1.1                          A bill for an act 
  1.2             relating to telecommunications; allowing for 
  1.3             alternative regulation of telephone companies for a 
  1.4             limited period; authorizing rulemaking to promote fair 
  1.5             and reasonable competition for local exchange service; 
  1.6             making technical changes; amending Minnesota Statutes 
  1.7             1994, sections 237.01, subdivision 6; 237.035; 237.09; 
  1.8             237.16; and 237.461, subdivision 2; proposing coding 
  1.9             for new law in Minnesota Statutes, chapter 237. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1994, section 237.01, 
  1.12  subdivision 6, is amended to read: 
  1.13     Subd. 6.  [TELECOMMUNICATIONS CARRIER.] "Telecommunications 
  1.14  carrier" means a person, firm, association, or corporation 
  1.15  authorized to furnish one or more of the following telephone 
  1.16  service services to the public, but not otherwise authorized to 
  1.17  furnish local exchange service:  (1) interexchange telephone 
  1.18  service; (2) local telephone service pursuant to a certificate 
  1.19  granted under the authority of section 237.16, subdivision 4, 
  1.20  before August 1, 1995; or (3) local service pursuant to a 
  1.21  certificate granted under section 237.16, for the first time 
  1.22  after August 1, 1995, except if granted to a successor to a 
  1.23  telephone company otherwise authorized to furnish local exchange 
  1.24  service.  Telecommunications carrier does not include entities 
  1.25  that derive more than 50 percent of their revenues from operator 
  1.26  services provided to transient locations such as hotels, motels, 
  1.27  and hospitals.  In addition, telecommunications carrier does not 
  2.1   include entities that provide centralized equal access services. 
  2.2      Sec. 2.  Minnesota Statutes 1994, section 237.035, is 
  2.3   amended to read: 
  2.4      237.035 [TELECOMMUNICATIONS CARRIER EXEMPTION.] 
  2.5      (a) Telecommunications carriers are not subject to 
  2.6   regulation under this chapter, except that only to the extent 
  2.7   required under paragraphs (b) to (e). 
  2.8      (b) Telecommunications carriers shall comply with the 
  2.9   requirements of section sections 237.121 and 237.74. 
  2.10     (c) Telecommunications carriers shall comply with section 
  2.11  237.16, subdivisions 8 and 9. 
  2.12     (d) To the extent a telecommunications carrier offers local 
  2.13  service, it shall obtain a certificate under section 237.16 for 
  2.14  that local service. 
  2.15     (e) In addition, a telecommunications carrier's local 
  2.16  service is subject to this chapter except that: 
  2.17     (1) a telecommunications carrier is not subject to 
  2.18  rate-of-return or earnings investigations under section 237.075 
  2.19  or 237.081; and 
  2.20     (2) a telecommunications carrier is not subject to section 
  2.21  237.22. 
  2.22     Sec. 3.  Minnesota Statutes 1994, section 237.09, is 
  2.23  amended to read: 
  2.24     237.09 [DISCRIMINATION PROHIBITED.] 
  2.25     Subdivision 1.  [GENERALLY.] No telephone company, or any 
  2.26  agent or officer thereof, shall, directly or indirectly, in any 
  2.27  manner, knowingly or willfully, charge, demand, collect, or 
  2.28  receive from any person, firm, or corporation, a greater or less 
  2.29  compensation for any intrastate service rendered or to be 
  2.30  rendered by it than it charges, demands, collects, or receives 
  2.31  from any other firm, person, or corporation for a like and 
  2.32  contemporaneous intrastate service under similar circumstances.  
  2.33     Subd. 2.  [PARTICULAR SERVICES.] (a) A telephone company 
  2.34  that offers or provides a service or services, service elements, 
  2.35  features, or functionalities on a separate, stand-alone basis to 
  2.36  any customer shall provide that service, service element, 
  3.1   feature, or functionality pursuant to tariff to all similarly 
  3.2   situated persons, including all telecommunications carriers and 
  3.3   competitors.  To the extent prohibited by the Federal 
  3.4   Communications Commission or public utilities commission, a 
  3.5   telephone company shall not give preference or discriminate in 
  3.6   providing services, products, or facilities to an affiliate or 
  3.7   to its own or an affiliate's retail department that sells to 
  3.8   consumers. 
  3.9      (b) For purposes of establishing an appropriate rate or 
  3.10  price floor for a rate for a telephone service, a telephone 
  3.11  company shall impute, on a service-by-service basis, into the 
  3.12  rate or price for that service, the tariffed rate or price for 
  3.13  the same services, service elements, or network functions that 
  3.14  the company provides to others who use it to provide a service 
  3.15  that competes with the telephone service offered by the 
  3.16  company.  A company is not required to impute a rate or price 
  3.17  under this paragraph if it demonstrates to the commission, in an 
  3.18  expedited proceeding under section 237.61, that: 
  3.19     (1) the competitor can obtain substantially equivalent 
  3.20  services, service elements, or network functions within the 
  3.21  relevant market or geographic area on reasonably comparable 
  3.22  terms and conditions through self-provision or from a provider 
  3.23  other than the telephone company; or 
  3.24     (2) application of the imputation requirement otherwise 
  3.25  would be inconsistent with the public interest. 
  3.26     Sec. 4.  [237.121] [PROHIBITED PRACTICES.] 
  3.27     A telephone company or telecommunications carrier may not 
  3.28  do any of the following with respect to services regulated by 
  3.29  the commission: 
  3.30     (1) upon request, fail to disclose in a timely and uniform 
  3.31  manner information necessary for the design of equipment and 
  3.32  services that will meet the specifications for interconnection; 
  3.33     (2) intentionally impair the speed, quality, or efficiency 
  3.34  of services, products, or facilities offered to a consumer under 
  3.35  a tariff, contract, or price list; 
  3.36     (3) fail to provide a service, product, or facility to a 
  4.1   consumer other than a telephone company or telecommunications 
  4.2   carrier in accordance with its applicable tariffs, price lists, 
  4.3   or contracts and with the commission's rules and orders; 
  4.4      (4) refuse to provide a service, product, or facility to a 
  4.5   telephone company or telecommunications carrier in accordance 
  4.6   with its applicable tariffs, price lists, or contracts and with 
  4.7   the commission's rules and orders; 
  4.8      (5) impose restrictions on the resale or shared use of its 
  4.9   services or network functions, provided that: 
  4.10     (i) it may require that residential service may not be 
  4.11  resold as a different class of service; and 
  4.12     (ii) the commission may prohibit resale of services it has 
  4.13  approved for provision for not-for-profit entities at rates less 
  4.14  than those offered to the general public; or 
  4.15     (6) provide telephone service to a person acting as a 
  4.16  telephone company or telecommunications carrier if the 
  4.17  commission has ordered the telephone company or 
  4.18  telecommunications carrier to discontinue service to that person.
