1.1                          A bill for an act 
  1.2             relating to telecommunications; modifying provisions 
  1.3             for alternative forms of regulation of telephone 
  1.4             companies; amending Minnesota Statutes 2002, sections 
  1.5             237.072; 237.774; Laws 1995, chapter 156, section 25; 
  1.6             proposing coding for new law in Minnesota Statutes, 
  1.7             chapter 237; repealing Minnesota Statutes 2002, 
  1.8             section 237.773; Laws 1995, chapter 156, section 22. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10                             ARTICLE 1 
  1.11                       ALTERNATIVE REGULATION 
  1.12     Section 1.  [237.78] [ALTERNATIVE REGULATION FOR SMALL 
  1.13  TELEPHONE COMPANIES.] 
  1.14     Subdivision 1.  [APPLICABILITY.] This section applies to 
  1.15  any local exchange telephone company with fewer than 500,000 
  1.16  subscribers that has made or makes an election under subdivision 
  1.17  2 or 5. 
  1.18     Subd. 2.  [ELECTION; EFFECT.] (a) A local telephone company 
  1.19  with fewer than 500,000 subscribers may elect to be subject to 
  1.20  alternative regulation by notice to the commission, in writing, 
  1.21  of its decision.  The telephone company may not revoke its 
  1.22  election for three years after making the election.  While that 
  1.23  election remains in effect, a telephone company is not subject 
  1.24  to the rate-of-return regulation or earnings investigation 
  1.25  provisions of section 237.075 or 237.081. 
  1.26     (b) If, before electing under this subdivision, a telephone 
  1.27  company has been found by the commission to have significant 
  2.1   quality of service problems in violation of applicable 
  2.2   commission rules, that company shall either resolve the quality 
  2.3   of service problems or develop a plan to resolve the quality of 
  2.4   service problems.  The quality of service plan must be approved 
  2.5   by the commission in order for an election under this 
  2.6   subdivision to be effective.  The commission shall make a 
  2.7   determination on the quality of service plan within 60 days 
  2.8   after it is submitted. 
  2.9      Subd. 3.  [LOCAL SERVICES.] (a) For the purposes of this 
  2.10  section, "local services" includes the following: 
  2.11     (1) residential and business service for local calling, 
  2.12  including measured local service, two-party service, private 
  2.13  branch exchange (PBX) trunks, trunk type hunting services, 
  2.14  direct inward dialing, the network access portion of central 
  2.15  office switched exchange service, and public access lines for 
  2.16  customer-owned coin-operated telephones; 
  2.17     (2) extended area service; 
  2.18     (3) switched network access service; 
  2.19     (4) call tracing; 
  2.20     (5) calling number blocking; 
  2.21     (6) touch tone service when provided separately from basic 
  2.22  local exchange service; 
  2.23     (7) local exchange, white-page, printed directories; 
  2.24     (8) 911 emergency services; 
  2.25     (9) installation and repair of local network access; 
  2.26     (10) local operator services, excluding directory 
  2.27  assistance; and 
  2.28     (11) toll service blocking and 1-900 or 976 access blocking.
  2.29     (b) Except as provided in paragraph (d), a telephone 
  2.30  company shall not implement a rate increase for local services, 
  2.31  beyond the level in effect 60 days before an election under 
  2.32  subdivision 2, for one year after electing to become subject to 
  2.33  alternative regulation. 
  2.34     (c) A company shall provide to its customers the ability to 
  2.35  block, at no extra charge, any new service that it offers, 
  2.36  provides, or bills.  This requirement does not apply to services 
  3.1   that require affirmative subscription by the customer.  Nothing 
  3.2   in this section prevents the commission from requiring blocking 
  3.3   or other privacy or safety protections for other types of 
  3.4   telecommunications services under section 237.081. 
  3.5      (d) At any time after electing under subdivision 2, a 
  3.6   telephone company may change rates for local services, except 
  3.7   switched network access services, to reflect: 
  3.8      (1) a change in state or federal taxes; 
  3.9      (2) a change in any jurisdictional allocation from the 
  3.10  Federal Communications Commission, the amount of which the 
  3.11  telephone company cannot control and for which an equal and 
  3.12  opposite exogenous change is made on the federal level; 
  3.13     (3) the substantial financial impact of an investment in a 
  3.14  network upgrade, which is made when the investment (i) exceeds 
  3.15  ten percent of the gross plant investment of the company or (ii) 
  3.16  is the result of any government mandate to construct specific 
  3.17  telephone infrastructure, if the mandate applies to local 
  3.18  telephone companies and the company would not otherwise be 
  3.19  compensated; 
  3.20     (4) a reduction in payments received from a federal or 
  3.21  state universal service fund, if the reduction is five percent 
  3.22  or more of the prior year's funding; or 
  3.23     (5) any other state or federal mandate. 
  3.24     (e) A telephone company proposing an increase under 
  3.25  paragraph (d) shall provide 60 days' advance written notice to 
  3.26  the department and each of the company's customers including the 
  3.27  individual rates affected and the procedure necessary for the 
  3.28  customers to petition for investigation.  If the department 
  3.29  receives a petition within 45 days after the notice from five 
  3.30  percent or 5,000, whichever is fewer, of the customers of the 
  3.31  telephone company, the department and company shall jointly 
  3.32  determine if the petition is valid and, if so, the department 
  3.33  may investigate the rate change to determine if it conforms to 
  3.34  the limitations of this subdivision.  Within 30 days of 
  3.35  validating the petition, the department shall report its 
  3.36  findings to the commission, which shall either adopt the report 
  4.1   or order changes to conform to this subdivision. 
