Current Status Bill Number:1224 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19960305 Primary Sponsor:Holland All Sponsors:Holland, Saleeby, Land, McGill, O'Dell, Glover, Jackson, Lander and Rankin Drafted Document Number:bbm\106652sd.96 Companion Bill Number:4694 Residing Body:Senate Current Committee:Judiciary Committee 11 SJ Subject:Telephone companies and services
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19960305 Introduced, read first time, 11 SJ
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND SECTION 58-9-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE REGULATION OF TELEPHONE COMPANIES AND DEFINITIONS, SO AS TO ADD PROVISIONS DEFINING "BASIC LOCAL EXCHANGE TELEPHONE SERVICE", "CARRIER OF LAST RESORT", "INCUMBENT LOCAL EXCHANGE CARRIER" OR "INCUMBENT LEC", "LOCAL EXCHANGE CARRIER" OR "LEC", "NEW ENTRANT LOCAL EXCHANGE CARRIER" OR "NEW ENTRANT LEC", "SMALL LOCAL EXCHANGE CARRIER" OR "SMALL LEC", "TELECOMMUNICATIONS SERVICES", AND "UNIVERSAL SERVICE"; TO AMEND SECTION 58-9-280, RELATING TO TELEPHONE COMPANIES AND THE REQUIREMENT THAT A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY MUST BE OBTAINED BEFORE CONSTRUCTION, OPERATION, OR EXTENSION OF A PLANT OR SYSTEM, SO AS TO ADD PROVISIONS WHICH PROVIDE, AMONG OTHER THINGS, THAT AFTER NOTICE AND AN OPPORTUNITY TO BE HEARD, THE PUBLIC SERVICE COMMISSION MAY GRANT A CERTIFICATE TO OPERATE AS A TELEPHONE UTILITY TO APPLICANTS PROPOSING TO FURNISH LOCAL TELEPHONE SERVICE IN THE SERVICE TERRITORY OF AN "INCUMBENT LEC", SUBJECT TO CERTAIN CONDITIONS AND EXEMPTIONS, AND TO PROVIDE FOR RELATED MATTERS; TO AMEND THE 1976 CODE BY ADDING SECTION 58-9-576 SO AS TO PROVIDE THAT AN "INCUMBENT LEC" MAY ELECT TO HAVE RATES, TERMS, AND CONDITIONS PURSUANT TO THE PLAN DESCRIBED IN THIS SECTION, AND TO PROVIDE FOR RELATED MATTERS; AND TO AMEND THE 1976 CODE BY ADDING SECTION 58-9-577 SO AS TO PROVIDE THAT, NOTWITHSTANDING SECTIONS 58-9-575 AND 58-9-576, A "SMALL LEC" MAY ELECT TO HAVE THE RATES, TERMS, AND CONDITIONS OF ITS SERVICES DETERMINED PURSUANT TO ALTERNATIVE FORMS OF REGULATION, WHICH MAY DIFFER AMONG COMPANIES AND MAY INCLUDE, BUT NOT BE LIMITED TO, PRICE REGULATION, RATHER THAN RATE OF RETURN OR OTHER FORMS OF EARNING REGULATION, AND TO PROVIDE FOR RELATED MATTERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 58-9-10 of the 1976 Code is amended by adding:
"(9) The term `basic local exchange telephone service' means for residential and single-line business customers, access to basic voice grade local service with touchtone, access to available emergency services and directory assistance, the capability to access interconnecting carriers, relay services, access to operator services, and one annual local directory listing (white pages).
(10) The term `carrier of last resort' means a facilities-based local exchange carrier which has the obligation to provide basic local exchange telephone service, upon reasonable request, to all residential and single-line business customers within a defined service area. Initially, the incumbent LEC must be a carrier of last resort within its existing service area.
(11) The term `incumbent local exchange carrier' or `incumbent LEC' means a telecommunications company, its affiliates, successors, or its assigns, which provides local exchange service pursuant to a certificate of public convenience and necessity issued by the commission before July 1, 1995, or operating as a local exchange carrier before that date pursuant to commission authority, to provide local exchange service within a certificated geographic service area of the State. Any such entity must be treated as the incumbent local exchange carrier only within the geographic area where it maintains service pursuant to:
(a) any certificate of public convenience and necessity issued before December 31, 1995; or
(b) any certificate of public convenience and necessity issued to supersede, in whole or in part, any certificate of public convenience and necessity issued before December 31, 1995.
(12) The term `local exchange carrier' or `LEC' means either an incumbent local exchange carrier or a new entrant local exchange carrier.
(13) The term `new entrant local exchange carrier' or `new entrant LEC' means a telecommunications company holding a certificate of public convenience and necessity issued by the commission pursuant to Section 58-9-280 (B) after December 31, 1995, to provide local exchange service within a certificated geographic service area of the State.
(14) The term `small local exchange carrier' or `small LEC' means a telecommunications company holding a certificate of public convenience and necessity issued by the commission before July 1, 1995, or operating as a local exchange carrier before that date pursuant to commission authority to provide local exchange service within a certificated geographic service area of the State, and having less than two hundred thousand access lines in the State as of July 1, 1995.
(15) The term `telecommunications services' means the services for the transmission of voice and data communications to the public for hire, including those nonwireline services provided in competition to landline services.
(16) The term `universal service' means the providing of basic local exchange telephone service, at affordable rates, upon reasonable request, to all residential and single-line business customers within a defined service area."
SECTION 2. Section 58-9-280 of the 1976 Code is amended to read:
"Section 58-9-280. (A) No telephone utility shall begin the construction or operation of any telephone utility plant or system, or of any extension thereof, except those ordered by the commission under the provisions of Section 58-9-270, without first obtaining from the commission a certificate that public convenience and necessity require or will require such construction or operation. But this section shall not be construed to require any telephone utility to secure a certificate for any extension within any municipality or district within which it had lawfully commenced operations on June 16, 1950 or for an extension within or to territory already served by it, necessary in the ordinary course of its business, or for an extension into territory contiguous to that already occupied by it as defined by the commission and not receiving similar service from another telephone utility; but, if any telephone utility in constructing or extending its lines, plant or system unreasonably interferes or is about to interfere unreasonably with the service or system of any other telephone utility, the commission may make such order and prescribe such terms and conditions in harmony with Articles 1 through 13 of this chapter as are just and reasonable.
(B) Effective July 1, 1996, after notice and an opportunity to be heard, the commission may grant a certificate to operate as a telephone utility, as defined in Section 58-9-10(6), to applicants proposing to furnish local telephone service in the service territory of an incumbent LEC, subject to the conditions and exemptions stated in this section and in applicable federal law. In determining whether to grant a certificate under this subsection, the commission may require that the:
(1) applicant show that it posses technical, financial, and managerial resources sufficient to provide the services requested;
(2) service to be provided will meet the service standards that the commission may adopt;
(3) provision of the service will not adversely impact the availability of affordable local exchange service;
(4) applicant, to the extent it may be required to do so by the commission, will participate in the support of universally available telephone service at affordable rates; and
(5) provision of the service does not otherwise adversely impact the public interest. In its application for certification, the applicant seeking to provide the service shall set forth with particularity the proposed geographic territory to be served, and a price list and informational tariff regarding the types of local exchange and exchange access services to be provided. Any person granted authority under this section shall maintain a current price list with the commission. A commission order, denying or approving an application for certification of a new local telephone service provider, shall be entered no more than sixty days from the filing of the application, except that the commission, upon notice, may extend that period not to exceed an additional sixty days.
(C) The commission shall determine the requirements applicable to all local telephone service providers necessary to implement this subsection. These requirements shall:
(1) provide for the reasonable interconnection of facilities between all certificated local telephone service providers upon a bona fide request for interconnection, subject to the negotiation process set forth in subsection (D) of this section;
(2) provide for the transfer of telephone numbers between local telephone service providers in a manner that is technically and economically feasible;
(3) provide for the reasonable unbundling of essential facilities and services upon a bona fide request from a certificated local telephone service provider where technically and economically feasible and priced in a manner that recovers the LEC's cost;
(4) determine when and under what circumstances resale of local exchange telephone services is in the public interest and should be allowed. Telecommunications services that are available at retail to a specific category of subscribers only shall not be offered for resale to a different category of subscribers; and
(5) provide for the continued development and encouragement of universally available basic local exchange telephone service at reasonably affordable rates. The final commission order implementing these requirements shall be issued within six months of the effective date of this section, except that the commission, upon notice, may extend that period up to an additional ninety days.
(D) The incumbent LEC and any new entrant LEC shall negotiate the rates, terms, and conditions for local interconnection. In the event that the parties are unable to agree on appropriate rates, terms, and conditions for interconnection within one hundred thirty-five to one hundred sixty days of receipt of a bona fide request, either party may petition the commission for determination of the appropriate rates, terms, and conditions for interconnection. This period may be shortened or extended by mutual agreement of the parties. The commission shall determine the appropriate rates, terms, and conditions for interconnection within nine months from the filing of the petition. Incumbent LECs may charge their existing toll switched access rates for local interconnection or may establish other compensatory rates for local interconnections services, to the extent permitted by federal law, that recover the costs of providing these services.
(E) In continuing South Carolina's commitment to universally available basic local exchange telephone service at affordable rates and to assist with the alignment of prices with costs, and consistent with applicable federal policies, the commission shall establish a universal service fund (USF) for distribution to a carrier of last resort. The commission shall issue its final order adopting such guidelines as may be necessary for the funding and management of the USF within twelve months of the effective date of this section except that the commission, upon notice, may extend that period up to an additional ninety days. Such guidelines shall address, without limitation, the following:
(1) The USF shall be administered by the commission or a third party designated by the commission under guidelines to be adopted by the commission.
(2) The commission shall require all telecommunications companies providing telecommunications services within South Carolina to contribute to the USF in a proportionate amount to their intrastate gross revenues from sale to end users of such telecommunications services, excluding those revenues received from the USF by a carrier of last resort and revenue received by a carrier of last resort from basic local exchange telephone services supported by the USF as determined by competitively neutral guidelines to be adopted by the commission.
(3) The commission also shall require any company providing telecommunications service to contribute to the USF if, after notice and opportunity for hearing, the commission determines that the company is providing private local exchange services or radio-based local exchange services in this State that compete with a local telecommunications service provided in this State.
(4) The size of the USF shall be determined by the commission based upon estimates as to the difference in the costs of basic local exchange telephone services and the amounts established by law or regulations of the commission as to the maximum amounts that may be charged for such services.
(5) Monies in the USF shall be distributed to a carrier of last resort upon application and demonstration that the costs as determined by the commission to provide basic local exchange telephone services exceed the maximum price permitted for such basic local exchange telephone services.
(6) The commission shall require any carrier of last resort seeking reimbursement from the fund to file the information necessary to determine the costs of providing basic local exchange telephone services. In the event that a carrier of last resort does not currently conduct detailed cost studies relating to such services, the commission shall allow for an appropriate surrogate for such study.
(7) The commission shall have the authority to make adjustments to the contribution or distribution levels based on yearly reconciliations and to order further contributions or distributions as needed.
(8) After notice and an opportunity for hearing to all affected carriers, the commission by rule may expand the set of services within the definition of universal service based on a finding that the uniform statewide demand for such additional service is such that including the service within the definition of universal service will further the public interest; provided, however, that before implementing any such finding, the commission shall provide for recovery of unrecovered costs through the USF of such additional service by the affected carrier of last resort.
(F) Nothing in this chapter shall be interpreted to limit or restrict any right that any local exchange carrier may have under federal law.
(G) Competition exists for a particular service if, for an identifiable class or group of customers in an exchange, group of exchanges, or other clearly defined geographical area, the service, its functional equivalent, or a substitute service is available from two or more providers. The commission shall not regulate a service for which competition exists if the market for that service is sufficiently competitive to protect the public interest. If the commission finds that competition exists for a particular service, but that such competition is not sufficient to protect the public interest, the commission shall provide the same regulatory and pricing flexibility to all providers of the service.
(H) Any local exchange carrier, upon a showing of changed circumstances or that it is necessary or appropriate to realign rates with the costs of various telecommunications components, may petition the commission to reexamine any rates that have been capped pursuant to the provisions of this chapter and to set new price caps.
(I) The incumbent LECs subject to this section shall be authorized to meet the offerings of any local exchange carrier serving the same area by packaging services together, suing volume discounts and term discounts, and by offering individual contracts for services, except as restricted by federal law. Individual contracts for services or contracts with other providers of telecommunications services shall not be filed with the commission, except as required by federal law.
(J) Subject to the requirements of applicable federal law, a small LEC may define the term `cost', as used within this section and where applicable to a small LEC, to include all embedded cost as well as a reasonable contribution to universal local service until such time as these costs are recovered from other sources.
(K) Subject to federal law, if the commission finds that the resale of any service or unbundled capability, element, feature, or function in a small LEC area is in the public interest, then the small LEC shall not be required to offer its services at a price below its cost.
(L) Upon enactment of this section and the establishment of the Small LEC Fund, as specified in subsection (M) of this section, the commission shall, subject to the requirements of federal law, allow any electing small LEC to immediately set its interconnection or toll switched access rates at levels comparable to the toll switched access rate levels of the largest LEC operating within the State. To offset the adverse effect on the revenues of the small LEC, the commission shall allow adjustment of other rates not to exceed statewide average rates, weighted by number of access lines, and shall allow distributions from the Small LEC Fund, as may be necessary to recover those revenues lost through the concurrent reduction of the intrastate switched access rates.
(M) The commission shall, not later than December 31, 1996, establish a Small LEC Fund. The Small LEC Fund shall initially be funded by those entities receiving an access or interconnection rate reduction in proportion to the amount of the rate reduction. The Small LEC Fund must transition into the USF as outlined in Section 58-9-280(E) when funding for the USF is finalized and adequate to support the obligations of the Small LEC Fund.
(N) The commission shall ensure that any requirements implemented under Section 58-9-280(C) are appropriate for the service territory of the small LEC and may implement such alternative requirements necessary to protect the public interest in such service area. Specifically, the commission shall ensure for small LECs that telecommunications services that are available at retail to a specific category of subscribers only shall not be offered for resale to a different category of subscribers and that such resale does not result in the loss of intrastate or interstate revenue to the selling company for the individual service being resold.
(O) If any provision or section of this chapter is held invalid or held not to apply to a particular local exchange carrier, such holding shall not affect the remaining provisions of this chapter or their application to any local exchange carrier to which they might apply."
SECTION 3. The 1976 Code is amended by adding:
"Section 58-9-576. (A) Any incumbent LEC may elect to have rates, terms, and conditions determined pursuant to the plan described in subsection (B).
(B) Notwithstanding any other provision of this chapter, effective July 1, 1996, any incumbent LEC may elect to have its rates, terms, and conditions for its services determined pursuant to the plan described in this subsection, in lieu of other forms of regulation including, but not limited to, rate of return or rate base monitoring or regulation, upon the filing of notice with the commission as follows:
(1) The plan under this subsection becomes effective on the date specified by the electing incumbent LEC but in no event sooner than thirty days after such notice is filed with the commission.
(2) On the date an incumbent LEC notifies the commission of its intent to elect the plan described in this section, existing rates, terms, and conditions for the services provided by the electing incumbent LEC contained in the then-existing tariffs and contracts are considered just and reasonable.
(3) The rates for flat-rated local exchange services for residential and single-line business customers on the date of election shall be the maximum rates that such local incumbent LEC may charge for these local exchange services for a period of two years from the date the election is filed with the commission. During such period, the local exchange company may charge less than the authorized maximum rates for these services. For those small LECs whose prices are below the statewide average local service rate, weighted by number of access lines, the commission shall waive the requirements of this paragraph.
(4) For those companies to which item (3) applies, after the expiration of the period set forth above, the rates for flat-rate local exchange residential and single-line business service provided by an incumbent LEC may be adjusted on an annual basis pursuant to an inflation-based index. Inflation shall be measured by the change in the GDP-PI and the annual percentage rate increase for these services in the aggregate shall not exceed GDP-PI for the preceding year.
(5) In the event the GDP-PI is no longer available, the commission shall elect a comparable broad national measure of inflation calculated by the United States Government for its use.
(6) The incumbent LECs shall set rates for all other services on a basis that does not unreasonably discriminate between similarly situated customers; provided, however, that all such rates are subject to a complaint process for abuse of market position in accordance with guidelines to be adopted by the commission.
(7) Incumbent LECs subject to this section shall file tariffs for its local exchange services that set out the terms and conditions of the services and the rates for such services. The tariff shall be presumed valid and become effective seven days after filing for price decreases and fourteen days after filing for price increases and new services.
(8) Any incumbent LEC operating under an alternative regulatory plan approved by the commission before the effective date of this section must adhere to the pricing provisions and price commitments of such plan for three years from the date of election pursuant to this section or until such alternative regulation plan expires, whichever is sooner. Thereafter, the incumbent local exchange telephone utility must be regulated pursuant to the plan provided for in this section.
Section 58-9-577. Notwithstanding Section 58-9-575 and 58-9-576, any small LEC may elect to have the rates, terms, and conditions of its services determined pursuant to alternative forms of regulation, which may differ among companies and may include, but not be limited to, price regulation, rather than rate of return or other forms of earning regulation. Upon application, the commission shall approve such alternative regulation or price regulation, which may differ among local exchange companies, upon finding that the plan as proposed:
(a) protects the affordability of basic local exchange telephone service, as such service is defined by the commission;
(b) reasonably assures the continuation of basic local exchange telephone service that meets reasonable service standards that the commission may adopt;
(c) will not unreasonably prejudice any class of telephone customers, including telecommunications companies; and
(d) is otherwise consistent with the public interest.
Upon approval of a price regulation plan, price regulation shall be the sole form of regulation imposed upon the electing local exchange carrier, and the commission shall regulate the electing local exchange carrier's prices rather than its earning. The small LEC shall file a tariff for its local exchange services that sets out the terms and conditions of the services and the rates for these services. The tariff shall be presumed valid and shall become effective seven days after filing for price decreases and fourteen days after filing for price increases and new services. The commission shall issue an order denying or approving the proposed plan for alternative regulation or price regulation, with or without modification, not more than ninety days from the filing of the application. However, the commission may extend the time period for an additional sixty days, in the discretion of the commission. If the commission approves the application with modifications, the local exchange carrier, subject to such approval, may accept the modifications and implement the proposed plans as modified or may at its option:
(i) withdraw its application and continue to be regulated under the form of regulation that existed immediately before the filing of the application or
(ii) file another proposed plan for price regulation."
SECTION 4. This act takes effect upon approval by the Governor.