  4.19     Sec. 5.  Minnesota Statutes 1994, section 237.16, is 
  4.20  amended to read: 
  4.21     237.16 [CONSTRUCTING TELEPHONE LINES AND EXCHANGES LOCAL 
  4.22  EXCHANGE COMPETITION, RULES.] 
  4.23     Subdivision 1.  [LOCAL NEW SERVICE, CERTIFICATE OF 
  4.24  AUTHORITY.] (a) For the purpose of bringing about uniformity of 
  4.25  practice fair and reasonable competition for local exchange 
  4.26  telephone services, the commission shall have has the exclusive 
  4.27  right authority to grant authority to: 
  4.28     (1) authorize any telephone company person to construct 
  4.29  telephone lines or exchanges for furnishing or to otherwise 
  4.30  furnish local service to subscribers in any municipality of this 
  4.31  state, and to prescribe the terms and conditions upon which 
  4.32  construction or service delivery may be carried on,; and 
  4.33  whenever the commission grants such authority, it shall be in 
  4.34  the form of a permit of indeterminate duration -- coupled with 
  4.35  the right to the municipality to purchase the telephone plant 
  4.36  within the city, as hereinafter provided.  No lines or equipment 
  5.1   shall be constructed or installed for the purpose of furnishing 
  5.2   local telephone service to the inhabitants or telephone users in 
  5.3   any locality in this state, where there is then in operation in 
  5.4   the locality or territory affected thereby another telephone 
  5.5   company already furnishing such service, without first securing 
  5.6   from the commission a declaration, after a public hearing, that 
  5.7   public convenience requires such proposed telephone lines or 
  5.8   equipment; but 
  5.9      (2) establish terms and conditions for the entry of 
  5.10  telephone service providers so as to protect consumers from 
  5.11  monopolistic practices and preserve the state's commitment to 
  5.12  universal service.  
  5.13     (b) No person shall provide telephone service in Minnesota 
  5.14  without first obtaining a determination that the person 
  5.15  possesses the technical, managerial, and financial resources to 
  5.16  provide the proposed telephone services and a certificate of 
  5.17  authority from the commission under terms and conditions the 
  5.18  commission finds to be consistent with fair and reasonable 
  5.19  competition, universal service, the provision of affordable 
  5.20  telephone service at a quality consistent with commission rules, 
  5.21  and the commission's rules.  
  5.22     (c) The commission shall make a determination on an 
  5.23  application for a certificate within 120 days of the filing of 
  5.24  the application.  
  5.25     (d) The governing body of any municipality or town shall 
  5.26  have the same powers of regulation which it now possesses with 
  5.27  reference to the location of poles and, wires, and other 
  5.28  equipment or facilities on, below, or above the streets, alleys, 
  5.29  or other public grounds so as to prevent any interference with 
  5.30  the safe and convenient use of streets and, alleys, and other 
  5.31  public grounds by the public.  
  5.32     (e) A telephone company or telecommunications carrier shall 
  5.33  provide for repair or restoration of streets, alleys, and other 
  5.34  public areas to their original condition if necessitated by the 
  5.35  installation or operation of telephone or telecommunications 
  5.36  carrier facilities. 
  6.1      Subd. 2.  [CERTIFICATE OF TERRITORIAL AUTHORITY.] All 
  6.2   telephone companies operating exchanges in the state of 
  6.3   Minnesota as of April 21, 1961, shall be entitled to receive a 
  6.4   certificate of territorial authority from the commission 
  6.5   authorizing such company to continue to serve the areas 
  6.6   presently included within the exchange boundaries as indicated 
  6.7   by the exchange boundary maps now on record with the commission 
  6.8   provided however that such exchange boundaries shall be subject 
  6.9   to review by the commission upon the filing of a complaint by 
  6.10  any interested party, the time for filing such complaints to be 
  6.11  limited to 60 days after the passage of Laws 1961, chapter 637.  
  6.12  If more than one company files maps indicating service in the 
  6.13  same territory, the commission shall, after hearing, on 
  6.14  reasonable notice to the interested parties, determine, from 
  6.15  such evidence as it may reasonably require, which of such 
  6.16  companies shall be entitled to a certificate of territorial 
  6.17  authority.  In making such determination, the commission shall 
  6.18  consider the ability of such company to furnish thereafter 
  6.19  reasonably adequate service in the territory in question.  Any 
  6.20  company operating a switchboard that does not presently have a 
  6.21  map on record with the commission shall have three months from 
  6.22  April 21, 1961, to file such map showing the territory being 
  6.23  served by such company.  
  6.24     Subd. 3.  [MAPS; RULES.] The style, size and kind of map, 
  6.25  together with the information to be shown thereon, shall be as 
  6.26  required by Every company authorized to provide local telephone 
  6.27  service under this section shall file a territorial map.  The 
  6.28  map must comply with the rules prescribed by the commission.  
  6.29  Such rules shall indicate the time and place for filing such 
  6.30  maps and shall require that such maps be kept current.  
  6.31     Subd. 4.  [NEW AMENDED CERTIFICATE REQUIRED FOR EXPANSION.] 
  6.32  No company authorized to provide local service shall construct 
  6.33  or operate any line, plant or system, or any extension thereof, 
  6.34  or provide local telephone service in any area for which it has 
  6.35  not been certified nor shall any person acquire ownership or 
  6.36  control thereof, of another telephone company either directly or 
  7.1   indirectly, without first obtaining from the commission a 
  7.2   determination that the present or future public convenience and 
  7.3   necessity require or will require such construction, operation, 
  7.4   or acquisition, and a new an amended certificate of territorial 
  7.5   authority; provided that.  The applicant for an amended 
  7.6   certificate shall file with the commission notice of the 
  7.7   expansion or acquisition, along with a new map under subdivision 
  7.8   3, identifying the territory to be served.  Notice of the filing 
  7.9   shall be served on any affected municipality and local telephone 
  7.10  company certified in that territory.  If no objection is filed 
  7.11  with the commission by any interested party or raised by the 
  7.12  commission within 20 days of the filing, it is considered 
  7.13  approved, except if it involves an acquisition governed by 
  7.14  section 237.23, in which case no certificate shall be granted 
  7.15  until approval is obtained pursuant to that section and 
  7.16  subdivision 1 of this section.  If an objection is filed, the 
  7.17  commission shall determine whether to approve the amendment in 
  7.18  an expedited proceeding under section 237.61.  This section 
  7.19  shall not be construed to require a telephone company operating 
  7.20  an exchange in Minnesota to secure a certificate for an 
  7.21  extension within any territory within which such company has 
  7.22  heretofore filed maps or for substitute facilities within such 
  7.23  territories, or for extensions into territories contiguous to 
  7.24  that already occupied by such company and not receiving similar 
  7.25  service from another company if no certificate of territorial 
  7.26  authority has been issued to or applied for by any other company.
  7.27     Subd. 5.  [REVOCATION.] Any certificate of territorial 
  7.28  authority may, after notice of hearing and a hearing, be revoked 
  7.29  by the commission, in whole or in part, for:  the failure of the 
  7.30  its holder thereof to furnish reasonably adequate telephone 
  7.31  service within the area or areas determined and defined in such 
  7.32  the certificate of territorial authority; failure to meet the 
  7.33  terms and conditions of its certificate; or intentional 
  7.34  violation of the commission's rules or orders.  
  7.35     Subd. 6.  [EXPANSION OF SERVICE AREA NOT REQUIRED.] Nothing 
  7.36  contained in This section shall be construed to does not require 
  8.1   any telephone company operating exchanges providing local 
  8.2   service in the state of Minnesota to render telephone service in 
  8.3   any portion of any territorial area in which such not included 
  8.4   on the telephone company does not render and does not propose to 
  8.5   render telephone service company's territorial map. 
  8.6      Subd. 7.  [EXISTING CERTIFICATES RETAINED.] This section 
  8.7   does not limit the ability of telephone companies possessing 
  8.8   certificates of territorial authority on August 1, 1995, 
  8.9   including, but not limited to, certificates authorizing resale 
  8.10  of local telephone service, to continue to provide telephone 
  8.11  service within their designated territories. 