  4.2      (f) One year after making an election under subdivision 2, 
  4.3   a telephone company may increase rates for local services, 
  4.4   except switched network access services.  A telephone company 
  4.5   proposing an increase shall provide 60 days' advance written 
  4.6   notice to its customers, including individual rates affected and 
  4.7   the procedure necessary for the customers to petition for 
  4.8   investigation.  If the commission receives a petition within 45 
  4.9   days after the notice, from five percent or 5,000, whichever is 
  4.10  fewer, of the customers of the telephone company, the department 
  4.11  and company jointly shall determine if the petition is valid 
  4.12  and, if so, the department may investigate the proposed rate 
  4.13  increase to determine if it is appropriate in light of rates 
  4.14  charged by other local exchange telephone companies for 
  4.15  comparable services, taking into account calling scope, quality 
  4.16  of service, the availability of competitive alternatives, 
  4.17  service costs, and the features available to the customers.  
  4.18  Within 30 days of validating the petition, the department shall 
  4.19  file a report with the commission.  The commission shall then 
  4.20  approve appropriate rates for those services.  Rates established 
  4.21  by the commission under this paragraph must not be increased 
  4.22  within one year of implementation. 
  4.23     (g) A telephone company may change rates for local 
  4.24  services, at any time, to implement extended area service or any 
  4.25  successor to that service.  Rate changes to implement this 
  4.26  service must be income neutral to the telephone company. 
  4.27     Subd. 4.  [RATES FOR OTHER SERVICES.] Telephone companies 
  4.28  shall file tariffs or price lists for services other than local 
  4.29  services with the commission, but the rates for these services 
  4.30  are not subject to commission approval or investigation. 
  4.31     Subd. 5.  [EXISTING PLAN.] If a telephone company is 
  4.32  subject to an alternative regulation plan on the effective date 
  4.33  of this section, the election provided for in subdivision 2 
  4.34  includes the right to elect continuation under the terms and 
  4.35  conditions of that plan without being subject to subdivision 3.  
  4.36  Such election must take effect on the date on which the 
  5.1   alternative regulation plan would otherwise expire or terminate 
  5.2   and may be made without regard to any conditions, prerequisites, 
  5.3   restrictions or limitations on continuations, renewals, or 
  5.4   extensions in the plan. 
  5.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  5.6   following final enactment. 
  5.7      Sec. 2.  Laws 1995, chapter 156, section 25, is amended to 
  5.8   read: 
  5.9      Sec. 25.  [EFFECTIVE DATE; EXPIRATION.] 
  5.10     Sections 1 to 22 are effective August 1, 1995, and.  The 
  5.11  amendments in sections 1 to 3, 5, and 6 to Minnesota Statutes, 
  5.12  section 237.01, subdivision 6; 237.035; 237.09; 237.16; and 
  5.13  237.461, subdivision 2, expire January 1, 2006. 
  5.14     Sec. 3.  [REPEALER.] 
  5.15     (a) Laws 1995, chapter 156, section 22 is repealed, 
  5.16  effective the day following final enactment. 
  5.17     (b) Minnesota Statutes 2002, section 237.773, is repealed, 
  5.18  effective the day following final enactment. 
  5.19                             ARTICLE 2 
  5.20                       CONFORMING AMENDMENTS 
  5.21     Section 1.  Minnesota Statutes 2002, section 237.072, is 
  5.22  amended to read: 
  5.23     237.072 [LIMITATION ON RATE CHANGE.] 
  5.24     (a) After December 15, 1997, the commission, 
  5.25  notwithstanding any provision to the contrary, shall not allow 
  5.26  an incumbent telephone company with more than 1,000,000 access 
  5.27  lines in Minnesota to change its retail rates for 
  5.28  telecommunications services without a determination of its 
  5.29  revenue requirement pursuant to section 237.075 unless the 
  5.30  incumbent telephone company is regulated pursuant to sections 
  5.31  237.76 to 237.773 237.772. 
  5.32     (b) If, prior to December 15, 1997, the incumbent telephone 
  5.33  company petitions the commission to become subject to an 
  5.34  alternative regulation plan under sections 237.76 to 237.773 
  5.35  237.772, paragraph (a) shall not apply to the petitioning 
  5.36  company until 270 days after the date of the filing of the 
  6.1   petition. 
  6.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  6.3   following final enactment. 
  6.4      Sec. 2.  Minnesota Statutes 2002, section 237.774, is 
  6.5   amended to read: 
  6.6      237.774 [APPLICATION OF OTHER LAWS.] 
  6.7      Except as provided in sections 237.76 to 237.773 237.772 or 
  6.8   section 237.78, a telephone company subject to a plan approved 
  6.9   under sections section 237.764 and 237.773 or 237.78, shall 
  6.10  comply with any state or federal laws governing the provision of 
  6.11  telephone services.  Nothing contained in sections 237.76 
  6.12  to 237.773 237.772 or section 237.78 is intended in any way to 
  6.13  change or modify the definitions contained in section 237.01 or 
  6.14  what constitutes the provision of telephone service under this 
  6.15  chapter or other laws. 
  6.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  6.17  following final enactment.