Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 156-S.F.No. 752
An act relating to telecommunications; allowing for
alternative regulation of telephone companies for a
limited period; authorizing rulemaking to promote fair
and reasonable competition for local exchange service;
making technical changes; amending Minnesota Statutes
1994, sections 237.01, subdivision 6; 237.035; 237.09;
237.16; and 237.461, subdivision 2; proposing coding
for new law in Minnesota Statutes, chapter 237.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1994, section 237.01,
subdivision 6, is amended to read:
Subd. 6. [TELECOMMUNICATIONS CARRIER.] "Telecommunications
carrier" means a person, firm, association, or corporation
authorized to furnish one or more of the following telephone
service services to the public, but not otherwise authorized to
furnish local exchange service: (1) interexchange telephone
service; (2) local telephone service pursuant to a certificate
granted under the authority of section 237.16, subdivision 4,
before August 1, 1995; or (3) local service pursuant to a
certificate granted under section 237.16, for the first time
after August 1, 1995, except if granted to a successor to a
telephone company otherwise authorized to furnish local exchange
service. Telecommunications carrier does not include entities
that derive more than 50 percent of their revenues from operator
services provided to transient locations such as hotels, motels,
and hospitals. In addition, telecommunications carrier does not
include entities that provide centralized equal access services.
Sec. 2. Minnesota Statutes 1994, section 237.035, is
amended to read:
237.035 [TELECOMMUNICATIONS CARRIER EXEMPTION.]
(a) Telecommunications carriers are not subject to
regulation under this chapter, except that only to the extent
required under paragraphs (b) to (e).
(b) Telecommunications carriers shall comply with the
requirements of section sections 237.121 and 237.74.
(c) Telecommunications carriers shall comply with section
237.16, subdivisions 8 and 9.
(d) To the extent a telecommunications carrier offers local
service, it shall obtain a certificate under section 237.16 for
that local service.
(e) In addition, a telecommunications carrier's local
service is subject to this chapter except that:
(1) a telecommunications carrier is not subject to
rate-of-return or earnings investigations under section 237.075
or 237.081; and
(2) a telecommunications carrier is not subject to section
237.22.
Sec. 3. Minnesota Statutes 1994, section 237.09, is
amended to read:
237.09 [DISCRIMINATION PROHIBITED.]
Subdivision 1. [GENERALLY.] No telephone company, or any
agent or officer thereof, shall, directly or indirectly, in any
manner, knowingly or willfully, charge, demand, collect, or
receive from any person, firm, or corporation, a greater or less
compensation for any intrastate service rendered or to be
rendered by it than it charges, demands, collects, or receives
from any other firm, person, or corporation for a like and
contemporaneous intrastate service under similar circumstances.
Subd. 2. [PARTICULAR SERVICES.] (a) A telephone company
that offers or provides a service or services, service elements,
features, or functionalities on a separate, stand-alone basis to
any customer shall provide that service, service element,
feature, or functionality pursuant to tariff to all similarly
situated persons, including all telecommunications carriers and
competitors. To the extent prohibited by the Federal
Communications Commission or public utilities commission, a
telephone company shall not give preference or discriminate in
providing services, products, or facilities to an affiliate or
to its own or an affiliate's retail department that sells to
consumers.
(b) For purposes of establishing an appropriate rate or
price floor for a rate for a telephone service, a telephone
company shall impute, on a service-by-service basis, into the
rate or price for that service, the tariffed rate or price for
the same services, service elements, or network functions that
the company provides to others who use it to provide a service
that competes with the telephone service offered by the
company. A company is not required to impute a rate or price
under this paragraph if it demonstrates to the commission, in an
expedited proceeding under section 237.61, that:
(1) the competitor can obtain substantially equivalent
services, service elements, or network functions within the
relevant market or geographic area on reasonably comparable
terms and conditions through self-provision or from a provider
other than the telephone company; or
(2) application of the imputation requirement otherwise
would be inconsistent with the public interest.
Sec. 4. [237.121] [PROHIBITED PRACTICES.]
A telephone company or telecommunications carrier may not
do any of the following with respect to services regulated by
the commission:
(1) upon request, fail to disclose in a timely and uniform
manner information necessary for the design of equipment and
services that will meet the specifications for interconnection;
(2) intentionally impair the speed, quality, or efficiency
of services, products, or facilities offered to a consumer under
a tariff, contract, or price list;
(3) fail to provide a service, product, or facility to a
consumer other than a telephone company or telecommunications
carrier in accordance with its applicable tariffs, price lists,
or contracts and with the commission's rules and orders;
(4) refuse to provide a service, product, or facility to a
telephone company or telecommunications carrier in accordance
with its applicable tariffs, price lists, or contracts and with
the commission's rules and orders;
(5) impose restrictions on the resale or shared use of its
services or network functions, provided that:
(i) it may require that residential service may not be
resold as a different class of service; and
(ii) the commission may prohibit resale of services it has
approved for provision for not-for-profit entities at rates less
than those offered to the general public; or
(6) provide telephone service to a person acting as a
telephone company or telecommunications carrier if the
commission has ordered the telephone company or
telecommunications carrier to discontinue service to that person.
