Legislature passes bill repealing most telecom regulations

One of the handful of bills that passed through the Legislature this year updates many of the state’s regulations on telecommunications companies.

Senate Bill 83, sponsored by Sen. Chris Birch, R-Anchorage, successfully passed the House and the Senate May 14, the day before the regular session ended and the Legislature moved into a special session; it now awaits the governor’s signature.

The bill repeals a number of statutes regulating telecom providers, including ratemaking authority, standards for equipment and services and Carrier of Last Resort, or COLR, regulations, which are designed to protect rural communities in the event that all telecom providers want to stop serving an area.

Telecommunications companies in Alaska broadly backed the bill, saying it would free up resources for them in an increasingly competitive environment. The Regulatory Commission of Alaska supported it as well, with the sole opposing vote coming from chairman Stephen McAlpine. RCA staff, however, raised a number of concerns about the future for telecom service across Alaska if the bill becomes law.

The members of the Alaska Telecom Association, who range from statewide providers like Alaska Communications to small local telephone companies, argued that economic regulation of telecommunications providers is outdated, clumsy and consumes resources that could be better put toward operations. Christine O’Connor, the executive director of the ATA, noted that the statutes have not been fully updated in about three decades.

“We tried to tackle that starting in 2014 with a petition to the Regulatory Commission,” she said. “They made some minor changes, but it didn’t end up relieving the burden. Some companies ended up with more complexity, not less. They had those petitions in 2014, and five years later we said let’s just do a full cleanup of these statutes.”

The telecom market has become more competitive in Alaska in recent years, with consumers increasingly preferring mobile and web-based communication services as opposed to traditional landlines. Landlines are still important, though; O’Connor said approximately 4 percent of Alaskans depend solely on landlines, while 48 percent still maintain one in addition to another service.

As the market shifts, the traditional monopoly-style regulation of telecoms becomes outdated for everyone, she said.

Under the new regulations, telecommunications providers would no longer have to file informational tariff reports with the RCA. The filings are to inform the RCA of intended changes rather than to request rate increases, and the companies argued that the filings are time-consuming and unnecessary.

GCI, one of the largest carriers in the state, spends significant time on filing the tariffs with the RCA, said Heather Handyside, vice president of corporate communications and community engagement for GCI. The company, which began as a landline provider about 40 years ago, has a dedicated team that sinks significant time into producing the reports, she said.

“We all can understand here in Alaska how dramatically telecommunications have changed in the last 40 years,” she said. “The regulatory environment hasn’t changed in 30 years, and we’re still operating today with regulatory guidance from 30 years ago. That’s really a part of what SB 83 does: eliminate the onerous and unnecessary paperwork that our company does.”

The bill does not mean the telecom providers will disengage entirely from the RCA, Handyside said, but it will “streamline” the process for everyone.

It would also eliminate statutes requiring utilities to charge “just and reasonable” prices, removing RCA oversight over rates, and repeal the ability of the RCA to designate a Carrier of Last Resort.

Companies argued in their letters and presentations that the Federal Communications Commission will still hold requirements for companies seeking to leave an area to justify it, but the RCA staff raised concerns about the potential for loss of service in rural areas. In documents submitted to the Legislature, ATA argued that COLR creates uncertainty for carriers because the RCA can change it at any time.

In a memo to the RCA, Common Carrier staff member David Parrish outlined concerns about many of the items in the ATA’s proposed bill, highlighting particularly the elimination of economic regulation, the elimination of COLR regulations and how the changes would impact RCA’s ongoing review of its subsidy program, known as the Alaska Universal Service Fund.

In letters and presentations to the Legislature, telecom providers mentioned how a number of states in the Lower 48 have taken similar actions to deregulate their telecommunications providers. The RCA staff memo contested that the situations in the Lower 48 and Alaska are the same.

“What has not been clear is whether those states have taken the approach of completely deregulating even the least competitive markets within their respective jurisdictions,” the memo states. “ATA has not indicated that other states have so limited the enforcement tools available to their utility commissions for whatever jurisdiction those commissions retain to render that jurisdiction de facto unenforceable.”

In the event the Legislature passed the bill, the staff memo recommends the RCA immediately open rulemaking processes to reinstate some of the provisions eliminated from statute.

In a House Labor and Commerce hearing on May 1, McAlpine told legislators that his primary motivation for opposing the bill was concern about service in rural Alaska. In a May 13 hearing, Rep. Jonathan Kreiss-Tomkins, D-Sitka, shared similar concern with the House Judiciary Committee, saying the bill was moving quickly and could have impacts on residents like those in the rural areas of Southeast.

“These communities for the main part don’t have cell phone service,” he said. “Landlines are the only means of communication these communities have. So therefore, it becomes a life and safety issue, as well as a commerce issue.”

The House Labor and Commerce Committee added an amendment to allow the RCA more flexibility to hire on a telecommunications industry expert, which it does not currently have. Rep. Adam Wool, R-Fairbanks, co-chair of the committee, said a number of people had approached him about a “brain drain” at the RCA because of more attractive jobs in the private sector.

O’Connor said the bill will result in immediate time and cost savings, especially for small providers that may have to bring in consultants to complete the filings required by the RCA. The RCA staff memo referred to the bill as deregulation, and O’Connor said the industry and ultimately the commissioners disagreed with that analysis.

“I would say it’s just a difference of philosophy,” she said. “I’m on the record at the RCA saying that we felt it was time to update these statutes. This one staffer said he felt like it’s a go in another direction. Naturally since our goal was to become more efficient and we were responding to a lot of comments over time … saying we’re doing a lot of work here on telecommunications here that’s outdated and needs to be stripped away.”

The amended bill passed the Legislature on May 14 and awaits transmittal to Gov. Michael J. Dunleavy for his signature.

Elizabeth Earl can be reached at [email protected].

05/22/2019 - 8:49am