Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 223-S.F.No. 739
An act relating to telecommunications; providing
policies to carry out the state's role in
telecommunications regulation; providing for a state
policy encouraging high speed telecommunication
services and greater capacity for services; providing
for a single statewide local access and transport area
(LATA); amending Minnesota Statutes 1996, sections
8.33, subdivision 2; 237.12, by adding a subdivision;
237.121; 237.16, subdivision 9; 237.761, subdivisions
4 and 8; 237.762, subdivisions 1, 3, and by adding a
subdivision; 237.764, subdivision 1; 237.765; 237.766;
and 237.769; 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 1996, section 8.33,
subdivision 2, is amended to read:
Subd. 2. [DUTIES.] The attorney general is responsible for
representing and furthering the interests of residential and
small business utility consumers through participation in
matters before the public utilities commission involving utility
rates and adequacy of utility services to residential or small
business utility consumers. The attorney general shall expend a
reasonable portion of effort among all three kinds of utility
services and shall identify and promote the needs of each class
of residential and small business consumers with respect to each
of the utility services. When participating in
telecommunication matters that affect deployment of the
infrastructure, the attorney general may apply the goals of:
(1) achieving economically efficient investment in:
(i) higher speed telecommunication services; and
(ii) greater capacity for voice, video, and data
transmission; and
(2) just and reasonable rates.
Sec. 2. [237.011] [TELECOMMUNICATIONS GOALS.]
The following are state goals that should be considered as
the commission executes its regulatory duties with respect to
telecommunication services:
(1) supporting universal service;
(2) maintaining just and reasonable rates;
(3) encouraging economically efficient deployment of
infrastructure for higher speed telecommunication services and
greater capacity for voice, video, and data transmission;
(4) encouraging fair and reasonable competition for local
exchange telephone service in a competitively neutral regulatory
manner;
(5) maintaining or improving quality of service;
(6) promoting customer choice;
(7) ensuring consumer protections are maintained in the
transition to a competitive market for local telecommunications
service; and
(8) encouraging voluntary resolution of issues between and
among competing providers and discouraging litigation.
Sec. 3. [237.072] [LIMITATION ON RATE CHANGES.]
(a) After December 15, 1997, the commission,
notwithstanding any provision to the contrary, shall not allow
an incumbent telephone company with more than 1,000,000 access
lines in Minnesota to change its retail rates for
telecommunications services without a determination of its
revenue requirement pursuant to section 237.075 unless the
incumbent telephone company is regulated pursuant to sections
237.76 to 237.773.
(b) If, prior to December 15, 1997, the incumbent telephone
company petitions the commission to become subject to an
alternative regulation plan under sections 237.76 to 237.773,
paragraph (a) shall not apply to the petitioning company until
180 days after the date of the filing of the petition.
Sec. 4. [237.082] [TELECOMMUNICATION SERVICES; POLICY OF
INCREASED SPEED AND SERVICES.]
When setting rates, adopting rules, or issuing orders
related to telecommunication matters that affect deployment of
the infrastructure, the commission may apply the goals of:
(1) achieving economically efficient investment in:
(i) higher speed telecommunication services; and
(ii) greater capacity for voice, video, and data
transmission; and
(2) just and reasonable rates.
The department of public service may apply the same goals
in its regulation of and recommendations regarding
telecommunication services.
Sec. 5. Minnesota Statutes 1996, section 237.12, is
amended by adding a subdivision to read:
Subd. 4. [PRICES FOR INTERCONNECTION AND NETWORK
ELEMENTS.] For telephone companies with more than 50,000 access
lines, the prices for interconnection or network elements to be
established by the commission in any pending or future
proceeding shall be based on a forward looking economic cost
methodology which shall include, but is not limited to,
consideration of the following:
(1) the use of the most efficient telecommunications
technology currently available and the least cost network
configuration, given the existing location of the incumbent
telephone company's wire centers;
(2) forward-looking depreciation rates;
(3) a reasonable allocation of forward-looking joint and
common costs;
(4) forward-looking cost of capital; and
(5) Minnesota tax rates, and where applicable, Minnesota
facility placement requirements, Minnesota topography, and
Minnesota climate.
Sec. 6. Minnesota Statutes 1996, section 237.121, is
amended to read:
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 unreasonable or discriminatory 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. 7. Minnesota Statutes 1996, section 237.16,
subdivision 9, is amended to read:
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 including access, usage and 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 and be consistent with section
254(b)(1) to (5) of the federal Telecommunications Act of 1996,
Public Law Number 104-104. 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.
Sec. 8. [237.164] [UNIVERSAL SERVICE DISCOUNTS FOR SCHOOLS
AND LIBRARIES.]
The commission shall establish intrastate service discounts
for schools and libraries by order to the extent and within the
time frame necessary to enable schools and libraries to begin
receiving federally supported discounts at the earliest date
permitted by the Federal Communications Commission.
Sec. 9. Minnesota Statutes 1996, section 237.761,
subdivision 4, is amended to read:
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 upon notice to affected customers 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 upon notice to affected customers and are considered
approved if no objection is filed or raised by an interested
party or the commission within 20 days after the filing. If an
interested party files an objection, the commission shall make
its determination on the proposed rate increase within 90 days
of the filing of the objection.
Sec. 10. Minnesota Statutes 1996, section 237.761,
subdivision 8, is amended to read:
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; and
(4) a description of planned investment and deployment of
higher speed telecommunications services and increased capacity
for voice, video, and data transmission, in both the
metropolitan and outstate portions of the company's service
territory.
Sec. 11. Minnesota Statutes 1996, section 237.762,
subdivision 1, is amended to read:
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.
Sec. 12. Minnesota Statutes 1996, section 237.762,
subdivision 3, is amended to read:
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. Except as
provided in paragraph (b), 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 two 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 changes in state
and federal taxes;
(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; and
(3) substantial financial impacts of investments in
telecommunications infrastructure which are made: (i) if the
investments, for any 12 month period, exceed 20 percent of the
gross plant investment of the company; or (ii) are the result of
government mandates to construct specific telephone
infrastructure, the mandate applies to local telephone
companies, and the company would not otherwise be compensated
through some other manner under the plan.
Sec. 13. Minnesota Statutes 1996, section 237.762, is
amended by adding a subdivision to read:
Subd. 7. [PACKAGED SERVICES.] This section does not
prevent a telephone company from packaging any service
classified as price regulated or flexibly priced pursuant to
section 237.761, subdivisions 2 to 4, with any other service, or
engaging in promotional activities concerning such services, so
long as: (1) the company also continues to offer these price
regulated and flexibly priced services as separate stand-alone
services at prices required by section 237.762; and (2) at the
time the packaged offering is introduced, or at the time the
package price is subsequently changed, the packaged rate or
price may not exceed the sum of the unpackaged rates or prices
for the individual service elements or services.
Sec. 14. Minnesota Statutes 1996, section 237.764,
subdivision 1, is amended to read:
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. At the time of filing a plan, the current
earnings level of a telephone company with more than 1,000,000
access lines in Minnesota shall be deemed reasonable.
(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, where necessary, 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.
Sec. 15. Minnesota Statutes 1996, section 237.765, is
amended to read:
237.765 [QUALITY OF SERVICE.]
(a) For an alternative regulation plan to be approved by
the commission under sections 237.76 to 237.774, the plan must
contain and an existing service quality plan or settlement for
retail customers approved by the commission or if no such plan
or settlement has been approved, 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.
(b) Any penalties under paragraph (a), clause (5), may
shall be paid into a universal service fund or returned to
customers under a method set forth in the plan.
(c) The terms of an existing service quality plan or
settlement approved by the commission must be offered to extend
through the duration of an alternative regulation plan filed
under this section.
Sec. 16. Minnesota Statutes 1996, section 237.766, is
amended to read:
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
three 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), if required 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. Any revised or renewed plan must be approved by
the commission and shall contain a mechanism under which a
telephone company may reduce the rates for price-regulated
services below the initial rates or prices or increase the rates
or prices during the term of the 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. 17. Minnesota Statutes 1996, section 237.769, is
amended to read:
237.769 [UNBUNDLING AND INTERCONNECTION RULES APPLICABLE.]
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. 18. [237.775] [EXISTING PLANS NOT AFFECTED.]
An alternative regulation plan approved by the commission
prior to May 1, 1997, is not subject to the amendments in this
act; provided that a plan filed, revised, or renewed after that
date is subject to those amendments.
Sec. 19. [STUDY OF GEOGRAPHICALLY DEAVERAGED RATES.]
The commissioner of public service shall convene a working
group to study the impacts of geographic deaveraging on
wholesale and retail rates and shall report in writing the
findings of this study to the legislature by February 1, 1998.
Members of the working group shall include representatives of
the office of the governor, the department of public service,
the public utilities commission, and the office of the attorney
general, as well as representatives of telephone companies,
telecommunications carriers, consumer organizations representing
senior citizens, other consumer organizations, and other
interested parties. The study must include: (1) consideration
of whether geographic deaveraging of wholesale and/or retail
rates is appropriate; (2) a description of how the universal
service mechanism should operate in conjunction with geographic
deaveraging of retail rates, in the event deaveraging were to
occur; (3) consideration of the appropriate timing of
implementation of wholesale and/or retail rate deaveraging, in
the event deaveraging were to occur; and (4) recommendations
regarding the state's regulatory role within the deaveraging
process, in the event deaveraging were to occur.
Sec. 20. [DEPRECIATION TASK FORCE.]
The department of public service shall convene a task force
of telephone companies, telecommunications carriers, and other
interested parties and, by January 1, 1999, submit a report to
the legislature on the adequacy of commission-approved
depreciation rates and recommendations regarding recovery of
depreciation expense.
Sec. 21. [EFFECTIVE DATE.]
Sections 2, 3, and 5 to 20 are effective on the day
following final enactment. Sections 1 and 4 are effective the
day following final enactment and apply to all proceedings or
matters reconsidered, pending, or commenced on or after that
date.
Presented to the governor May 27, 1997
Signed by the governor May 30, 1997, 1:14 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes