HCS HB 1779 -- TELECOMMUNICATIONS SERVICES

SPONSOR:  Emery

COMMITTEE ACTION:  Voted "do pass" by the Special Committee on
Utilities by a vote of 6 to 5.

This substitute changes the laws regarding telecommunications
services.  In its main provisions, the substitute:

(1)  Requires interconnected voice over Internet protocol service
(VOIP) to be registered with the Missouri Public Service
Commission in a manner similar to other telecommunications
providers;

(2)  Defines VOIP service based on the Federal Communications
Commission guidelines;

(3)  Allows the Missouri Public Service Commission to charge the
same exchange access fees to VOIP providers as it charges other
telecommunications providers;

(4)  Requires VOIP providers to charge, collect, and remit the
appropriate fees to fund the Universal Service Fund,
telecommunications relay services, and local enhanced 911; file
annual reports with the commission; and develop a process for
handling customer questions and complaints;

(5)  Reduces the number of days before a rate change becomes
effective for telecommunications services in competitive markets
and for retail business customers in noncompetitive markets;

(6)  Allows for the use of price caps in exchanges where VOIP
service is provided.  Price caps will be based upon the federal
Consumer Price Index.  Non-basic telecommunications services are
exempted from price caps;

(7)  Allows incumbent local exchange companies (ILECs) to set
maximum rates for basic local services in noncompetitive
exchanges based on specified criteria;

(8)  Allows ILECs to have competitive status in exchanges that
meet certain competitive criteria;

(9)  Allows ILECs to obtain rule and statute waivers in the same
manner as other regulated companies.  The commission may reimpose
quality of service and billing standards if it finds that the
ILEC has engaged in a pattern or practice of inadequate service;

(10)  Eliminates the distinction between residential and business
services and allows uniform pricing within exchanges;

(11)  Requires the commission to maintain records of competitive
companies, changes review of competitive status from mandatory to
discretionary, and specifies new criteria for maximum allowable
prices in exchanges that are not deemed competitive;

(12)  Requires the commission to determine a price-cap company to
be competitive if 40% or more of its subscriber access lines are
in competitive exchanges.  Rates for basic local service in
formerly noncompetitive exchanges are capped at the highest rate
for basic local service in the ILEC's competitive exchanges for
three years following the finding;

(13)  Allows price-cap companies to rebalance rates on a revenue
neutral basis.  ILECs may raise basic local rates up to $1.50 per
month each year but must reduce intrastate access rates to
exactly offset the increase;

(14)  Allows all companies an alternative method for gaining
competitive classification for individual services on a
company-wide basis.  A company may also gain competitive status
as a whole if a majority of its services are declared
competitive;

(15)  Eliminates certification requirements for certain small,
rural areas served by an ILEC;

(16)  Allows the commission to investigate and resolve customer
complaints based on federal laws and regulations;

(17)  Establishes a price cap on incumbent local exchange
companies when they are classified as competitive so that they
cannot raise the exchange access service rates charged to other
carriers;

(18)  Allows alternative local exchange carriers that possess a
certificate of service authority to provide basic local
telecommunications service to be granted statewide authorization;
and

(19)  Allows market pricing for intrastate operator and directory
services including directory assistance services.

FISCAL NOTE:  No impact on state funds in FY 2009, FY 2010, and
FY 2011.

PROPONENTS:  Supporters say that the telecommunications industry
changes rapidly and it is imperative to allow the free market to
function in this area in order to enhance the availability of new
services and reduce customer costs.  Deregulation generally
results in great job growth in the telecommunications industry.
The bill is a compromise agreed to by most major Missouri
telecommunications industries.  It will preserve the authority of
the Missouri Public Service Commission regarding customer service
issues.

Testifying for the bill were Representative Emery; Charles
Davidson, New York University Law and Communications Policy
Center; Missouri Telecommunications Industry Association;
Missouri Cable Telecommunications Association; CenturyTel;
Comcast; and Missouri Chamber of Commerce and Industry.

OPPONENTS:  Those who oppose the bill say that it lacks certain
important safeguards for consumers.

Testifying against the bill was Sprint Nextel Corporation.

OTHERS:  Others testifying on the bill say that VOIP providers
should pay local taxes and fees and that this should be specified
in the bill.  Some were unsure of the Missouri Public Service
Commission's authority to handle customer complaints under the
legislation and that the bill eliminates some commission
oversight, allows companies classified as competitive in one area
to raise rates statewide, and eliminates the distinction in
pricing between residences and businesses so that rates can be
raised on both residences and businesses even if a
telecommunications company is not competitive in both the
residential and business markets.

Testifying on the bill were Missouri Municipal League; Missouri
Public Service Commission; and Lewis Mills, Office of Public
Counsel.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:11 pm