  8.12     Subd. 8.  [RULES.] (a) Before August 1, 1997, the 
  8.13  commission shall adopt rules applicable to all telephone 
  8.14  companies and telecommunications carriers required to obtain or 
  8.15  having obtained a certificate for provision of telephone service 
  8.16  using any existing federal standards as minimum standards and 
  8.17  incorporating any additional standards or requirements necessary 
  8.18  to ensure the provision of high quality telephone services 
  8.19  throughout the state.  The rules must, at a minimum: 
  8.20     (1) define procedures for competitive entry and exit; 
  8.21     (2) require the provisions of equal access and 
  8.22  interconnection with the company's network and other features, 
  8.23  functions, and services which the commission considers necessary 
  8.24  to promote fair and reasonable competition; 
  8.25     (3) require unbundling of network services and functions to 
  8.26  at least the level required by existing federal standards; 
  8.27     (4) prescribe, if necessary, methods of reciprocal 
  8.28  compensation between telephone companies; 
  8.29     (5) provide for local telephone number portability; 
  8.30     (6) prescribe appropriate regulatory standards for new 
  8.31  local telephone service providers, that facilitate and support 
  8.32  the development of competitive services; 
  8.33     (7) protect against cross-subsidization, unfair 
  8.34  competition, and other practices harmful to promoting fair and 
  8.35  reasonable competition; 
  8.36     (8) prescribe methods for the preservation of universal and 
  9.1   affordable local telephone services; 
  9.2      (9) prescribe standards for quality of service; and 
  9.3      (10) provide for the continued provision of local emergency 
  9.4   telephone services under chapter 403. 
  9.5      (b) Before January 1, 1998, in a separate rulemaking, the 
  9.6   commission shall adopt separate rules regarding the issues 
  9.7   described in paragraph (a), clauses (1) to (10), as may be 
  9.8   appropriate to provision of competitive local telephone service 
  9.9   in areas served by telephone companies with less than 50,000 
  9.10  subscribers originally certified to provide local telephone 
  9.11  services before January 1, 1988.  
  9.12     Subd. 9.  [UNIVERSAL SERVICE FUND.] The commission shall 
  9.13  establish and require contributions to a universal service fund, 
  9.14  to be supported by all providers of telephone services, whether 
  9.15  or not they are telephone companies under section 237.01, 
  9.16  including, but not limited to, local telephone companies, 
  9.17  independent telephone companies, cooperative telephone 
  9.18  companies, municipal telephone companies, telecommunications 
  9.19  carriers, radio common carriers, personal communication service 
  9.20  providers, and cellular carriers.  Services that should be 
  9.21  considered for inclusion as universal include, at a minimum, 
  9.22  single-party service with touch-tone capability, line quality 
  9.23  capable of carrying facsimile and data transmissions, equal 
  9.24  access, emergency services number capability, statewide 
  9.25  telecommunications relay service for the hearing-impaired, and 
  9.26  blocking of long-distance toll services.  The fund must be 
  9.27  administered and distributed in accordance with rules adopted by 
  9.28  the commission and designed to preserve the availability of 
  9.29  universal service throughout the state.  Any state universal 
  9.30  service fund must be coordinated with any federal universal 
  9.31  service fund.  The department shall make recommendations to the 
  9.32  legislature by January 1, 1996, regarding a plan for 
  9.33  contributions to and expenditures from the universal service 
  9.34  fund.  In particular, the department shall address the following 
  9.35  issues: 
  9.36     (1) what additional services should be included in the 
 10.1   basic set of essential telephone services which the state should 
 10.2   encourage in its mandate to ensure universal service; 
 10.3      (2) whether and how expenditures from the fund should be 
 10.4   used to ensure citizens access to local government and other 
 10.5   public access programming; and 
 10.6      (3) whether expenditures from the fund should be used to 
 10.7   encourage construction of infrastructure for, and access to, 
 10.8   advanced services, especially in high-cost areas of the state, 
 10.9   and, if the commission determines the fund should be used for 
 10.10  this purpose, a plan to accomplish these goals.  
 10.11     Subd. 10.  [INTERIM AUTHORITY.] (a) Before adopting the 
 10.12  rules required under subdivision 8, the commission shall grant 
 10.13  an applicant a certificate to provide a proposed local telephone 
 10.14  service when the commission finds that the applicant meets the 
 10.15  conditions of subdivision 1.  Any applicant for a certificate 
 10.16  pursuant to subdivision 1 shall, at the time its application is 
 10.17  filed, provide notice of its application to all local telephone 
 10.18  companies authorized to provide local exchange service in the 
 10.19  geographic area identified in the application.  The applicant 
 10.20  and telephone companies shall negotiate a temporary arrangement 
 10.21  pertaining to interconnection matters for the effective 
 10.22  interconnection of local exchange networks, pending the adoption 
 10.23  of the rules under subdivision 8.  If the applicant and the 
 10.24  telephone companies fail to reach agreement within 60 days of 
 10.25  filing the application, the commission shall set the terms of 
 10.26  the temporary arrangement at the time of the issuance of the 
 10.27  certificate. 
 10.28     (b) Any company previously certified to provide local 
 10.29  telephone services may request a temporary arrangement for the 
 10.30  effective interconnection with the local exchange network of 
 10.31  another telephone company in the same territory, pursuant to the 
 10.32  time frames and procedures of this subdivision. 
 10.33     (c) In addition, through and until the rules are adopted 
 10.34  under subdivision 8, each telephone company serving more than 
 10.35  50,000 access lines in the state shall: 
 10.36     (1) permit interconnection or discontinue interconnection 
 11.1   for intrastate services to the same extent and in the same 
 11.2   manner and time frame as the Federal Communications Commission 
 11.3   requires interconnection or permits discontinuance of 
 11.4   interconnection for interstate services; and 
 11.5      (2) unbundle its intrastate services and facilities used 
 11.6   for intrastate services to the same extent and in the same 
 11.7   manner as the Federal Communications Commission requires 
 11.8   unbundling for interstate purposes. 
 11.9      Subd. 11.  [INTERIM AUTHORITY IN AREAS SERVED BY TELEPHONE 
 11.10  COMPANIES WITH LESS THAN 50,000 SUBSCRIBERS.] (a) Before 
 11.11  adopting the rules required under subdivision 8 for telephone 
 11.12  companies with less than 50,000 subscribers, when an applicant 
 11.13  requests certification to provide local telephone service in an 
 11.14  area served by a telephone company with less than 50,000 
 11.15  subscribers originally certified to provide local telephone 
 11.16  service before January 1, 1988, the commission shall grant the 
 11.17  application if it finds the applicant meets the requirements of 
 11.18  subdivision 1.  The commission shall make its determination on 
 11.19  the application, including whether to provide a temporary 
 11.20  arrangement for the effective interconnection of the local 
 11.21  exchange networks, after a hearing under chapter 14 or expedited 
 11.22  proceeding under section 237.61, within nine months of the 
 11.23  application, and considering any facts unique to that telephone 
 11.24  company.  In addition, if an application is granted, that 
 11.25  telephone company shall: 
 11.26     (1) permit interconnection or discontinue interconnection 
 11.27  for intrastate services to the same extent and in the same 
 11.28  manner and time frame as the Federal Communications Commission 
 11.29  may thereafter require for that small telephone company for 
 11.30  interstate purposes. 