Sec. 5. Minnesota Statutes 1994, section 237.16, is
amended to read:
237.16 [CONSTRUCTING TELEPHONE LINES AND EXCHANGES LOCAL
EXCHANGE COMPETITION, RULES.]
Subdivision 1. [LOCAL NEW SERVICE, CERTIFICATE OF
AUTHORITY.] (a) For the purpose of bringing about uniformity of
practice fair and reasonable competition for local exchange
telephone services, the commission shall have has the exclusive
right authority to grant authority to:
(1) authorize any telephone company person to construct
telephone lines or exchanges for furnishing or to otherwise
furnish local service to subscribers in any municipality of this
state, and to prescribe the terms and conditions upon which
construction or service delivery may be carried on,; and
whenever the commission grants such authority, it shall be in
the form of a permit of indeterminate duration -- coupled with
the right to the municipality to purchase the telephone plant
within the city, as hereinafter provided. No lines or equipment
shall be constructed or installed for the purpose of furnishing
local telephone service to the inhabitants or telephone users in
any locality in this state, where there is then in operation in
the locality or territory affected thereby another telephone
company already furnishing such service, without first securing
from the commission a declaration, after a public hearing, that
public convenience requires such proposed telephone lines or
equipment; but
(2) establish terms and conditions for the entry of
telephone service providers so as to protect consumers from
monopolistic practices and preserve the state's commitment to
universal service.
(b) No person shall provide telephone service in Minnesota
without first obtaining a determination that the person
possesses the technical, managerial, and financial resources to
provide the proposed telephone services and a certificate of
authority from the commission under terms and conditions the
commission finds to be consistent with fair and reasonable
competition, universal service, the provision of affordable
telephone service at a quality consistent with commission rules,
and the commission's rules.
(c) The commission shall make a determination on an
application for a certificate within 120 days of the filing of
the application.
(d) The governing body of any municipality or town shall
have the same powers of regulation which it now possesses with
reference to the location of poles and, wires, and other
equipment or facilities on, below, or above the streets, alleys,
or other public grounds so as to prevent any interference with
the safe and convenient use of streets and, alleys, and other
public grounds by the public.
(e) A telephone company or telecommunications carrier shall
provide for repair or restoration of streets, alleys, and other
public areas to their original condition if necessitated by the
installation or operation of telephone or telecommunications
carrier facilities.
Subd. 2. [CERTIFICATE OF TERRITORIAL AUTHORITY.] All
telephone companies operating exchanges in the state of
Minnesota as of April 21, 1961, shall be entitled to receive a
certificate of territorial authority from the commission
authorizing such company to continue to serve the areas
presently included within the exchange boundaries as indicated
by the exchange boundary maps now on record with the commission
provided however that such exchange boundaries shall be subject
to review by the commission upon the filing of a complaint by
any interested party, the time for filing such complaints to be
limited to 60 days after the passage of Laws 1961, chapter 637.
If more than one company files maps indicating service in the
same territory, the commission shall, after hearing, on
reasonable notice to the interested parties, determine, from
such evidence as it may reasonably require, which of such
companies shall be entitled to a certificate of territorial
authority. In making such determination, the commission shall
consider the ability of such company to furnish thereafter
reasonably adequate service in the territory in question. Any
company operating a switchboard that does not presently have a
map on record with the commission shall have three months from
April 21, 1961, to file such map showing the territory being
served by such company.
Subd. 3. [MAPS; RULES.] The style, size and kind of map,
together with the information to be shown thereon, shall be as
required by Every company authorized to provide local telephone
service under this section shall file a territorial map. The
map must comply with the rules prescribed by the commission.
Such rules shall indicate the time and place for filing such
maps and shall require that such maps be kept current.
Subd. 4. [NEW AMENDED CERTIFICATE REQUIRED FOR EXPANSION.]
No company authorized to provide local service shall construct
or operate any line, plant or system, or any extension thereof,
or provide local telephone service in any area for which it has
not been certified nor shall any person acquire ownership or
control thereof, of another telephone company either directly or
indirectly, without first obtaining from the commission a
determination that the present or future public convenience and
necessity require or will require such construction, operation,
or acquisition, and a new an amended certificate of territorial
authority; provided that. The applicant for an amended
certificate shall file with the commission notice of the
expansion or acquisition, along with a new map under subdivision
3, identifying the territory to be served. Notice of the filing
shall be served on any affected municipality and local telephone
company certified in that territory. If no objection is filed
with the commission by any interested party or raised by the
commission within 20 days of the filing, it is considered
approved, except if it involves an acquisition governed by
section 237.23, in which case no certificate shall be granted
until approval is obtained pursuant to that section and
subdivision 1 of this section. If an objection is filed, the
commission shall determine whether to approve the amendment in
an expedited proceeding under section 237.61. This section
shall not be construed to require a telephone company operating
an exchange in Minnesota to secure a certificate for an
extension within any territory within which such company has
heretofore filed maps or for substitute facilities within such
territories, or for extensions into territories contiguous to
that already occupied by such company and not receiving similar
service from another company if no certificate of territorial
authority has been issued to or applied for by any other company.
Subd. 5. [REVOCATION.] Any certificate of territorial
authority may, after notice of hearing and a hearing, be revoked
by the commission, in whole or in part, for: the failure of the
its holder thereof to furnish reasonably adequate telephone
service within the area or areas determined and defined in such
the certificate of territorial authority; failure to meet the
terms and conditions of its certificate; or intentional
violation of the commission's rules or orders.
Subd. 6. [EXPANSION OF SERVICE AREA NOT REQUIRED.] Nothing
contained in This section shall be construed to does not require
any telephone company operating exchanges providing local
service in the state of Minnesota to render telephone service in
any portion of any territorial area in which such not included
on the telephone company does not render and does not propose to
render telephone service company's territorial map.
Subd. 7. [EXISTING CERTIFICATES RETAINED.] This section
does not limit the ability of telephone companies possessing
certificates of territorial authority on August 1, 1995,
including, but not limited to, certificates authorizing resale
of local telephone service, to continue to provide telephone
service within their designated territories.
Subd. 8. [RULES.] (a) Before August 1, 1997, the
commission shall adopt rules applicable to all telephone
companies and telecommunications carriers required to obtain or
having obtained a certificate for provision of telephone service
using any existing federal standards as minimum standards and
incorporating any additional standards or requirements necessary
to ensure the provision of high quality telephone services
throughout the state. The rules must, at a minimum:
(1) define procedures for competitive entry and exit;
(2) require the provisions of equal access and
interconnection with the company's network and other features,
functions, and services which the commission considers necessary
to promote fair and reasonable competition;
(3) require unbundling of network services and functions to
at least the level required by existing federal standards;
(4) prescribe, if necessary, methods of reciprocal
compensation between telephone companies;
(5) provide for local telephone number portability;
(6) prescribe appropriate regulatory standards for new
local telephone service providers, that facilitate and support
the development of competitive services;
(7) protect against cross-subsidization, unfair
competition, and other practices harmful to promoting fair and
reasonable competition;
(8) prescribe methods for the preservation of universal and
affordable local telephone services;
(9) prescribe standards for quality of service; and
(10) provide for the continued provision of local emergency
telephone services under chapter 403.
(b) Before January 1, 1998, in a separate rulemaking, the
commission shall adopt separate rules regarding the issues
described in paragraph (a), clauses (1) to (10), as may be
appropriate to provision of competitive local telephone service
in areas served by telephone companies with less than 50,000
subscribers originally certified to provide local telephone
services before January 1, 1988.
Subd. 9. [UNIVERSAL SERVICE FUND.] The commission shall
establish and require contributions to a universal service fund,
to be supported by all providers of telephone services, whether
or not they are telephone companies under section 237.01,
including, but not limited to, local telephone companies,
independent telephone companies, cooperative telephone
companies, municipal telephone companies, telecommunications
carriers, radio common carriers, personal communication service
providers, and cellular carriers. Services that should be
considered for inclusion as universal include, at a minimum,
single-party service with touch-tone capability, line quality
capable of carrying facsimile and data transmissions, equal
access, emergency services number capability, statewide
telecommunications relay service for the hearing-impaired, and
blocking of long-distance toll services. The fund must be
administered and distributed in accordance with rules adopted by
the commission and designed to preserve the availability of
universal service throughout the state. Any state universal
service fund must be coordinated with any federal universal
service fund. The department shall make recommendations to the
legislature by January 1, 1996, regarding a plan for
contributions to and expenditures from the universal service
fund. In particular, the department shall address the following
issues:
(1) what additional services should be included in the
basic set of essential telephone services which the state should
encourage in its mandate to ensure universal service;
(2) whether and how expenditures from the fund should be
used to ensure citizens access to local government and other
public access programming; and
(3) whether expenditures from the fund should be used to
encourage construction of infrastructure for, and access to,
advanced services, especially in high-cost areas of the state,
and, if the commission determines the fund should be used for
this purpose, a plan to accomplish these goals.
Subd. 10. [INTERIM AUTHORITY.] (a) Before adopting the
rules required under subdivision 8, the commission shall grant
an applicant a certificate to provide a proposed local telephone
service when the commission finds that the applicant meets the
conditions of subdivision 1. Any applicant for a certificate
pursuant to subdivision 1 shall, at the time its application is
filed, provide notice of its application to all local telephone
companies authorized to provide local exchange service in the
geographic area identified in the application. The applicant
and telephone companies shall negotiate a temporary arrangement
pertaining to interconnection matters for the effective
interconnection of local exchange networks, pending the adoption
of the rules under subdivision 8. If the applicant and the
telephone companies fail to reach agreement within 60 days of
filing the application, the commission shall set the terms of
the temporary arrangement at the time of the issuance of the
certificate.
(b) Any company previously certified to provide local
telephone services may request a temporary arrangement for the
effective interconnection with the local exchange network of
another telephone company in the same territory, pursuant to the
time frames and procedures of this subdivision.
(c) In addition, through and until the rules are adopted
under subdivision 8, each telephone company serving more than
50,000 access lines in the state shall:
(1) permit interconnection or discontinue interconnection
for intrastate services to the same extent and in the same
manner and time frame as the Federal Communications Commission
requires interconnection or permits discontinuance of
interconnection for interstate services; and
(2) unbundle its intrastate services and facilities used
for intrastate services to the same extent and in the same
manner as the Federal Communications Commission requires
unbundling for interstate purposes.
Subd. 11. [INTERIM AUTHORITY IN AREAS SERVED BY TELEPHONE
COMPANIES WITH LESS THAN 50,000 SUBSCRIBERS.] (a) Before
adopting the rules required under subdivision 8 for telephone
companies with less than 50,000 subscribers, when an applicant
requests certification to provide local telephone service in an
area served by a telephone company with less than 50,000
subscribers originally certified to provide local telephone
service before January 1, 1988, the commission shall grant the
application if it finds the applicant meets the requirements of
subdivision 1. The commission shall make its determination on
the application, including whether to provide a temporary
arrangement for the effective interconnection of the local
exchange networks, after a hearing under chapter 14 or expedited
proceeding under section 237.61, within nine months of the
application, and considering any facts unique to that telephone
company. In addition, if an application is granted, that
telephone company shall:
(1) permit interconnection or discontinue interconnection
for intrastate services to the same extent and in the same
manner and time frame as the Federal Communications Commission
may thereafter require for that small telephone company for
interstate purposes.
(2) unbundle its intrastate services and facilities used
for intrastate services to the same extent and in the same
manner as the Federal Communications Commission may thereafter
require for that telephone company for interstate purposes.
(b) If a telephone company with less than 50,000
subscribers is authorized by the Federal Communications
Commission to provide video common carrier services before the
rules required under subdivision 8 are adopted, an application
under this subdivision for certification to provide local
telephone service in an area served by that telephone company
shall be determined within 120 days of its filing.
Subd. 12. [EXTENSION OF INTEREXCHANGE FACILITIES.] In
order to promote the development of competitive interexchange
services and facilities, any interexchange facility that is
owned by a certified telephone company, independent telephone
company, telecommunications carrier or an affiliate and that is
used to provide service to customers located in areas for which
it has been previously certified to provide service may be
extended to meet and interconnect with the facility of another
telephone company, small telephone company, or
telecommunications carrier, whether at a point inside or outside
of its territories, without further proceeding, order, or
determination of current or future public convenience and
necessity, upon mutual consent with the other telephone company,
small telephone company, or telecommunications carrier whose
facilities will be met and interconnected. Written notice of
the extension and interconnection must be provided to the public
utilities commission and department of public safety within 30
days after completion. The written notice must be served on all
local exchange companies certified before January 1, 1988, in
all areas where the facilities are located.
Subd. 13. [APPLICATION OF OTHER LAW.] Notwithstanding any
provisions of sections 237.035 and 237.74 to the contrary,
before adopting the rules under subdivision 8, the local
services provided by a telecommunications carrier are subject to
this chapter in the same manner as those local services of a
telephone company regulated under this chapter, except that the
telecommunications carrier is not subject to section 237.22 and
is not subject to rate-of-return regulation or earnings
investigations under section 237.075 or 237.081. Before
offering a local telephone service a telecommunications carrier
must be certified to provide local service under this section.
Sec. 6. Minnesota Statutes 1994, section 237.461,
subdivision 2, is amended to read:
Subd. 2. [CIVIL PENALTY.] A person who knowingly and
intentionally violates a provision of this chapter or rule or
order of the commission adopted under this chapter shall forfeit
and pay to the state a penalty, in an amount to be determined by
the court, of at least $100 and not more than $1,000 $5,000 for
each day of each violation. The civil penalties provided for in
this section may be recovered by a civil action brought by the
attorney general in the name of the state. Amounts recovered
under this section must be paid into the state treasury.
Sec. 7. [237.76] [PURPOSE.]
A telephone company may petition the commission for
approval of an alternative regulation plan under sections 237.76
to 237.774. The purpose of an alternative regulation plan is to
provide a telephone company's customers with service of a
quality consistent with commission rules at affordable rates, to
facilitate the development of telecommunication alternatives for
customers, and to provide, where appropriate, a regulatory
environment with greater flexibility than is available under
traditional rate-of-return regulation as reflected in other
provisions of this chapter.
Sec. 8. [237.761] [ALTERNATIVE REGULATION PLAN; SERVICES.]
Subdivision 1. [CLASSIFICATION OF SERVICES.] An
alternative regulation plan must contain provisions that provide
for classification of all telephone services as price regulated,
flexibly priced, or nonprice regulated consistent with
subdivisions 2 to 5.
Subd. 2. [PRICE-REGULATED SERVICE; DEFINITION.] For
purposes of this section, the term "price-regulated service"
includes only those services that are:
(1) essential for providing local telephone service and
access to the local telephone network;
(2) integrally related to privacy, health, and safety of
the company's customers; and
(3) for which no reasonable alternative exists within the
relevant market or geographic area on reasonably comparable
terms and conditions.
