SECOND REGULAR SESSION

HOUSE BILL NO. 1785

89TH GENERAL ASSEMBLY

INTRODUCED BY REPRESENTATIVES DeMARCE, FARNEN (Co-sponsors), KENNEDY, DAVIS (122),

HECKEMEYER, RANSDALL, PARKER, SEIGFREID, FITZWATER, SUMMERS, CLAYTON,

MERIDETH, WIGGINS, ELLIOTT AND HEGEMAN.

Read 1^st time February 17, 1998 and 1000 copies ordered printed.

ANNE C. WALKER, Chief Clerk

L3899.01I

AN ACT

To amend chapter 392, RSMo, by adding thereto two new sections relating to provision of expanded basic local telecommunications service and continuation of interexchange telecommunications service, with an emergency clause.

Be it enacted by the General Assembly of the state of Missouri, as follows:

Section A. Chapter 392, RSMo, is amended by adding thereto two new sections, to be known as sections 392.540 and 392.545, to read as follows:

392.540. 1. Sections 392.540 and 392.545 may be cited as the "Local Calling Parity Act of 1998".

2. As used in sections 392.540 and 392.545, the following words and phrases mean:

(1) "Expanded area service" or "EAS", a two-way, flat-rate local calling plan currently in existence between certain exchanges in this state;

(2) "Local calling scope", an area within an exchange or between two or more exchanges within which basic local telecommunications service and other local service as ordered by the commission are offered on a mandatory basis to all telecommunications customers, without toll charges and with exchange access charges or other forms of compensation arranged between companies limited to charges and forms of compensation as approved by the commission;

(3) "Metropolitan exchange", an exchange area containing entirely or in part a city of over one hundred thirty thousand population;

(4) "Rate center", the geographic points identified by vertical and horizontal coordinates that are used to measure the distance a call travels for rating intraLATA and interLATA toll calls, as defined in the incumbent local exchange telecommunications company's tariff in effect January 1, 1998.

3. Other provisions of law to the contrary notwithstanding, the commission shall immediately institute a proceeding which shall be concluded not later than October 1, 1999, to devise guidelines and procedures under which local exchange telecommunications companies doing business in this state shall expand the provision of basic local telecommunications service by implementing local calling scopes between exchanges which meet the following criteria:

(1) Between an exchange which lies entirely or in part within any county or any city not within a county and all other exchanges which lie entirely or in part within the same county or the same city not within a county; or

(2) Between an exchange and any other exchange located not more than thirty miles distant, the distance being measured from rate center to rate center of the exchanges.

The commission shall have the authority, as a result of a proceeding initiated on its own motion or that of the office of the public counsel, to order the implementation of the expanded local calling scopes as provided in this section.

4. During the first three months of the proceeding initiated pursuant to subsection 3 of this section, the commission shall hold at least six public hearings, geographically dispersed evenly throughout the state. Notice of the public hearing to be held in the location most convenient to each county or city not within a county shall be provided in at least one newspaper of general circulation in each county or city not within a county in the state. Such notice shall be reasonably calculated to inform the general public of the hearing. The notice shall contain the purpose of the hearing, the date, time and place of the hearing, a contact person at the public service commission and a telephone number and address to reach the contact. The notice shall be published not less than five days before the hearing.

5. The commission shall require each incumbent local exchange company providing interexchange telecommunications service to any exchange to file a tariff implementing the service described in subsection 3 of this section by April 1, 2000. Any plan to implement expanded local calling scopes as provided in subsection 3 of this section shall be subject to the approval of the commission. In developing a plan, the commission shall require telecommunications companies to enter into negotiations to provide for expanded local calling scopes throughout their service areas. If the telecommunications companies are unable to reach an agreement within a time frame consistent with the requirements of this section and the instructions of the commission, the commission may impose its own plan. The commission shall have the authority to determine the method of funding this service. In determining the method of funding this service, the commission shall first utilize any available earnings of the telephone companies in excess of those authorized in their respective tariffs; provided, however, that the commission shall not mandate any plan that requires the transfer of funds to implement expanded local calling scopes from one telephone company to another unless or until all other remedies are exhausted. Any telecommunications company seeking to recover any portion of its expenses or lost toll revenues or access charges resulting from the implementation of expanded local calling scopes shall demonstrate its financial hardship to the commission before such recovery shall be allowed. It shall be within the discretion of the commission to determine the methodology and source of recovery for any such affected telephone company. Such methodology and source may include, but not be limited to, increases in the affected telephone company's rates and charges, sharing of lost revenues and increased expenses by any other telephone company included in the plan under review, and any other methodology which has as its goal the maintenance of reasonable telephone rates for all subscribers in the state.

6. Except as provided in subsections 7 and 8 of this section, the commission shall establish a charge for each business and residential customer access line in each exchange for the expanded local calling scope service provided pursuant to this section. This fee is mandatory within the exchange and is in addition to the charge for existing local basic service. The local exchange telecommunications company shall not require any customer to purchase any other service in order to obtain the expanded local calling scope service pursuant to subsection 3 of this section. In all exchanges, the commission shall seek to limit the amount of the charge to the lesser of:

(1) Fifty percent of the company's charge for local basic service for either residential or business customers, excluding all other additives and charges; or

(2) Three dollars fifty cents per month for residential customers or six dollars per month for business customers.

Where it is shown by clear and convincing evidence that the charges called for in this section cannot be practicably implemented for reasons of geographic, economic or technological infeasibility, the commission shall establish charges similar to rates charged for similar services in metropolitan areas. In establishing charges pursuant to this subsection, the commission shall make use of expanded area service plans in existence as of January 1, 1998, as a model for developing low cost interexchange local phone service and determining rates to be charged for provision of such service.

7. Any provision of law to the contrary notwithstanding, the expanded local calling scope service established pursuant to this section shall be considered a mandatory local service and any company providing such service in high cost areas of the state shall be eligible to receive funding from the state universal service fund established pursuant to procedures established by section 392.248 in order to bring customer charges within the rate structure called for by subsection 6 of this section. Funding from the state universal service fund established pursuant to section 392.248 may be used to replace the revenue occasioned by any small local exchange telecommunications company's voluntary application to reduce its intrastate exchange access rates to facilitate the implementation of expanded local calling scopes in the exchange or exchanges of the small local telecommunications company, which application must be made by the company prior to April 1, 2000.

8. The commission shall have the authority to delay establishment of the expanded local calling scope in a given exchange or set of exchanges if it finds, upon motion by the office of the public counsel or of a city or county located within the exchange or set of exchanges, that establishment of expanded local calling scopes in that exchange would impose an undue economic burden on telecommunications customers in the exchange or set of exchanges. In the event that establishment of an expanded local calling scope is delayed by the commission pursuant to this section, the commission shall promptly initiate a proceeding to devise a plan under which expanded local calling scope service may be provided to the affected area at a reasonable charge.

9. Subsections 3 to 8 of this section notwithstanding, the expanded local calling scope service authorized by this section shall not be available for telecommunications customers in metropolitan exchanges and exchanges which share two-way local calling privileges with metropolitan exchanges pursuant to a metropolitan calling area plan in place pursuant to order of the commission. It is the intent of the general assembly that the expanded local calling scope service authorized in this section shall supplement and not replace or substitute for existing metropolitan calling area plans currently in existence pursuant to order of the commission. Nothing in this section shall be construed to preclude the commission from conducting proceedings to explore proposals for less expensive local calling plans in metropolitan areas.

10. Nothing in this section shall be construed to impair the legislative purposes set forth in section 392.185 within the parameters for provision of basic local telecommunications service established by this section.

392.545. 1. No incumbent local exchange telecommunications company providing basic local telecommunications service within the state of Missouri on January 1, 1998, shall abandon such service until and unless it shall demonstrate, and the commission finds, after notice and hearing, that such abandonment will not deprive any customers of basic local telecommunications service or access thereto and is not otherwise contrary to the public interest.

2. The implementation of intraLATA toll dialing parity within the exchange or exchanges of any small local exchange telecommunications company shall not occur prior to June 1, 1999.

3. No incumbent local exchange telecommunications company providing basic interexchange telecommunications service within the exchange or exchanges of any small incumbent local exchange telecommunications company on January 1, 1998, shall abandon such service until and unless it shall demonstrate, and the commission finds, after notice and hearing, that intraLATA toll dialing parity was implemented in the exchange or exchanges where the incumbent local exchange telecommunications company carrier desires to abandon such service not less than one year prior to the filing of the application for abandonment, that during the year prior to the filing of the application not less than three interexchange carriers have continuously provided basic interexchange telecommunications service to all customers residing in the exchange or exchanges, that such abandonment will not deprive any customers of basic interexchange telecommunications service or access thereto, and that such abandonment is not otherwise contrary to the public interest.

Section B. Because immediate action is necessary to preserve the availability of interexchange telecommunications service in certain exchanges in this state, this act is deemed necessary for the immediate preservation of the public health, welfare, peace and safety, and is hereby declared to be an emergency act within the meaning of the constitution, and this act shall be in full force and effect upon its passage and approval.

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