 11.31     (2) unbundle its intrastate services and facilities used 
 11.32  for intrastate services to the same extent and in the same 
 11.33  manner as the Federal Communications Commission may thereafter 
 11.34  require for that telephone company for interstate purposes. 
 11.35     (b) If a telephone company with less than 50,000 
 11.36  subscribers is authorized by the Federal Communications 
 12.1   Commission to provide video common carrier services before the 
 12.2   rules required under subdivision 8 are adopted, an application 
 12.3   under this subdivision for certification to provide local 
 12.4   telephone service in an area served by that telephone company 
 12.5   shall be determined within 120 days of its filing. 
 12.6      Subd. 12.  [EXTENSION OF INTEREXCHANGE FACILITIES.] In 
 12.7   order to promote the development of competitive interexchange 
 12.8   services and facilities, any interexchange facility that is 
 12.9   owned by a certified telephone company, independent telephone 
 12.10  company, telecommunications carrier or an affiliate and that is 
 12.11  used to provide service to customers located in areas for which 
 12.12  it has been previously certified to provide service may be 
 12.13  extended to meet and interconnect with the facility of another 
 12.14  telephone company, small telephone company, or 
 12.15  telecommunications carrier, whether at a point inside or outside 
 12.16  of its territories, without further proceeding, order, or 
 12.17  determination of current or future public convenience and 
 12.18  necessity, upon mutual consent with the other telephone company, 
 12.19  small telephone company, or telecommunications carrier whose 
 12.20  facilities will be met and interconnected.  Written notice of 
 12.21  the extension and interconnection must be provided to the public 
 12.22  utilities commission and department of public safety within 30 
 12.23  days after completion.  The written notice must be served on all 
 12.24  local exchange companies certified before January 1, 1988, in 
 12.25  all areas where the facilities are located.  
 12.26     Subd. 13.  [APPLICATION OF OTHER LAW.] Notwithstanding any 
 12.27  provisions of sections 237.035 and 237.74 to the contrary, 
 12.28  before adopting the rules under subdivision 8, the local 
 12.29  services provided by a telecommunications carrier are subject to 
 12.30  this chapter in the same manner as those local services of a 
 12.31  telephone company regulated under this chapter, except that the 
 12.32  telecommunications carrier is not subject to section 237.22 and 
 12.33  is not subject to rate-of-return regulation or earnings 
 12.34  investigations under section 237.075 or 237.081.  Before 
 12.35  offering a local telephone service a telecommunications carrier 
 12.36  must be certified to provide local service under this section.  
 13.1      Sec. 6.  Minnesota Statutes 1994, section 237.461, 
 13.2   subdivision 2, is amended to read: 
 13.3      Subd. 2.  [CIVIL PENALTY.] A person who knowingly and 
 13.4   intentionally violates a provision of this chapter or rule or 
 13.5   order of the commission adopted under this chapter shall forfeit 
 13.6   and pay to the state a penalty, in an amount to be determined by 
 13.7   the court, of at least $100 and not more than $1,000 $5,000 for 
 13.8   each day of each violation.  The civil penalties provided for in 
 13.9   this section may be recovered by a civil action brought by the 
 13.10  attorney general in the name of the state.  Amounts recovered 
 13.11  under this section must be paid into the state treasury. 
 13.12     Sec. 7.  [237.76] [PURPOSE.] 
 13.13     A telephone company may petition the commission for 
 13.14  approval of an alternative regulation plan under sections 237.76 
 13.15  to 237.774.  The purpose of an alternative regulation plan is to 
 13.16  provide a telephone company's customers with service of a 
 13.17  quality consistent with commission rules at affordable rates, to 
 13.18  facilitate the development of telecommunication alternatives for 
 13.19  customers, and to provide, where appropriate, a regulatory 
 13.20  environment with greater flexibility than is available under 
 13.21  traditional rate-of-return regulation as reflected in other 
 13.22  provisions of this chapter. 
 13.23     Sec. 8.  [237.761] [ALTERNATIVE REGULATION PLAN; SERVICES.] 
 13.24     Subdivision 1.  [CLASSIFICATION OF SERVICES.] An 
 13.25  alternative regulation plan must contain provisions that provide 
 13.26  for classification of all telephone services as price regulated, 
 13.27  flexibly priced, or nonprice regulated consistent with 
 13.28  subdivisions 2 to 5. 
 13.29     Subd. 2.  [PRICE-REGULATED SERVICE; DEFINITION.] For 
 13.30  purposes of this section, the term "price-regulated service" 
 13.31  includes only those services that are: 
 13.32     (1) essential for providing local telephone service and 
 13.33  access to the local telephone network; 
 13.34     (2) integrally related to privacy, health, and safety of 
 13.35  the company's customers; and 
 13.36     (3) for which no reasonable alternative exists within the 
 14.1   relevant market or geographic area on reasonably comparable 
 14.2   terms and conditions. 
 14.3      Subd. 3.  [SPECIFIC PRICE-REGULATED 
 14.4   SERVICES.] Price-regulated telephone services are the following: 
 14.5      (1) residential and business service for local calling, 
 14.6   including measured local service, two-party service, private 
 14.7   branch exchange (PBX) trunks, trunk type hunting services, 
 14.8   direct inward dialing, the network access portion of central 
 14.9   office switched exchange service, and public access lines for 
 14.10  customer-owned coin-operated telephones; 
 14.11     (2) extended area service; 
 14.12     (3) switched network access service; 
 14.13     (4) call tracing; 
 14.14     (5) calling number blocking; 
 14.15     (6) touch tone service when provided separately from basic 
 14.16  local exchange service; 
 14.17     (7) local exchange, white-page, printed directories; 
 14.18     (8) 911 emergency services; 
 14.19     (9) installation and repair of local network access; 
 14.20     (10) local operator services, excluding directory 
 14.21  assistance; and 
 14.22     (11) toll service blocking and 1-900 or 976 access blocking.
 14.23     Subd. 4.  [FLEXIBLY PRICED SERVICES.] (a) A service not 
 14.24  listed in subdivision 3 or not otherwise determined to be price 
 14.25  regulated under subdivision 6 or 7 or nonprice regulated must be 
 14.26  classified as a flexibly priced service. 
 14.27     (b) Flexibly priced services are regulated consistent with 
 14.28  section 237.60, subdivision 2, except that: 
 14.29     (1) rate decreases may be effective immediately upon filing 
 14.30  and are considered approved if no objection is filed or raised 
 14.31  by an interested party or the commission within ten days after 
 14.32  the filing; and 
 14.33     (2) rate increases may be effective 20 days after filing 
 14.34  and are considered approved if no objection is filed or raised 
 14.35  by an interested party or the commission within 20 days after 
 14.36  the filing. 
 15.1      Subd. 5.  [NON-PRICE-REGULATED SERVICES.] (a) A service 
 15.2   must be classified as nonprice regulated if the commission 
 15.3   finds, based upon evidence filed by the telephone company and 
 15.4   other evidence available to the commission and consistent with 
 15.5   the company's proposed plan, that there is sufficient 
 15.6   competition to justify classification as nonprice regulated.  In 
 15.7   making that determination, the factors the commission shall 
 15.8   consider include: 
 15.9      (1) the number, size, and identity of competitors providing 
 15.10  the same or functionally equivalent service; 
 15.11     (2) the geographic area in which competitive service is 
 15.12  actually available to and being used by customers, to the extent 
 15.13  this information is available to the commission; 
 15.14     (3) the importance of the service to the public; and 
 15.15     (4) the effect of classification of the service on the 
 15.16  development of a competitive telecommunications market. 
 15.17     (b) Telephone companies shall file tariffs or price lists 
 15.18  for non-price-regulated services with the commission, but the 
 15.19  rates for these services are not subject to commission approval 
 15.20  or investigation except as provided in subdivision 6 and 
 15.21  sections 237.762, subdivision 6, 237.770, and 237.771. 
 15.22     Subd. 6.  [RECLASSIFICATION.] An alternative regulation 
 15.23  plan may contain provisions allowing for the reclassification of 
 15.24  services during the course of the plan upon a showing that the 
 15.25  service meets the criteria contained in subdivision 2, 3, 4, or 
 15.26  5, and the plan, for the requested classification. 
 15.27     Subd. 7.  [NEW SERVICES; CLASSIFICATION; RATES.] At the 
 15.28  time the company first offers a service, it shall file a tariff 
 15.29  or price list and the proposed classification for the service 
 15.30  under the plan along with a written explanation of why the 
 15.31  proposed classification is consistent with this section.  New 
 15.32  services classified as flexibly priced or nonprice regulated may 
 15.33  be offered on one day's notice to the commission and the 
 15.34  department.  New services classified as price regulated may be 
 15.35  offered pursuant to the terms set forth in the plan.  A service 
 15.36  is not considered a new service if it consists of a repackaging 
 16.1   including bundling, unbundling, or repricing of an already 
 16.2   existing service.  If no interested party or the commission 
 16.3   objects to the company's proposed classification within 30 days 
 16.4   of the filing of the petition, the company's proposed 
 16.5   classification of the service is approved.  If an objection is 
 16.6   filed, the commission shall determine the classification of the 
 16.7   service within 90 days of the filing of the new service. 
 16.8      Subd. 8.  [INVESTMENT COMMITMENTS.] (a) An alternative 
 16.9   regulation plan must also include a plan outlining the company's 
 16.10  commitment to invest in telecommunications infrastructure 
 16.11  improvements in this state over a period of not less than six 
 16.12  years. 
 16.13     (b) An investment plan shall include all of the following: 
 16.14     (1) a description of the level of planned investment in 
 16.15  technological or infrastructure enhancement; 
 16.16     (2) a description of the extent to which planned investment 
 16.17  will make new telecommunications technology available to 
 16.18  customers or expand the availability of current technology; and 
 16.19     (3) a description of the planned deployment of fiber-optic 
 16.20  facilities or broad-band capabilities to schools, libraries, 
 16.21  technical colleges, hospitals, colleges and universities, and 
 16.22  local governments in this state. 
 16.23     Sec. 9.  [237.762] [RATES; PRICES.] 
 16.24     Subdivision 1.  [INITIAL RATES.] As part of its evaluation 
 16.25  of an alternative regulation plan, the commission shall 
 16.26  determine whether the telephone company's existing service 
 16.27  substantially complies with commission rules and if its rates 
 16.28  and rate design are appropriate in light of the proposed plan or 
 16.29  whether changes should be made before the plan is implemented or 
 16.30  phased in during the course of the plan.  An alternative 
 16.31  regulation plan approved by the commission under this section 
 16.32  must provide that the recurring and nonrecurring rates or prices 
 16.33  that may be charged by a telephone company for price-regulated 
 16.34  services are no higher than the approved rate or prices on file 
 16.35  with the commission for those services on the date of the filing 
 16.36  of the plan.  Furthermore, no plan may in any way change the 
 17.1   terms or conditions of any access charge settlements approved by 
 17.2   the commission or exempt any company from compliance with any 
 17.3   commission access charge order issued before the filing of a 
 17.4   plan.  The plan must address implementation of additional access 
 17.5   charge reductions that may occur during that portion of the plan 
 17.6   that extends beyond expiration of commission-approved 
 17.7   settlements. 
 17.8      Subd. 2.  [NEW SERVICE; RATES.] For services offered by the 
 17.9   telephone company for the first time after August 1, 1995, the 
 17.10  rates or prices must equal or exceed the total service long-run 
 17.11  incremental cost of the service. 
 17.12     Subd. 3.  [RATE CHANGES.] (a) An alternative regulation 
 17.13  plan must set forth the procedures under which the telephone 
 17.14  company may reduce the rates or prices for price-regulated 
 17.15  services below the initial rates or prices or thereafter 
 17.16  increase the rates or prices during the term of the plan.  The 
 17.17  rates or prices may not be reduced below the total service 
 17.18  long-run incremental cost of providing the service.  The rates 
 17.19  or prices may not exceed the initial rates or prices for the 
 17.20  service determined under subdivision 1 for the first three years 
 17.21  of the plan.  After a plan has been in effect for three years, 
 17.22  price-regulated rates may be changed as appropriate under a 
 17.23  procedure set forth in an approved plan.  Rates for 
 17.24  price-regulated services may not be increased unless the company 
 17.25  has demonstrated substantial compliance with the quality of 
 17.26  service standards set forth in the plan. 
 17.27     (b) An approved plan may allow changes in rates for 
 17.28  price-regulated services after three years to reflect: 
 17.29     (1) substantial financial impacts of government mandates to 
 17.30  construct specific telephone infrastructure and increases or 
 17.31  decreases in state and federal taxes, if the mandate applies to 
 17.32  local telephone companies and the company would not otherwise be 
 17.33  compensated through some other manner under the plan; and 
 17.34     (2) changes in jurisdictional allocations from the Federal 
 17.35  Communications Commission, the amount of which the telephone 
 17.36  company cannot control and for which equal and opposite 
 18.1   exogenous changes are made on the federal level. 
 18.2      Subd. 4.  [BUNDLED RATES.] When the rates or prices for 
 18.3   services are unbundled, the price for each basic network 
 18.4   function must be set to equal or exceed its total service 
 18.5   long-run incremental cost.  Before August 1, 1997, if the rates 
 18.6   or prices for price-regulated services are bundled, the bundled 
 18.7   rate or price may not exceed the sum of the unbundled rates or 
 18.8   prices for the individual service elements or services or the 
 18.9   total initial bundled rate or price for those service elements 
 18.10  or services. 
 18.11     Subd. 5.  [INCOME-NEUTRAL CHANGES.] Other than as 
 18.12  authorized in this subdivision, an initial alternative 
 18.13  regulation plan must not permit income-neutral rate changes for 
 18.14  price-regulated services during the plan except as is necessary 
 18.15  to implement extended area service or any successor to that 
 18.16  service.  Any plan must provide that after the rules issued 
 18.17  pursuant to section 237.16 are adopted, rates for 
 18.18  price-regulated services may be increased, as approved by the 
 18.19  commission, to the extent necessary to carry out the purpose of 
 18.20  those rules.  However, rate increases, if any, for those 
 18.21  services must be incorporated with a universal service fund so 
 18.22  that the effective rate for the customers of those services does 
 18.23  not increase during the first three years of the plan. 
 18.24     Subd. 6.  [RATES FOR OTHER SERVICES.] The telephone company 
 18.25  shall file price lists with the commission for all flexibly 
 18.26  priced or non-price-regulated services.  The rate or price for 
 18.27  each flexibly priced and non-price-regulated service must be 
 18.28  equal to or exceed the total service long-run incremental cost 
 18.29  of providing that service.  In any proceeding regarding the 
 18.30  appropriateness of a rate or price for a flexibly priced or 
 18.31  non-price-regulated service, the telephone company has the 
 18.32  burden of proving that the rate or price is above the total 
 18.33  service long-run incremental cost of providing that service. 
 18.34     Sec. 10.  [237.763] [EXEMPTION FROM RATE-OF-RETURN 
 18.35  REGULATION AND RATE INVESTIGATIONS.] 
 18.36     Except as provided in the plan and any subsequent plans, a 
 19.1   company that has an alternative regulation plan approved under 
 19.2   section 237.764, is not subject to the rate-of-return regulation 
 19.3   or earnings investigations provisions of section 237.075 or 
 19.4   237.081 during the term of the plan.  A company with an approved 
 19.5   plan is not subject to the provisions of section 237.57; 237.58; 
 19.6   237.59; 237.60, subdivisions 1, 2, 4, and 5; 237.62; 237.625; 
 19.7   237.63; or 237.65, during the term of the plan.  Except as 
 19.8   specifically provided in this section or in the approved plan, 
 19.9   the commission retains all of its authority under section 
 19.10  237.081 to investigate other matters and to issue appropriate 
 19.11  orders, and the department retains its authority under sections 
 19.12  216A.07 and 237.15 to investigate matters other than the 
 19.13  earnings of the company. 
 19.14     Sec. 11.  [237.764] [PLAN ADOPTION; EFFECT.] 
 19.15     Subdivision 1.  [PETITION, NOTICE, HEARING, AND 
 19.16  DECISION.] (a) Before acting on a petition for approval of an 
 19.17  alternative regulation plan, the commission shall conduct any 
 19.18  public meetings it may consider necessary.  
 19.19     (b) The commission shall require the petitioning telephone 
 19.20  company to provide notice of the proposed plan to its customers, 
 19.21  along with a summary description of the plan provisions and the 
 19.22  dates, times, and locations of public meetings scheduled by the 
 19.23  commission.  
 19.24     (c) The company's petition shall contain an explanation of 
 19.25  how ratepayers will benefit from the plan and a justification of 
 19.26  the appropriateness of earnings levels and rates in light of the 
 19.27  proposed plan as well as any proposed changes in rates for 
 19.28  price-regulated services for the first three years of the 
 19.29  proposed plan.  If a telephone company has completed a general 
 19.30  rate proceeding, rate investigation, or audit of its earnings by 
 19.31  the department or commission within two years of the initial 
 19.32  application for an alternative form of regulation plan, the 
 19.33  commission order or department audit report, updated for the 
 19.34  most recent calendar year, is sufficient justification of 
 19.35  earnings levels to initiate the filing of an alternative 
 19.36  regulation plan.  
 20.1      (d) The commission shall conduct a proceeding under section 
 20.2   237.61 to decide whether to approve the plan and shall grant 
 20.3   discovery as appropriate.  
 20.4      (e) The commission shall issue findings of fact and 
 20.5   conclusions concerning the appropriateness of the proposed 
 20.6   initial rates and the proposed plan, or any modifications to it, 
 20.7   but may not order that a modified plan take effect without the 
 20.8   agreement of the petitioning telephone company.  The commission 
 20.9   shall issue its decision on a plan within six months after 
 20.10  receiving the petition to approve the plan unless the commission 
 20.11  and the petitioning company agree to an extension of the time 
 20.12  for commission action.  
 20.13     (f) If a settlement is submitted to the commission, the 
 20.14  commission shall accept, reject, or modify the proposed 
 20.15  settlement within 60 days from the date it was submitted. 
 20.16     Subd. 2.  [SETTLEMENT; STIPULATION; FINAL ORDER.] Upon 
 20.17  receipt of a petition for an alternative regulation plan, the 
 20.18  commission shall convene a conference including all interested 
 20.19  parties to encourage settlement or stipulation of issues.  Any 
 20.20  settlement or stipulation must be submitted to the commission, 
 20.21  which shall accept or reject the proposal in its entirety or 
 20.22  modify it.  If the commission modifies the proposal, all parties 
 20.23  have 30 days to comment on the proposed modifications, after 
 20.24  which the commission shall issue its final order.  If the final 
 20.25  order contains modifications to the proposal, each party to the 
 20.26  settlement has ten days to reject the proposed modifications, in 
 20.27  which case the matter must be decided under section 237.61.  
 20.28  After appropriate notice and hearing for all parties, the 
 20.29  commission may adopt a stipulation submitted by a substantial 
 20.30  number of, but less than all, parties. 
 20.31     Subd. 3.  [EFFECT ON INCENTIVE PLAN.] The approval of a 
 20.32  plan under this section automatically terminates any existing 
 20.33  incentive plan previously approved under section 237.625 upon 
 20.34  the effective date of the plan approved under this section, 
 20.35  provided, however, the company remains obligated to share 
 20.36  earnings under the terms of the incentive plan through the date 
 21.1   of the termination of that plan and also is required to complete 
 21.2   the performance of any other unexecuted commitments under the 
 21.3   incentive plan. 
 21.4      Sec. 12.  [237.765] [QUALITY OF SERVICE.] 
 21.5      For an alternative regulation plan to be approved by the 
 21.6   commission under sections 237.76 to 237.774, the plan must 
 21.7   contain and the commission shall require: 
 21.8      (1) evidence that current service quality substantially 
 21.9   complies with commission rules as to justify lessened rate 
 21.10  regulation; 
 21.11     (2) a baseline measurement of the quality of service levels 
 21.12  as achieved by the company during the previous three years, to 
 21.13  the extent the data are available, and specific statewide 
 21.14  standards for measuring the quality of price-regulated and 
 21.15  flexibly priced services provided by the company, including, but 
 21.16  not limited to (i) time intervals for installation, (ii) time 
 21.17  intervals for restoration or repair of service, (iii) trouble 
 21.18  rates, (iv) exchange access line held orders, and (v) customer 
 21.19  service answer time; 
 21.20     (3) provisions for reporting to the commission at least 
 21.21  annually the company's performance as to the quality of service 
 21.22  standards by quarter for the previous year; 
 21.23     (4) provisions that index quality of service standards for 
 21.24  local residence services to similar standards for local business 
 21.25  services; 
 21.26     (5) appropriate remedies, including penalties and 
 21.27  customer-specific adjustments or payments to compensate 
 21.28  customers for specific quality of service failures, so as to 
 21.29  ensure substantial compliance with the quality of service 
 21.30  standards set forth in the plan; and 
 21.31     (6) provisions for informing customers of their rights as 
 21.32  to quality of service and how customers can register their 
 21.33  complaints regarding service. 
 21.34     Any penalties under clause (5) may be paid into a universal 
 21.35  service fund or returned to customers under a method set forth 
 21.36  in the plan. 
 22.1      Sec. 13.  [237.766] [PLAN DURATION.] 
 22.2      An alternative regulation plan approved by the commission 
 22.3   under section 237.764 must remain in force as approved for the 
 22.4   term specified in the plan, which must be for no less than four 
 22.5   years.  Within six months prior to the termination of the plan, 
 22.6   the plan must be reviewed by the commission and, with the 
 22.7   consent of the company, revised or renewed consistent with 
 22.8   sections 237.76 to 237.774, except that the justification of 
 22.9   earnings levels in section 237.764, subdivision 1, paragraph 
 22.10  (c), and the provisions prohibiting rate increases at the 
 22.11  initiation of or during the first three years of a plan 
 22.12  contained in section 237.762, shall not apply to a revised or 
 22.13  renewed plan.  The plan must specify the reports required of the 
 22.14  telephone company for review of the plan and specify that the 
 22.15  telephone company shall maintain records in sufficient detail to 
 22.16  facilitate the review. 
 22.17     Sec. 14.  [237.767] [DISCONTINUANCE OF SERVICE.] 
 22.18     Without the express approval of the commission, a telephone 
 22.19  company subject to a plan may not discontinue the provision of a 
 22.20  service or basic network function that has been classified as 
 22.21  price regulated or flexibly priced. 
 22.22     Sec. 15.  [237.768] [PERIODIC FINANCIAL REPORTS.] 
 22.23     In addition to the reports required under section 237.766, 
 22.24  an alternative regulation plan may require a telephone company 
 22.25  to file with the department an annual report of financial 
 22.26  matters for the previous calendar year on or before May 1 of 
 22.27  each year on report forms furnished by the department of public 
 22.28  service in the same manner as is required of other telephone 
 22.29  companies on August 1, 1995.  In addition, any company subject 
 22.30  to a plan shall file with the commission and department a copy 
 22.31  of any filings it has made to the Federal Communications 
 22.32  Commission regarding the provisions of video programming 
 22.33  provided through a video dial tone facility in Minnesota.  An 
 22.34  alternative regulation plan may require a telephone company to 
 22.35  maintain its accounts in accordance with the system of accounts 
 22.36  prescribed for the company by the commission under section 
 23.1   237.10. 
 23.2      Sec. 16.  [237.769] [UNBUNDLING AND INTERCONNECTION.] 
 23.3      Every plan must contain, and the commission shall approve, 
 23.4   rates for and procedures under which the telephone company will, 
 23.5   on or before the effective date of the plan, permit 
 23.6   interconnection with and unbundle its intrastate services and 
 23.7   facilities to the same extent and in the same manner as the 
 23.8   Federal Communications Commission requires the interconnection 
 23.9   and unbundling for interstate purposes for that company.  Any 
 23.10  company under a plan is subject to any rules adopted under 
 23.11  section 237.16 on the same date as those rules are applicable to 
 23.12  other companies. 
 23.13     Sec. 17.  [237.770] [SUBSIDIZATION.] 
 23.14     No telephone company shall subsidize flexibly priced or 
 23.15  non-price-regulated services from other services.  A telephone 
 23.16  service is not subsidized if the aggregate revenues for the 
 23.17  service equal or exceed the total service long-run incremental 
 23.18  costs of providing the service.  If the commission determines, 
 23.19  after a proceeding under section 237.081, that subsidization 
 23.20  exists, it shall order changes in rates to price the subsidized 
 23.21  service above total service long-run incremental cost and may 
 23.22  invoke any other remedies otherwise available under this chapter.
 23.23     Sec. 18.  [237.771] [DISCRIMINATION.] 
 23.24     The rates of a telephone company under a plan must be the 
 23.25  same in all geographic locations of the state except for good 
 23.26  cause.  A plan may contain provisions that define good cause, 
 23.27  including consideration of the ability to respond to 
 23.28  competition.  Sections 237.09, 237.121, and 237.60, subdivision 
 23.29  3 apply to a telephone company under a plan. 
 23.30     Sec. 19.  [237.772] [COST STUDY METHODOLOGY.] 
 23.31     Subdivision 1.  [TOTAL SERVICE LONG-RUN INCREMENTAL 
 23.32  COST.] (a) For purposes of this chapter, total service long-run 
 23.33  incremental cost (TSLRIC) means the total cost to the company of 
 23.34  supplying a service, group of services, or basic network 
 23.35  function.  The term "long-run" means a period of time sufficient 
 23.36  so that all inputs are avoidable based on the total increment of 
 24.1   service, group of services, or basic network function and 
 24.2   includes the relevant costs resulting from the company's 
 24.3   decision to provide the service, group of services, or basic 
 24.4   network function, holding constant the production levels of all 
 24.5   other services, groups of services, or basic network functions 
 24.6   provided by the company.  
 24.7      (b) A telephone company is not required to prepare or file 
 24.8   TSLRIC or variable cost studies for all of its services as a 
 24.9   prerequisite to filing a plan.  However, the commission may 
 24.10  order cost studies to be prepared for specific services as a 
 24.11  condition of approval of the plan. 
 24.12     Subd. 2.  [PETITION FOR VARIABLE COST STUDY.] To the extent 
 24.13  that this section or the commission may require a company to 
 24.14  provide a TSLRIC study, a company may submit a petition to the 
 24.15  commission for permission to submit a variable cost study 
 24.16  instead of a TSLRIC study.  The commission shall grant the 
 24.17  petition if the telephone company demonstrates: 
 24.18     (1) that a TSLRIC study is burdensome in relation to its 
 24.19  annual revenue from the service involved; 
 24.20     (2) in the case of an existing service, that the service is 
 24.21  no longer being offered to new customers; or 
 24.22     (3) if the telephone company shows other good cause. 
 24.23     Sec. 20.  [237.773] [ALTERNATIVE REGULATION FOR SMALL 
 24.24  TELEPHONE COMPANIES.] 
 24.25     Subdivision 1.  [DEFINITION.] For purposes of this section, 
 24.26  "small telephone company" means a local exchange telephone 
 24.27  company with fewer than 50,000 subscribers that has made an 
 24.28  election under subdivision 2 whether or not the company is 
 24.29  subject to sections 237.58, 237.59, 237.60, subdivisions 1, 2, 
 24.30  and 5, 237.62, and 237.625. 
 24.31     Subd. 2.  [ELECTION; EFFECT.] A local telephone company 
 24.32  with fewer than 50,000 subscribers may elect to become a small 
 24.33  telephone company by notice to the commission, in writing, of 
 24.34  its decision.  The small telephone company may not revoke its 
 24.35  election for three years after making the election.  While that 
 24.36  election remains in effect, a small telephone company is not 
 25.1   subject to the rate-of-return regulation or earnings 
 25.2   investigation provisions of section 237.075 or 237.081. 
 25.3      If, before electing under this subdivision, a small 
 25.4   telephone company has been found by the commission to have 
 25.5   significant quality of service problems in violation of 
 25.6   applicable commission rules, that company must either resolve 
 25.7   the quality of service problems or develop a plan to resolve the 
 25.8   quality of service problems in conformance with section 
 25.9   237.765.  The quality of service plan must be approved by the 
 25.10  commission in order for an election under this subdivision to be 
 25.11  effective.  The commission shall make a determination on the 
 25.12  quality of service plan within 60 days after it is submitted. 
 25.13     Subd. 3.  [LOCAL RATES.] (a) Except as provided in 
 25.14  paragraph (b), a small telephone company shall not implement a 
 25.15  rate increase for any service listed in section 237.761, 
 25.16  subdivision 3, beyond the level in effect 60 days prior to an 
 25.17  election under subdivision 2, until the later of January 1, 
 25.18  1998, or two years after making an election.  However, a small 
 25.19  telephone company may implement any new service and establish 
 25.20  rates for any new service and may change rates for any other 
 25.21  service at any time subject to the requirements of section 
 25.22  237.761, subdivision 4. 
 25.23     A small company shall provide to its customers the ability 
 25.24  to block, at no extra charge, any new service which it offers, 
 25.25  provides, or bills.  This requirement shall not apply to 
 25.26  services that require affirmative subscription by the customer.  
 25.27  Nothing in this section shall prevent the commission from 
 25.28  requiring blocking or other privacy or safety protections for 
 25.29  other types of telecommunications services under section 237.081.
 25.30     (b) At any time following one year after electing under 
 25.31  subdivision 2, a small telephone company may change rates for 
 25.32  local services except switched network access services, listed 
 25.33  in section 237.761, subdivision 3, to reflect: 
 25.34     (1) changes in state and federal taxes; 
 25.35     (2) changes in jurisdictional allocations from the Federal 
 25.36  Communications Commission, the amount of which the small 
 26.1   telephone company cannot control and for which equal and 
 26.2   opposite exogenous changes are made on the federal level; 
 26.3      (3) substantial financial impacts of investments in network 
 26.4   upgrades which are made; or 
 26.5      (i) if the investment exceeds 20 percent of the gross plant 
 26.6   investment of the company; or 
 26.7      (ii) as the result of government mandates to construct 
 26.8   specific telephone infrastructure, if the mandate applies to 
 26.9   local telephone companies and the company would not otherwise be 
 26.10  compensated. 
 26.11  A small telephone company may change rates for local services 
 26.12  listed in section 237.761, subdivision 3, at any time, to 
 26.13  implement extended area service or any successor to that service 
 26.14  on an income neutral basis. 
 26.15     A small telephone company proposing an increase under this 
 26.16  subdivision, shall provide 60 days' advance written notice to 
 26.17  the department and each of the company's customers including the 
 26.18  individual rates affected and the procedure necessary for the 
 26.19  customers to petition for investigation.  If the department 
 26.20  receives a petition within 45 days after the notice from five 
 26.21  percent or 500, whichever is fewer, of the customers of the 
 26.22  small telephone company, the department shall determine if the 
 26.23  petition is valid and, if so, may investigate the rate change to 
 26.24  determine if it conforms to the limitations of this subdivision. 
 26.25  The department shall report its findings to the commission, 
 26.26  which shall either adopt the report or order changes to conform 
 26.27  to this subdivision. 
 26.28     (c) On or after the later of January 1998, or two years 
 26.29  after making an election under subdivision 2, a small telephone 
 26.30  company may increase rates for local services, except switched 
 26.31  network access services, listed in section 237.761, subdivision 
 26.32  3.  
 26.33     A small telephone company proposing an increase shall 
 26.34  provide 60 days' advance written notice to its customers 
 26.35  including individual rates affected and the procedure necessary 
 26.36  for the customers to petition for investigation.  If the 
 27.1   commission receives a petition within 45 days after such notice, 
 27.2   from five percent or 500, whichever is fewer, of the customers 
 27.3   of the small telephone company, the department shall determine 
 27.4   if the petition is valid and, if so, may investigate the 
 27.5   proposed rate increase to determine if it is appropriate in 
 27.6   light of rates charged by other local exchange telephone 
 27.7   companies for comparable services, taking into account calling 
 27.8   scope, quality of service, the availability of competitive 
 27.9   alternatives, service costs, and the features available to the 
 27.10  customers.  The department shall file a report with the 
 27.11  commission which shall then approve appropriate rates for those 
 27.12  services.  Rates established by the commission under this 
 27.13  paragraph shall not be increased within one year of 
 27.14  implementation. 
 27.15     Subd. 4.  [ACCESS RATES.] (a) No election by a small 
 27.16  telephone company may in any way change the terms or conditions 
 27.17  of any interexchange access charge settlements approved by the 
 27.18  commission before an election under subdivision 2. 
 27.19     (b) While any interexchange access charge settlement 
 27.20  approved by the commission remains in effect, the commission and 
 27.21  department shall enforce the agreement without further 
 27.22  investigation of interexchange access charges or earnings 
 27.23  relating to the interexchange access service.  Except as 
 27.24  specifically provided in this section, the commission retains 
 27.25  all of its authority under section 237.081 to investigate other 
 27.26  matters relating to interexchange access charges and to issue 
 27.27  appropriate orders, and the department retains its authority 
 27.28  under sections 216A.07 and 237.15 to investigate matters 
 27.29  relating to interexchange access charges. 
 27.30     Subd. 5.  [DEPRECIATION.] While an election under 
 27.31  subdivision 2 is in effect, the company shall be subject to 
 27.32  complaints by the department or others concerning its 
 27.33  depreciation rates and practices pursuant to section 237.081, 
 27.34  subdivision 1a, and shall submit to the department the 
 27.35  information required by Minnesota Rules, parts 7810.7700 and 
 27.36  7810.7800, but shall not otherwise be subject to section 237.22 
 28.1   or the certification procedures of Minnesota Rules, part 
 28.2   7810.7000.  
 28.3      Sec. 21.  [237.774] [OTHER LAWS.] 
 28.4      Except as provided in sections 237.76 to 237.773, a 
 28.5   telephone company subject to a plan approved under sections 
 28.6   237.764 and 237.773, shall comply with any state or federal laws 
 28.7   governing the provision of telephone services.  Nothing 
 28.8   contained in sections 237.76 to 237.773 is intended in any way 
 28.9   to change or modify the definitions contained in section 237.01 
 28.10  or what constitutes the provision of telephone service under 
 28.11  this chapter or other laws. 
 28.12     Sec. 22.  [PUBLIC ACCESS.] 
 28.13     The department of public service shall investigate how to 
 28.14  ensure citizen access to local government and other public 
 28.15  access programming on emerging communication technologies such 
 28.16  as video dial-tone and satellite transmission equivalent to that 
 28.17  required of cable franchise operators pursuant to Minnesota 
 28.18  Statutes, chapter 238, and the alternatives available to the 
 28.19  state to ensure that access. 
 28.20     The department shall make recommendations to the 
 28.21  legislature by February 15, 1996, concerning public access. 
 28.22     Sec. 23.  [STATEMENT OF INTENT.] 
 28.23     The amendments to Minnesota Statutes, section 237.16, 
 28.24  subdivision 1, paragraph (d), in this law are solely intended 
 28.25  for clarification.  No substantive changes in powers of 
 28.26  regulation are intended, nor are to be implied. 
 28.27     Sec. 24.  [MUNICIPAL FRANCHISE FEES; UTILITIES.] 
 28.28     The department of public service shall study the issue of 
 28.29  franchise fees and related compensation paid to local 
 28.30  governments by utilities and cable communication companies.  The 
 28.31  study shall include a survey of fees and related compensation 
 28.32  currently paid to municipalities by utilities and cable 
 28.33  communication companies, and the purpose for which the franchise 
 28.34  fees and related compensation are remitted to municipalities by 
 28.35  utilities and cable communication companies.  The department 
 28.36  shall develop recommendations on a state policy regarding these 
 29.1   fees and related compensation, particularly addressing the 
 29.2   issues of the purposes for which such fees may be assessed and 
 29.3   paid, the amount of the fees, and uses of such fee revenue and 
 29.4   related compensation.  The department shall report its findings 
 29.5   and recommendations to the legislature by February 15, 1996. 
 29.6      Sec. 25.  [EFFECTIVE DATE; EXPIRATION.] 
 29.7      Sections 1 to 22 are effective August 1, 1995, and expire 
 29.8   January 1, 2006.