Subd. 3. [SPECIFIC PRICE-REGULATED
SERVICES.] Price-regulated telephone services are the following:
(1) residential and business service for local calling,
including measured local service, two-party service, private
branch exchange (PBX) trunks, trunk type hunting services,
direct inward dialing, the network access portion of central
office switched exchange service, and public access lines for
customer-owned coin-operated telephones;
(2) extended area service;
(3) switched network access service;
(4) call tracing;
(5) calling number blocking;
(6) touch tone service when provided separately from basic
local exchange service;
(7) local exchange, white-page, printed directories;
(8) 911 emergency services;
(9) installation and repair of local network access;
(10) local operator services, excluding directory
assistance; and
(11) toll service blocking and 1-900 or 976 access blocking.
Subd. 4. [FLEXIBLY PRICED SERVICES.] (a) A service not
listed in subdivision 3 or not otherwise determined to be price
regulated under subdivision 6 or 7 or nonprice regulated must be
classified as a flexibly priced service.
(b) Flexibly priced services are regulated consistent with
section 237.60, subdivision 2, except that:
(1) rate decreases may be effective immediately upon filing
and are considered approved if no objection is filed or raised
by an interested party or the commission within ten days after
the filing; and
(2) rate increases may be effective 20 days after filing
and are considered approved if no objection is filed or raised
by an interested party or the commission within 20 days after
the filing.
Subd. 5. [NON-PRICE-REGULATED SERVICES.] (a) A service
must be classified as nonprice regulated if the commission
finds, based upon evidence filed by the telephone company and
other evidence available to the commission and consistent with
the company's proposed plan, that there is sufficient
competition to justify classification as nonprice regulated. In
making that determination, the factors the commission shall
consider include:
(1) the number, size, and identity of competitors providing
the same or functionally equivalent service;
(2) the geographic area in which competitive service is
actually available to and being used by customers, to the extent
this information is available to the commission;
(3) the importance of the service to the public; and
(4) the effect of classification of the service on the
development of a competitive telecommunications market.
(b) Telephone companies shall file tariffs or price lists
for non-price-regulated services with the commission, but the
rates for these services are not subject to commission approval
or investigation except as provided in subdivision 6 and
sections 237.762, subdivision 6, 237.770, and 237.771.
Subd. 6. [RECLASSIFICATION.] An alternative regulation
plan may contain provisions allowing for the reclassification of
services during the course of the plan upon a showing that the
service meets the criteria contained in subdivision 2, 3, 4, or
5, and the plan, for the requested classification.
Subd. 7. [NEW SERVICES; CLASSIFICATION; RATES.] At the
time the company first offers a service, it shall file a tariff
or price list and the proposed classification for the service
under the plan along with a written explanation of why the
proposed classification is consistent with this section. New
services classified as flexibly priced or nonprice regulated may
be offered on one day's notice to the commission and the
department. New services classified as price regulated may be
offered pursuant to the terms set forth in the plan. A service
is not considered a new service if it consists of a repackaging
including bundling, unbundling, or repricing of an already
existing service. If no interested party or the commission
objects to the company's proposed classification within 30 days
of the filing of the petition, the company's proposed
classification of the service is approved. If an objection is
filed, the commission shall determine the classification of the
service within 90 days of the filing of the new service.
Subd. 8. [INVESTMENT COMMITMENTS.] (a) An alternative
regulation plan must also include a plan outlining the company's
commitment to invest in telecommunications infrastructure
improvements in this state over a period of not less than six
years.
(b) An investment plan shall include all of the following:
(1) a description of the level of planned investment in
technological or infrastructure enhancement;
(2) a description of the extent to which planned investment
will make new telecommunications technology available to
customers or expand the availability of current technology; and
(3) a description of the planned deployment of fiber-optic
facilities or broad-band capabilities to schools, libraries,
technical colleges, hospitals, colleges and universities, and
local governments in this state.
Sec. 9. [237.762] [RATES; PRICES.]
Subdivision 1. [INITIAL RATES.] As part of its evaluation
of an alternative regulation plan, the commission shall
determine whether the telephone company's existing service
substantially complies with commission rules and if its rates
and rate design are appropriate in light of the proposed plan or
whether changes should be made before the plan is implemented or
phased in during the course of the plan. An alternative
regulation plan approved by the commission under this section
must provide that the recurring and nonrecurring rates or prices
that may be charged by a telephone company for price-regulated
services are no higher than the approved rate or prices on file
with the commission for those services on the date of the filing
of the plan. Furthermore, no plan may in any way change the
terms or conditions of any access charge settlements approved by
the commission or exempt any company from compliance with any
commission access charge order issued before the filing of a
plan. The plan must address implementation of additional access
charge reductions that may occur during that portion of the plan
that extends beyond expiration of commission-approved
settlements.
Subd. 2. [NEW SERVICE; RATES.] For services offered by the
telephone company for the first time after August 1, 1995, the
rates or prices must equal or exceed the total service long-run
incremental cost of the service.
Subd. 3. [RATE CHANGES.] (a) An alternative regulation
plan must set forth the procedures under which the telephone
company may reduce the rates or prices for price-regulated
services below the initial rates or prices or thereafter
increase the rates or prices during the term of the plan. The
rates or prices may not be reduced below the total service
long-run incremental cost of providing the service. The rates
or prices may not exceed the initial rates or prices for the
service determined under subdivision 1 for the first three years
of the plan. After a plan has been in effect for three years,
price-regulated rates may be changed as appropriate under a
procedure set forth in an approved plan. Rates for
price-regulated services may not be increased unless the company
has demonstrated substantial compliance with the quality of
service standards set forth in the plan.
(b) An approved plan may allow changes in rates for
price-regulated services after three years to reflect:
(1) substantial financial impacts of government mandates to
construct specific telephone infrastructure and increases or
decreases in state and federal taxes, if the mandate applies to
local telephone companies and the company would not otherwise be
compensated through some other manner under the plan; and
(2) changes in jurisdictional allocations from the Federal
Communications Commission, the amount of which the telephone
company cannot control and for which equal and opposite
exogenous changes are made on the federal level.
Subd. 4. [BUNDLED RATES.] When the rates or prices for
services are unbundled, the price for each basic network
function must be set to equal or exceed its total service
long-run incremental cost. Before August 1, 1997, if the rates
or prices for price-regulated services are bundled, the bundled
rate or price may not exceed the sum of the unbundled rates or
prices for the individual service elements or services or the
total initial bundled rate or price for those service elements
or services.
Subd. 5. [INCOME-NEUTRAL CHANGES.] Other than as
authorized in this subdivision, an initial alternative
regulation plan must not permit income-neutral rate changes for
price-regulated services during the plan except as is necessary
to implement extended area service or any successor to that
service. Any plan must provide that after the rules issued
pursuant to section 237.16 are adopted, rates for
price-regulated services may be increased, as approved by the
commission, to the extent necessary to carry out the purpose of
those rules. However, rate increases, if any, for those
services must be incorporated with a universal service fund so
that the effective rate for the customers of those services does
not increase during the first three years of the plan.
Subd. 6. [RATES FOR OTHER SERVICES.] The telephone company
shall file price lists with the commission for all flexibly
priced or non-price-regulated services. The rate or price for
each flexibly priced and non-price-regulated service must be
equal to or exceed the total service long-run incremental cost
of providing that service. In any proceeding regarding the
appropriateness of a rate or price for a flexibly priced or
non-price-regulated service, the telephone company has the
burden of proving that the rate or price is above the total
service long-run incremental cost of providing that service.
Sec. 10. [237.763] [EXEMPTION FROM RATE-OF-RETURN
REGULATION AND RATE INVESTIGATIONS.]
Except as provided in the plan and any subsequent plans, a
company that has an alternative regulation plan approved under
section 237.764, is not subject to the rate-of-return regulation
or earnings investigations provisions of section 237.075 or
237.081 during the term of the plan. A company with an approved
plan is not subject to the provisions of section 237.57; 237.58;
237.59; 237.60, subdivisions 1, 2, 4, and 5; 237.62; 237.625;
237.63; or 237.65, during the term of the plan. Except as
specifically provided in this section or in the approved plan,
the commission retains all of its authority under section
237.081 to investigate other matters and to issue appropriate
orders, and the department retains its authority under sections
216A.07 and 237.15 to investigate matters other than the
earnings of the company.
Sec. 11. [237.764] [PLAN ADOPTION; EFFECT.]
Subdivision 1. [PETITION, NOTICE, HEARING, AND
DECISION.] (a) Before acting on a petition for approval of an
alternative regulation plan, the commission shall conduct any
public meetings it may consider necessary.
(b) The commission shall require the petitioning telephone
company to provide notice of the proposed plan to its customers,
along with a summary description of the plan provisions and the
dates, times, and locations of public meetings scheduled by the
commission.
(c) The company's petition shall contain an explanation of
how ratepayers will benefit from the plan and a justification of
the appropriateness of earnings levels and rates in light of the
proposed plan as well as any proposed changes in rates for
price-regulated services for the first three years of the
proposed plan. If a telephone company has completed a general
rate proceeding, rate investigation, or audit of its earnings by
the department or commission within two years of the initial
application for an alternative form of regulation plan, the
commission order or department audit report, updated for the
most recent calendar year, is sufficient justification of
earnings levels to initiate the filing of an alternative
regulation plan.
(d) The commission shall conduct a proceeding under section
237.61 to decide whether to approve the plan and shall grant
discovery as appropriate.
(e) The commission shall issue findings of fact and
conclusions concerning the appropriateness of the proposed
initial rates and the proposed plan, or any modifications to it,
but may not order that a modified plan take effect without the
agreement of the petitioning telephone company. The commission
shall issue its decision on a plan within six months after
receiving the petition to approve the plan unless the commission
and the petitioning company agree to an extension of the time
for commission action.
(f) If a settlement is submitted to the commission, the
commission shall accept, reject, or modify the proposed
settlement within 60 days from the date it was submitted.
Subd. 2. [SETTLEMENT; STIPULATION; FINAL ORDER.] Upon
receipt of a petition for an alternative regulation plan, the
commission shall convene a conference including all interested
parties to encourage settlement or stipulation of issues. Any
settlement or stipulation must be submitted to the commission,
which shall accept or reject the proposal in its entirety or
modify it. If the commission modifies the proposal, all parties
have 30 days to comment on the proposed modifications, after
which the commission shall issue its final order. If the final
order contains modifications to the proposal, each party to the
settlement has ten days to reject the proposed modifications, in
which case the matter must be decided under section 237.61.
After appropriate notice and hearing for all parties, the
commission may adopt a stipulation submitted by a substantial
number of, but less than all, parties.
Subd. 3. [EFFECT ON INCENTIVE PLAN.] The approval of a
plan under this section automatically terminates any existing
incentive plan previously approved under section 237.625 upon
the effective date of the plan approved under this section,
provided, however, the company remains obligated to share
earnings under the terms of the incentive plan through the date
of the termination of that plan and also is required to complete
the performance of any other unexecuted commitments under the
incentive plan.
Sec. 12. [237.765] [QUALITY OF SERVICE.]
For an alternative regulation plan to be approved by the
commission under sections 237.76 to 237.774, the plan must
contain and the commission shall require:
(1) evidence that current service quality substantially
complies with commission rules as to justify lessened rate
regulation;
(2) a baseline measurement of the quality of service levels
as achieved by the company during the previous three years, to
the extent the data are available, and specific statewide
standards for measuring the quality of price-regulated and
flexibly priced services provided by the company, including, but
not limited to (i) time intervals for installation, (ii) time
intervals for restoration or repair of service, (iii) trouble
rates, (iv) exchange access line held orders, and (v) customer
service answer time;
(3) provisions for reporting to the commission at least
annually the company's performance as to the quality of service
standards by quarter for the previous year;
(4) provisions that index quality of service standards for
local residence services to similar standards for local business
services;
(5) appropriate remedies, including penalties and
customer-specific adjustments or payments to compensate
customers for specific quality of service failures, so as to
ensure substantial compliance with the quality of service
standards set forth in the plan; and
(6) provisions for informing customers of their rights as
to quality of service and how customers can register their
complaints regarding service.
Any penalties under clause (5) may be paid into a universal
service fund or returned to customers under a method set forth
in the plan.
Sec. 13. [237.766] [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 four
years. 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), 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. 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.
Sec. 14. [237.767] [DISCONTINUANCE OF SERVICE.]
Without the express approval of the commission, a telephone
company subject to a plan may not discontinue the provision of a
service or basic network function that has been classified as
price regulated or flexibly priced.
Sec. 15. [237.768] [PERIODIC FINANCIAL REPORTS.]
In addition to the reports required under section 237.766,
an alternative regulation plan may require a telephone company
to file with the department an annual report of financial
matters for the previous calendar year on or before May 1 of
each year on report forms furnished by the department of public
service in the same manner as is required of other telephone
companies on August 1, 1995. In addition, any company subject
to a plan shall file with the commission and department a copy
of any filings it has made to the Federal Communications
Commission regarding the provisions of video programming
provided through a video dial tone facility in Minnesota. An
alternative regulation plan may require a telephone company to
maintain its accounts in accordance with the system of accounts
prescribed for the company by the commission under section
237.10.
Sec. 16. [237.769] [UNBUNDLING AND INTERCONNECTION.]
Every plan must contain, and the commission shall approve,
rates for and procedures under which the telephone company will,
on or before the effective date of the plan, permit
interconnection with and unbundle its intrastate services and
facilities to the same extent and in the same manner as the
Federal Communications Commission requires the interconnection
and unbundling for interstate purposes for that company. Any
company under a plan is subject to any rules adopted under
section 237.16 on the same date as those rules are applicable to
other companies.
Sec. 17. [237.770] [SUBSIDIZATION.]
No telephone company shall subsidize flexibly priced or
non-price-regulated services from other services. A telephone
service is not subsidized if the aggregate revenues for the
service equal or exceed the total service long-run incremental
costs of providing the service. If the commission determines,
after a proceeding under section 237.081, that subsidization
exists, it shall order changes in rates to price the subsidized
service above total service long-run incremental cost and may
invoke any other remedies otherwise available under this chapter.
Sec. 18. [237.771] [DISCRIMINATION.]
The rates of a telephone company under a plan must be the
same in all geographic locations of the state except for good
cause. A plan may contain provisions that define good cause,
including consideration of the ability to respond to
competition. Sections 237.09, 237.121, and 237.60, subdivision
3 apply to a telephone company under a plan.
Sec. 19. [237.772] [COST STUDY METHODOLOGY.]
Subdivision 1. [TOTAL SERVICE LONG-RUN INCREMENTAL
COST.] (a) For purposes of this chapter, total service long-run
incremental cost (TSLRIC) means the total cost to the company of
supplying a service, group of services, or basic network
function. The term "long-run" means a period of time sufficient
so that all inputs are avoidable based on the total increment of
service, group of services, or basic network function and
includes the relevant costs resulting from the company's
decision to provide the service, group of services, or basic
network function, holding constant the production levels of all
other services, groups of services, or basic network functions
provided by the company.
(b) A telephone company is not required to prepare or file
TSLRIC or variable cost studies for all of its services as a
prerequisite to filing a plan. However, the commission may
order cost studies to be prepared for specific services as a
condition of approval of the plan.
Subd. 2. [PETITION FOR VARIABLE COST STUDY.] To the extent
that this section or the commission may require a company to
provide a TSLRIC study, a company may submit a petition to the
commission for permission to submit a variable cost study
instead of a TSLRIC study. The commission shall grant the
petition if the telephone company demonstrates:
(1) that a TSLRIC study is burdensome in relation to its
annual revenue from the service involved;
(2) in the case of an existing service, that the service is
no longer being offered to new customers; or
(3) if the telephone company shows other good cause.
Sec. 20. [237.773] [ALTERNATIVE REGULATION FOR SMALL
TELEPHONE COMPANIES.]
Subdivision 1. [DEFINITION.] For purposes of this section,
"small telephone company" means a local exchange telephone
company with fewer than 50,000 subscribers that has made an
election under subdivision 2 whether or not the company is
subject to sections 237.58, 237.59, 237.60, subdivisions 1, 2,
and 5, 237.62, and 237.625.
Subd. 2. [ELECTION; EFFECT.] A local telephone company
with fewer than 50,000 subscribers may elect to become a small
telephone company by notice to the commission, in writing, of
its decision. The small telephone company may not revoke its
election for three years after making the election. While that
election remains in effect, a small telephone company is not
subject to the rate-of-return regulation or earnings
investigation provisions of section 237.075 or 237.081.
If, before electing under this subdivision, a small
telephone company has been found by the commission to have
significant quality of service problems in violation of
applicable commission rules, that company must either resolve
the quality of service problems or develop a plan to resolve the
quality of service problems in conformance with section
237.765. The quality of service plan must be approved by the
commission in order for an election under this subdivision to be
effective. The commission shall make a determination on the
quality of service plan within 60 days after it is submitted.
Subd. 3. [LOCAL RATES.] (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 shall 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.
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 shall 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. 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.
Subd. 4. [ACCESS RATES.] (a) No election by a small
telephone company may in any way change the terms or conditions
of any interexchange access charge settlements approved by the
commission before an election under subdivision 2.
(b) While any interexchange access charge settlement
approved by the commission remains in effect, the commission and
department shall enforce the agreement without further
investigation of interexchange access charges or earnings
relating to the interexchange access service. Except as
specifically provided in this section, the commission retains
all of its authority under section 237.081 to investigate other
matters relating to interexchange access charges and to issue
appropriate orders, and the department retains its authority
under sections 216A.07 and 237.15 to investigate matters
relating to interexchange access charges.
Subd. 5. [DEPRECIATION.] While an election under
subdivision 2 is in effect, the company shall be subject to
complaints by the department or others concerning its
depreciation rates and practices pursuant to section 237.081,
subdivision 1a, and shall submit to the department the
information required by Minnesota Rules, parts 7810.7700 and
7810.7800, but shall not otherwise be subject to section 237.22
or the certification procedures of Minnesota Rules, part
7810.7000.
Sec. 21. [237.774] [OTHER LAWS.]
Except as provided in sections 237.76 to 237.773, a
telephone company subject to a plan approved under sections
237.764 and 237.773, shall comply with any state or federal laws
governing the provision of telephone services. Nothing
contained in sections 237.76 to 237.773 is intended in any way
to change or modify the definitions contained in section 237.01
or what constitutes the provision of telephone service under
this chapter or other laws.
Sec. 22. [PUBLIC ACCESS.]
The department of public service shall investigate how to
ensure citizen access to local government and other public
access programming on emerging communication technologies such
as video dial-tone and satellite transmission equivalent to that
required of cable franchise operators pursuant to Minnesota
Statutes, chapter 238, and the alternatives available to the
state to ensure that access.
The department shall make recommendations to the
legislature by February 15, 1996, concerning public access.
Sec. 23. [STATEMENT OF INTENT.]
The amendments to Minnesota Statutes, section 237.16,
subdivision 1, paragraph (d), in this law are solely intended
for clarification. No substantive changes in powers of
regulation are intended, nor are to be implied.
Sec. 24. [MUNICIPAL FRANCHISE FEES; UTILITIES.]
The department of public service shall study the issue of
franchise fees and related compensation paid to local
governments by utilities and cable communication companies. The
study shall include a survey of fees and related compensation
currently paid to municipalities by utilities and cable
communication companies, and the purpose for which the franchise
fees and related compensation are remitted to municipalities by
utilities and cable communication companies. The department
shall develop recommendations on a state policy regarding these
fees and related compensation, particularly addressing the
issues of the purposes for which such fees may be assessed and
paid, the amount of the fees, and uses of such fee revenue and
related compensation. The department shall report its findings
and recommendations to the legislature by February 15, 1996.
Sec. 25. [EFFECTIVE DATE; EXPIRATION.]
Sections 1 to 22 are effective August 1, 1995, and expire
January 1, 2006.
Presented to the governor May 9, 1995
Signed by the governor May 10, 1995, 10:16 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes