications services 
  2.21  to competitive local exchange carriers and to the retail 
  2.22  affiliate. 
  2.23     Subd. 9.  [WHOLESALE OPERATIONS.] "Wholesale operations" 
  2.24  means the provision, by the wholesale affiliate of a large 
  2.25  incumbent local exchange carrier to other telecommunications 
  2.26  carriers including the retail affiliate, of facilities and 
  2.27  services that become components, elements, parts, or segments of 
  2.28  the retail service provided by those other carriers, and 
  2.29  includes, without limitation, the provision of interconnection, 
  2.30  access, unbundled network elements alone or in combination, or 
  2.31  resale services. 
  2.32     Sec. 2.  [237.83] [STRUCTURAL SEPARATION REQUIREMENTS AND 
  2.33  PROCEDURES.] 
  2.34     Subdivision 1.  [STRUCTURAL SEPARATION REQUIREMENTS.] (a) 
  2.35  In addition to any other requirements of law, a large incumbent 
  2.36  local exchange carrier shall structurally separate its retail 
  3.1   operations from its wholesale operations by creating a retail 
  3.2   affiliate and a wholesale affiliate, consistent with proceedings 
  3.3   of the commission to implement sections 237.82 to 237.85.  The 
  3.4   retail affiliate and the wholesale affiliate shall conduct their 
  3.5   respective operations in accordance with paragraphs (b) to (j). 
  3.6      (b) The retail affiliate shall operate as a competitive 
  3.7   local exchange carrier. 
  3.8      (c) The wholesale affiliate must own and operate all 
  3.9   network facilities of the incumbent local exchange carrier as it 
  3.10  existed before the effective date of the structural separation. 
  3.11     (d) The wholesale affiliate is prohibited from providing 
  3.12  retail service to customers in Minnesota, and shall operate 
  3.13  completely independently from the retail affiliate.  The retail 
  3.14  affiliate may not own or control, jointly with the wholesale 
  3.15  affiliate or otherwise, any of the network facilities of the 
  3.16  incumbent local exchange carrier or the land, buildings, poles, 
  3.17  conduits, or rights-of-way on or in which the network facilities 
  3.18  are located. 
  3.19     (e) All transactions and agreements between the retail 
  3.20  affiliate and the wholesale affiliate must be at arms' length, 
  3.21  must be reduced to writing, must be available for public 
  3.22  inspection, and may not take effect until approved by the 
  3.23  commission, on recommendation by the department. 
  3.24     (f) The commission may not approve a transaction between 
  3.25  the wholesale affiliate and the retail affiliate until all 
  3.26  interested parties, including the department, have had an 
  3.27  opportunity to be heard and unless the commission affirmatively 
  3.28  finds that the transaction: 
  3.29     (1) does not discriminate against competitive local 
  3.30  exchange carriers; and 
  3.31     (2) will not result in any cross-subsidization between the 
  3.32  wholesale affiliate and the retail affiliate. 
  3.33     (g) The retail affiliate and wholesale affiliate: 
  3.34     (1) shall maintain separate books, records, and accounts; 
  3.35     (2) must have separate officers, directors, and employees; 
  3.36  and 
  4.1      (3) shall operate in separate office locations, subject to 
  4.2   an appropriate collocation agreement or agreements approved by 
  4.3   the commission pursuant to this section. 
  4.4      (h) The wholesale affiliate may not discriminate in favor 
  4.5   of the retail affiliate, and the retail affiliate may not 
  4.6   discriminate in favor of the wholesale affiliate. 
  4.7      (i) The wholesale affiliate shall make all products, 
  4.8   services, and service functions, including network elements, 
  4.9   facilities, interfaces, and systems, available to each 
  4.10  competitive local exchange carrier at the prices, terms, and 
  4.11  conditions at which they are available to the retail affiliate.  
  4.12  The wholesale affiliate shall make all those products, services, 
  4.13  and service functions available to an affiliated or unaffiliated 
  4.14  competitive local exchange carrier only through a tariff or an 
  4.15  interconnection agreement approved by the commission. 
  4.16     (j) The wholesale affiliate is subject to rate of return 
  4.17  regulation and is prohibited from implementing or operating 
  4.18  under an alternative form of regulation under sections 237.76 to 
  4.19  237.774. 
  4.20     Subd. 2.  [IMPLEMENTATION AND ENFORCEMENT PROCEDURES.] The 
  4.21  commission shall adopt: 
  4.22     (1) procedures for reviewing transactions between the 
  4.23  retail affiliate and the wholesale affiliate; 
  4.24     (2) enforcement measures for violations of sections 237.82 
  4.25  to 237.85, including auditing requirements; and 
  4.26     (3) any other rule, requirement, or procedure necessary or 
  4.27  appropriate for implementing sections 237.82 to 237.85. 
  4.28     Subd. 3.  [DEADLINES FOR IMPLEMENTING STRUCTURAL 
  4.29  SEPARATION.] (a) On or before August 1, 2002, the commission 
  4.30  shall begin proceedings to implement sections 237.82 to 237.85 
  4.31  in accordance with the requirements of this section.  The 
  4.32  commission shall conclude the proceedings on or before February 
  4.33  1, 2003, and, except as otherwise set forth in this subdivision, 
  4.34  shall complete the implementation of the required structural 
  4.35  separation no later than May 1, 2003.  
  4.36     (b) If a large incumbent local exchange carrier is granted 
  5.1   authority to provide in-region inter-LATA long distance service 
  5.2   pursuant to United States Code, title 47, section 271, before 
  5.3   May 1, 2003, then the commission shall ensure that the required 
  5.4   structural separation is implemented for that large incumbent 
  5.5   local exchange carrier before or simultaneously with the grant 
  5.6   of authority to provide in-region inter-LATA long distance 
  5.7   service pursuant to United States Code, title 47, section 271. 
  5.8      Subd. 4.  [DEPARTMENT PARTICIPATION.] The department shall 
  5.9   participate as an interested party in these proceedings.  The 
  5.10  commission shall give substantial weight to the recommendations 
  5.11  and suggestions of the department during the course of the 
  5.12  proceedings. 
  5.13     Sec. 3.  [237.84] [STANDARDS OF CONDUCT.] 
  5.14     Subdivision 1.  [ESTABLISHING STANDARDS OF CONDUCT.] As 
  5.15  part of its proceedings to implement sections 237.82 to 237.85, 
  5.16  the commission, after providing all interested parties a full 
  5.17  opportunity to submit proposals, offer comments, and participate 
  5.18  in hearings, shall, by order or rule, establish standards of 
  5.19  conduct, in accordance with this section, governing the 
  5.20  relationship between the retail affiliate and the wholesale 
  5.21  affiliate.  These standards must ensure that: 
  5.22     (1) the retail affiliate is not given any preference or 
  5.23  advantage in its relationship with the wholesale affiliate; and 
  5.24     (2) all services provided by the wholesale affiliate to the 
  5.25  retail affiliate are provided in a nondiscriminatory manner as 
  5.26  required under sections 237.82 to 237.85 and other applicable 
  5.27  law. 
  5.28     Subd. 2.  [CONTENT OF STANDARDS.] At a minimum, the 
  5.29  standards of conduct must provide for the following: 
  5.30     (1) no discrimination against or preferential treatment for 
  5.31  any new entrant in the local exchange marketplace, or of the 
  5.32  retail affiliate, by the wholesale operation or any other 
  5.33  affiliate of the large incumbent local exchange carrier; 
  5.34     (2) no disclosure or preferential sharing of any 
  5.35  confidential information between the retail and wholesale 
  5.36  affiliates of the large incumbent local exchange carrier; 
  6.1      (3) adequate rules prohibiting cross-subsidization of the 
  6.2   retail operation of a large incumbent local exchange carrier by 
  6.3   the wholesale operation of the large incumbent local exchange 
  6.4   carrier, or vice versa; 
  6.5      (4) maintenance of separate books and records by the retail 
  6.6   and wholesale operations of the large incumbent local exchange 
  6.7   carrier; 
  6.8      (5) sufficient physical and operational separation to 
  6.9   accomplish the requirements of sections 237.82 to 237.85; 
  6.10     (6) an informal dispute resolution procedure; and 
  6.11     (7) a procedure for monitoring and enforcing compliance 
  6.12  with the standards of conduct, together with a system of 
  6.13  penalties for noncompliance, consistent with existing commission 
  6.14  rules. 
  6.15     Subd. 3.  [LIMITATION.] In adopting standards of conduct 
  6.16  under this section, the commission may not prohibit the retail 
  6.17  and wholesale operations of a large incumbent local exchange 
  6.18  carrier from using or sharing similar corporate names, 
  6.19  trademarks, trade dress, or service marks. 
  6.20     Subd. 4.  [FURTHER PROCEEDINGS IF NEEDED.] Subsequent to 
  6.21  developing standards of conduct in accordance with this section, 
  6.22  the commission shall conduct further proceedings as it deems 
  6.23  necessary to implement and enforce those standards.  As part of 
  6.24  these proceedings, the commission may, in its discretion, 
  6.25  develop and apply additional standards of conduct applicable to 
  6.26  the marketing activities of the retail affiliate. 
  6.27     Sec. 4.  [237.85] [INITIATION AND CONDUCT OF 
  6.28  INVESTIGATION.] 
  6.29     Subdivision 1.  [INITIATION OF INVESTIGATION.] Upon 
  6.30  complaint or upon its own motion, the commission shall conduct 
  6.31  an investigation of the existence, nature, and extent of 
  6.32  anticompetitive or discriminatory behavior in the local exchange 
  6.33  marketplace, and the impact of that behavior on (1) the speed 
  6.34  and ease of entry into that marketplace by new entrants and (2) 
  6.35  the sustained viability of new entrants within that market. 
  6.36     Subd. 2.  [CONDUCT OF INVESTIGATION.] (a) The commission 
  7.1   may require a large incumbent local exchange carrier to provide 
  7.2   information, including documents and testimony, in accordance 
  7.3   with the commission's rules regarding the discovery of 
  7.4   information.  Material that the commission determines to be 
  7.5   confidential, proprietary, or trade secret information provided 
  7.6   under this section must not be disclosed to any person not 
  7.7   directly employed or retained by the commission to conduct the 
  7.8   investigation without the consent of the party providing the 
  7.9   information.  
  7.10     (b) Notwithstanding this prohibition on disclosure of 
  7.11  information, the commission shall disclose information obtained 
  7.12  under this section, under an appropriate confidentiality 
  7.13  agreement, to the department's telecommunications division and 
  7.14  the residential utilities division of the office of attorney 
  7.15  general.  The commission may disclose the information to 
  7.16  appropriate federal and state law enforcement officials if it 
  7.17  determines that disclosure is necessary to prevent or restrain a 
  7.18  violation of federal or state law and it provides the party that 
  7.19  provided the information with reasonable notice and opportunity 
  7.20  to prevent or limit disclosure. 
  7.21     Subd. 3.  [REFERRALS AFTER INVESTIGATION.] If, as a result 
  7.22  of the investigation conducted under this section, the 
  7.23  commission has reason to believe that anticompetitive or 
  7.24  discriminatory conduct, including the unlawful exercise of 
  7.25  market power, is preventing retail telecommunications customers 
  7.26  from obtaining the benefits of a properly functioning and 
  7.27  effectively competitive retail local exchange telecommunications 
  7.28  market, the commission shall: 
  7.29     (1) refer its findings to the state attorney general, the 
  7.30  United States Department of Justice, the Securities and Exchange 
  7.31  Commission, and the Federal Communications Commission; 
  7.32     (2) disclose any information it has obtained in the course 
  7.33  of its investigation to any agency to which it has made referral 
  7.34  under this section; and 
  7.35     (3) intervene, as provided and permitted by law or rule, in 
  7.36  any proceedings initiated as a result of a referral made under 
  8.1   this section. 
  8.2      Sec. 5.  [EFFECTIVE DATE.] 
  8.3      Sections 1 to 4 are effective July 1, 2002.