Minnesota Session Laws - 2004, Regular Session

                            CHAPTER 214-S.F.No. 1115 
                  An act relating to telecommunications; regulating 
                  third-party billing on telecommunications bills; 
                  modifying provisions for alternative forms of 
                  regulation of telephone companies; amending Minnesota 
                  Statutes 2002, sections 237.766; 237.773, subdivision 
                  3; proposing coding for new law in Minnesota Statutes, 
                  chapter 237. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  [237.665] [PROHIBITION AGAINST BILLING FOR 
        UNAUTHORIZED CHARGES.] 
           (a) A telephone company or telecommunications carrier 
        providing local service shall not include on a customer's bill a 
        charge for goods or services on behalf of a third-party service 
        provider unless the third-party service provider has obtained 
        the customer's prior express authorization to include such 
        charges on the customer's bill.  
           (b) If a customer of a telephone company or 
        telecommunications carrier notifies the telephone company or 
        telecommunications carrier that an unauthorized charge from a 
        third-party service provider has been included on the customer's 
        bill, then the telephone company or telecommunications carrier 
        shall remove the unauthorized charge.  The telephone company or 
        telecommunications carrier shall credit to the customer any 
        amounts paid for the unauthorized charges that were billed by 
        the telephone company or telecommunications carrier during the 
        six months prior to the customer's complaint, unless the 
        third-party service provider can produce within 14 calendar days 
        of the complaint evidence to the customer and the telephone 
        company or the telecommunications carrier of prior express 
        authorization by the customer. 
           (c) A third-party service provider meets the prior express 
        authorization requirements of this section only if it obtains or 
        receives a customer's written authorization in the form of a 
        letter of agency, a customer's oral authorization verified by an 
        independent third party, or a copy of an e-mail notice of 
        verification as described in clause (3). 
           (1) If the third-party service provider obtains the 
        customer's written authorization in the form of a letter of 
        agency, it must be a separate or easily separable document.  The 
        sole purpose of the letter of agency shall be to authorize a 
        charge for goods or services to appear on the customer's 
        telephone bill.  The letter of agency must be of sufficient size 
        to be clearly legible and must contain clear and unambiguous 
        language that contains separate statements for each good or 
        service for which the customer is agreeing to be billed.  The 
        letter of agency must be signed and dated by the customer. 
           (2) If the customer's authorization is oral, the 
        authorization must be verified by an independent third-party 
        verifier.  The verification is valid only if: 
           (i) the independent third party confirms the customer's 
        identity with information unique to the customer unless the 
        customer refuses, then that fact must be noted; and 
           (ii) the independent third party informs the customer that 
        the customer is agreeing to be billed for goods or services that 
        will appear as a charge on the customer's telephone bill. 
           (3) If a customer enters a contract via the Internet with a 
        third-party service provider for goods or services which are 
        charged to the bill issued by the customer's telephone company 
        or telecommunications carrier providing local service, the 
        third-party service provider must, within 48 hours of receiving 
        the customer's authorization, send the customer, via e-mail, a 
        notice of verification confirming the authorization.  The 
        third-party service provider shall maintain a copy of the notice 
        of verification for the duration of the contract as a record of 
        the customer's express authorization to be charged for the goods 
        or services on the customer's telephone bill for local service. 
           (d) For direct-dialed calls, where the call itself 
        represents the service for which the charge is placed on a 
        customer's local telephone bill, such as "900 number" services 
        and "dial around" services, evidence that the call was placed 
        from the number that is subject to the telephone bill shall be 
        considered sufficient evidence of authorization for that call 
        for billing authorization purposes established in this section.  
        Nothing in this section shall be construed to change a telephone 
        company's or telecommunication carrier's obligations or affect a 
        telephone subscriber's rights under section 325F.692. 
           (e) This section does not apply to charges for collect 
        calls. 
           (f) Nothing in this section restricts the right of a 
        telephone company or telecommunications carrier to seek to 
        recover from a third-party service provider unauthorized charges 
        credited to the customer by the telephone company or 
        telecommunications carrier. 
           Sec. 2.  Minnesota Statutes 2002, section 237.766, is 
        amended to read: 
           237.766 [PLAN DURATION AND EXTENSION.] 
           Subdivision 1.  [PLAN DURATION.] An alternative regulation 
        plan approved by the commission under section 237.764 must 
        remain in force as approved for the term specified in the plan, 
        which must be for no less than three years.  Except as otherwise 
        provided in this section, within six months prior to the 
        termination of the plan, the plan must be reviewed by the 
        commission and, with the consent of the company, revised or 
        renewed consistent with sections 237.76 to 237.774, except that 
        the justification of earnings levels in section 237.764, 
        subdivision 1, paragraph (c), if required and the provisions 
        prohibiting rate increases at the initiation of or during the 
        first three years of a plan contained in section 237.762, shall 
        not apply to a revised or renewed plan.  Any revised or renewed 
        plan must be approved by the commission and shall contain a 
        mechanism under which a telephone company may reduce the rates 
        for price-regulated services below the initial rates or prices 
        or increase the rates or prices during the term of the revised 
        or renewed plan.  The plan must specify the reports required of 
        the telephone company for review of the plan and specify that 
        the telephone company shall maintain records in sufficient 
        detail to facilitate the review the company shall give notice 
        that it will propose a new plan, extend an existing plan, or 
        revert to rate of return regulation. 
           Subd. 2.  [NEW PLAN.] A new plan proposed by a company must 
        be reviewed by the commission and, with the consent of the 
        company, revised or approved consistent with sections 237.76 to 
        237.774, except that the justification of earnings levels in 
        section 237.764, subdivision 1, paragraph (c), if required, and 
        the provisions prohibiting rate increases at the initiation of 
        or during the first three years of a plan contained in section 
        237.762, shall not apply to a new plan.  Any new plan must be 
        approved by the commission and shall contain a mechanism under 
        which a telephone company may reduce the rates for 
        price-regulated services below the initial rates or prices or 
        increase the rates or prices during the term of the plan.  The 
        plan must specify the reports required of the telephone company 
        for review of the plan and specify that the telephone company 
        shall maintain records in sufficient detail to facilitate the 
        review.  A new plan is not an extension, which must be made 
        pursuant to subdivision 3.  
           Subd. 3.  [PLAN EXTENSION.] (a) Notwithstanding the 
        provisions of its plan, a telephone company operating under a 
        plan as of the effective date of this section, may elect to 
        extend that plan for up to three years from the expiration date 
        of the plan or until December 31, 2007, whichever is earlier.  
        The election is effective upon notification to customers, the 
        commission, the department, and the Office of the Attorney 
        General.  A telephone company must provide notification of its 
        election within 30 days of the effective date of this section, 
        or within six months of the expiration of its current or expired 
        plan, whichever is later.  Once a telephone company has elected 
        to exercise the option provided under this subdivision, the 
        company may elect at any time to terminate the plan by notifying 
        customers, the commission, the department, and the Office of the 
        Attorney General, in writing, six months prior to the 
        termination date.  Upon termination of a plan, the company shall 
        be regulated as provided in this chapter. 
           (b) A telephone company may elect to extend a plan entered 
        into after the effective date of this section in lieu of 
        proposing a new plan only if the company is in substantial 
        compliance with the plan's service quality provisions and has 
        met its infrastructure obligations under the plan.  If the 
        company elects to extend a plan, the rates for price-regulated 
        services shall be capped at the rate levels in effect at the 
        time the extension commences, provided, however, exceptions to a 
        price cap contained in the plan being extended may remain in 
        force.  Unless otherwise specified in the plan, all other 
        provisions of the plan shall continue in effect throughout the 
        extension period.  A plan may not be extended for less than one 
        year or more than three years, and may only be extended once. 
           (c) The Department of Commerce or the Office of the 
        Attorney General may file an objection to the extension with the 
        commission if the company is not in substantial compliance with 
        the service quality provisions of its plan or has not met its 
        infrastructure obligations under the plan.  An objection must be 
        filed within 45 days of the company's notice of its intention to 
        extend the plan. 
           (d) If an objection is filed by the Department of Commerce 
        or the Office of the Attorney General, the commission may hold a 
        hearing on the issues raised in the objection.  The hearings 
        shall be completed within 30 days of the deadline for filing the 
        objections.  If the commission finds that the issues raised in 
        the objection are valid, it may reject the extension.  If the 
        commission finds that the issues raised in the objection are not 
        valid, it shall approve the extension.  The commission shall 
        issue its decision within 15 days of the completion of the 
        hearings concerning the objection.  
           (e) If the Department of Commerce or the Office of the 
        Attorney General does not file an objection, the commission 
        shall approve the extension within 60 days of the company's 
        filing of its notice of its intention to extend the plan.  
           Sec. 3.  Minnesota Statutes 2002, section 237.773, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LOCAL RATE.] (a) Except as provided in paragraph 
        (b), a small telephone company shall not implement a rate 
        increase for any service listed in section 237.761, subdivision 
        3, beyond the level in effect 60 days prior to an election under 
        subdivision 2, until the later of January 1, 1998, or two years 
        after making an election.  However, a small telephone company 
        may implement any new service and establish rates for any new 
        service and may change rates for any other service at any time 
        subject to the requirements of section 237.761, subdivision 4.  
        A small company shall provide to its customers the ability to 
        block, at no extra charge, any new service which it offers, 
        provides, or bills.  This requirement shall not apply to 
        services that require affirmative subscription by the customer.  
        Nothing in this section shall prevent the commission from 
        requiring blocking or other privacy or safety protections for 
        other types of telecommunications services under section 237.081.
           (b) At any time following one year after electing under 
        subdivision 2, a small telephone company may change rates for 
        local services except switched network access services, listed 
        in section 237.761, subdivision 3, to reflect: 
           (1) changes in state and federal taxes; 
           (2) changes in jurisdictional allocations from the Federal 
        Communications Commission, the amount of which the small 
        telephone company cannot control and for which equal and 
        opposite exogenous changes are made on the federal level; 
           (3) substantial financial impacts of investments in network 
        upgrades which are made; or 
           (i) if the investment exceeds 20 percent of the gross plant 
        investment of the company; or 
           (ii) as the result of government mandates to construct 
        specific telephone infrastructure, if the mandate applies to 
        local telephone companies and the company would not otherwise be 
        compensated. 
        A small telephone company may change rates for local services 
        listed in section 237.761, subdivision 3, at any time, to 
        implement extended area service or any successor to that service 
        on an income-neutral basis. 
        A small telephone company proposing an increase under this 
        subdivision shall provide 60 days' advance written notice to the 
        department and each of the company's customers including the 
        individual rates affected and the procedure necessary for the 
        customers to petition for investigation.  If the department 
        receives a petition within 45 days after the notice from five 
        percent or 500, whichever is fewer, of the customers of the 
        small telephone company, the department and the company shall 
        jointly determine if the petition is valid and, if so, may 
        investigate the rate change to determine if it conforms to the 
        limitations of this subdivision.  Within 30 days of validating 
        the petition, the department shall report its findings to the 
        commission, which shall either adopt the report or order changes 
        to conform to this subdivision. 
           (c) On or after the later of January 1998, or two years 
        after making an election under subdivision 2, a small telephone 
        company may increase rates for local services, except switched 
        network access services, listed in section 237.761, subdivision 
        3.  A small telephone company proposing an increase shall 
        provide 60 days' advance written notice to its customers 
        including individual rates affected and the procedure necessary 
        for the customers to petition for investigation.  If the 
        commission receives a petition within 45 days after such notice, 
        from five percent or 500, whichever is fewer, of the customers 
        of the small telephone company, the department and the company 
        shall jointly determine if the petition is valid and, if so, may 
        investigate the proposed rate increase to determine if it is 
        appropriate in light of rates charged by other local exchange 
        telephone companies for comparable services, taking into account 
        calling scope, quality of service, the availability of 
        competitive alternatives, service costs, and the features 
        available to the customers.  Within 30 days of validating the 
        petition, the department shall file a report with the commission 
        which shall then approve appropriate rates for those services.  
        Rates established by the commission under this paragraph shall 
        not be increased within one year of implementation. 
           Sec. 4.  [AFOR PLAN EXTENDED; EXPEDITED APPROVAL OF NEW 
        PLAN.] 
           (a) A telephone company that has received an order from the 
        Federal Communications Commission, pursuant to United States 
        Code, title 47, section 271, to provide in-region interLATA 
        services in the state and that was operating under an 
        alternative form of regulation plan approved under Minnesota 
        Statutes, sections 237.73 to 237.775, as of December 1, 2003, 
        shall continue to be regulated under the provisions of that plan 
        until December 31, 2005, notwithstanding any contrary provision 
        in the plan or in Minnesota Statutes, sections 237.73 to 
        237.773.  During this period, the telephone company may elect to 
        be regulated under traditional rate of return regulation under 
        Minnesota Statutes, chapter 237, but must give six months' 
        notice of that election to the Public Utilities Commission, the 
        Office of the Attorney General, and the Department of Commerce.  
           (b) If, on or before December 31, 2004, a telephone company 
        described in paragraph (a), the Department of Commerce and the 
        Office of the Attorney General jointly file with the Public 
        Utilities Commission a new alternative form of regulation plan 
        for the telephone company under Minnesota Statutes, sections 
        237.73 to 237.775, the new plan shall be effective 60 days after 
        the date of filing. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Section 1 is effective August 1, 2004.  Sections 2 and 4 
        are effective the day following final enactment. 
           Presented to the governor May 15, 2004 
           Signed by the governor May 19, 2004, 10:00 a.m.