Session of 1999
         
HOUSE BILL No. 2539
         
By Committee on Federal and State Affairs
         
2-25
         

  9             AN  ACT concerning telecommunications; relating to rate rebalancing
10             and access to the Kansas universal service fund; amending K.S.A. 1998
11             Supp. 66-1,187, 66-2001, 66-2002, 66-2003, 66-2005, 66-2008 and 66-
12             2009 and repealing the existing sections; also repealing K.S.A. 1998
13             Supp. 66-2012 and 66-2013.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. K.S.A. 1998 Supp. 66-1,187 is hereby amended to read as
17       follows: 66-1,187. As used in this act:
18             (a) "Broadband" means the transmission of digital signals at rates
19       equal to or greater than 1.5 megabits per second.
20             (b) "CLASS services" means custom local area signaling services,
21       which include automatic callback, automatic recall, calling number iden-
22       tification, selective call rejection, selective call acceptance, selective call
23       forwarding, distinctive ringing and customer originated trace.
24             (c) "Commission" means the state corporation commission.
25             (d) "Dialing parity" means that a person that is not an affiliate of a
26       local exchange carrier is able to provide telecommunications services in
27       such a manner that customers have the ability to route automatically,
28       without the use of any access code, their telecommunications to the tel-
29       ecommunications carrier of the customer's designation from among two
30       or more telecommunications carriers, including such local exchange
31       carrier.
32             (e) "Federal act" means the federal telecommunications act of 1996,
33       P.L. 104-104 (amending the communications act of 1934, 47 U.S.C. 151,
34       et seq.)
35             (f) "ISDN" means integrated services digital network which is a net-
36       work and associated technology that provides simultaneous voice and data
37       communications over a single communications channel.
38             (g) "LATA" has the meaning ascribed to it in the federal act.
39             (h) "Local exchange carrier" means any telecommunications public
40       utility or its successor providing switched telecommunications service
41       within any local exchange service area, as approved by the commission
42       on or before January 1, 1996. However, with respect to the Hill City
43       exchange area, in which multiple carriers were certified by the commis-
44       sion prior to January 1, 1996, the commission's determination, subject to
45       any court appeals, of which authorized carrier shall serve as the carrier
46       of last resort will determine which carrier shall be deemed the local
47       exchange carrier for that exchange.
48             (i) "Number portability" has the meaning ascribed to it in the federal
49       act.
50             (j) "1 + intraLATA dialing parity" means the ability of a local exchange
51       service customer to specify the telecommunications or local exchange
52       carrier that will carry the intraLATA long distance messages when that
53       customer dials either "1" or "0" plus a 10-digit number.
54             (k) "Operating area" means:
55             (1) In the case of a rural telephone company, operating area or service
56       area means such company's study area or areas as approved by the federal
57       communications commission;
58             (2) in the case of a local exchange carrier, other than a rural telephone
59       company, operating area or service area means such carrier's local
60       exchange service area or areas as approved by the commission.
61             (l) "Rural telephone company" has the meaning ascribed to it in the
62       federal act, excluding any local exchange carrier which together with all
63       of its affiliates has 20,000 or more access lines in the state.
64             (m) "Telecommunications carrier" means a corporation, company,
65       individual, association of persons, their trustees, lessees or receivers that
66       provides a telecommunications service, including, but not limited to, in-
67       terexchange carriers and competitive access providers, but not including
68       local exchange carriers certified before January 1, 1996.
69             (n) "Telecommunications public utility" means any public utility, as
70       defined in K.S.A. 66-104, and amendments thereto, which owns, controls,
71       operates or manages any equipment, plant or generating machinery, or
72       any part thereof, for the transmission of telephone messages, as defined
73       in K.S.A. 66-104, and amendments thereto, or the provision of telecom-
74       munications services in or throughout any part of Kansas.
75             (o) "Telecommunications service" means the provision of a service
76       for the transmission of telephone messages, or two-way video or data
77       messages.
78             (p) "Universal service" means telecommunications services and fa-
79       cilities which include: single party, two-way voice grade calling; stored
80       program controlled switching with vertical service capability; E911 ca-
81       pability; tone dialing; access to operator services; access to directory as-
82       sistance; and equal access to long distance services; and toll blocking or
83       toll control.
84             (q) "Enhanced universal service" means telecommunications serv-
85       ices, in addition to those included in universal service, which shall include:
86       Signaling system seven capability, with CLASS service capability; basic
87       and primary rate ISDN capability, or the technological equivalent; full-
88       fiber interconnectivity, or the technological equivalent, between central
89       offices; and broadband capable facilities to: All schools accredited pur-
90       suant to K.S.A. 72-1101 et seq., and amendments thereto; hospitals as
91       defined in K.S.A. 65-425, and amendments thereto; public libraries; and
92       state and local government facilities which request broadband services,
93       without regard to any transmission, media or technology, high-speed,
94       switched, broadband telecommunications capability that enables users to
95       originate and receive high-quality voice, data, graphics and video tele-
96       communications using any technology.
97             Sec.  2. K.S.A. 1998 Supp. 66-2001 is hereby amended to read as
98       follows: 66-2001. It is hereby declared to be the public policy of the state
99       to:
100             (a) Ensure that every Kansan will have access to a first class telecom-
101       munications infrastructure that provides excellent services at an afforda-
102       ble price;
103             (b) ensure that conditions exist for consumers throughout the state
104       to realize the benefits of competition through increased services and im-
105       proved telecommunications facilities and infrastructure at reduced rea-
106       sonable rates;
107             (c) promote consumer access to a full range of telecommunications
108       services, including advanced telecommunications services that are com-
109       parable in urban and rural areas throughout the state;
110             (d) advance the development of a statewide telecommunications in-
111       frastructure that is capable of supporting applications, such as public
112       safety, telemedicine, services for persons with special needs, distance
113       learning, public library services, access to internet providers and others;
114       and
115             (e) protect consumers of telecommunications services from fraudu-
116       lent business practices and practices that are inconsistent with the public
117       interest, convenience and necessity.; and
118             (f) foster conditions for continuous innovation of information net-
119       working and telecommunications.
120             Sec.  3. K.S.A. 1998 Supp. 66-2002 is hereby amended to read as
121       follows: 66-2002. The commission shall:
122             (a) Adopt a definition of "universal service" and "enhanced universal
123       service," pursuant to subsections (p) and (q) of K.S.A. 1998 Supp. 66-
124       1,187;
125             (b) (a) Authorize any requesting telecommunications carrier to pro-
126       vide local exchange or exchange access service pursuant to subsection (a)
127       of K.S.A. 1998 Supp. 66-2003, and amendments thereto;
128             (c) (b) on or before July 1, 1996, the commission shall initiate a pro-
129       ceeding to adopt guidelines to ensure that all telecommunications carriers
130       and local exchange carriers preserve and enhance universal service, pro-
131       tect the public safety and welfare, ensure the continued quality of tele-
132       communications services and safeguard the rights of consumers;
133             (d) review, approve and ensure compliance with network infrastruc-
134       ture plans submitted by local exchange carriers pursuant to K.S.A. 1998
135       Supp. 66-2005, and amendments thereto;
136             (e) (c) review, approve and ensure compliance with regulatory plans
137       submitted by local exchange carriers pursuant to K.S.A. 1998 Supp. 66-
138       2005, and amendments thereto;
139             (f) (d) on or before January 1, 1997, establish, pursuant to K.S.A. 1998
140       Supp. 66-2006, and amendments thereto, the Kansas lifeline service pro-
141       gram, hereinafter referred to as the KLSP;
142             (g) (e) initiate and complete a proceeding by January 1, 1997, to es-
143       tablish a competitively neutral mechanism or mechanisms to fund: dual
144       party relay services for Kansans who are speech or hearing impaired;
145       telecommunications equipment for persons with visual impediments; and
146       telecommunications equipment for persons with other special needs. This
147       funding mechanism or mechanisms shall be implemented by March 1,
148       1997;
149             (h) (f) on or before January 1, 1997, establish the Kansas universal
150       service fund pursuant to K.S.A. 1998 Supp. 66-2008, and amendments
151       thereto, hereinafter referred to as the KUSF, and make various deter-
152       minations relating to the implementation of such fund;
153             (i) (g) authorize all local exchange carriers to provide internet access
154       as outlined in K.S.A. 1998 Supp. 66-2011, and amendments thereto, and
155       report on the status of the implementation provisions to specified legis-
156       lative committees;
157             (j) review the federal act and adopt additional standards and guide-
158       lines as necessary for enforcing slamming restrictions;
159             (k) (h) commencing on June 1, 1997, and periodically thereafter, re-
160       view and, to the extent necessary, modify the definition of universal serv-
161       ice and enhanced universal service, and adjust the KUSF as necessary,
162       taking into account advances in telecommunications and information
163       technology and services;
164             (l) (i) on or before January 1, 1997, initiate and complete a proceeding
165       to establish minimum quality of service standards which will be equally
166       applicable to all local exchange carriers and telecommunications carriers
167       in the state; any local exchange carrier or telecommunications carrier
168       violating such standards, for each occurrence, shall forfeit and pay a pen-
169       alty of not less than $100, nor more than $5,000; violations of such stan-
170       dards shall be enforced in accordance with provisions of K.S.A. 66-138
171       and 66-177, and amendments thereto; and
172             (m) (j) on January 1, 2000, prepare and submit a report to the leg-
173       islature. The report shall include an analysis of the manner in which the
174       regulatory framework has served to: Protect consumers; safeguard uni-
175       versal service; ensure that consumers have reaped the benefits of com-
176       petition; maximize the use of market forces; and promote development
177       of the telecommunications infrastructure throughout the state. The com-
178       mission also shall recommend if and how the KUSF should be modified.
179       The commission may submit the report by posting the report's contents
180       on the commission's internet homepage and notifying the legislature of
181       the report's availability.
182             Sec.  4. K.S.A. 1998 Supp. 66-2003 is hereby amended to read as
183       follows: 66-2003. (a) On or before September 1, 1996, the commission
184       shall begin to authorize applications for certificates of public convenience
185       and necessity to provide local exchange or exchange access service.
186             (b) A local exchange carrier shall be required to offer to allow rea-
187       sonable resale of its retail telecommunications services and to sell un-
188       bundled local loop, switch and trunk facilities to telecommunications car-
189       riers, as required by the federal act and pursuant to negotiated
190       agreements or a statement of terms and conditions generally available to
191       telecommunications carriers.
192             (c) To encourage telecommunications carriers to build or install tel-
193       ecommunications facilities, including, but not limited to, local loop and
194       switching facilities in the state, and except as otherwise negotiated by a
195       local exchange carrier and a telecommunications carrier, the prices for
196       such unbundled facilities shall be determined by the commission, on a
197       nondiscriminatory basis, to permit the recovery of costs and a reasonable
198       profit. The commission shall determine wholesale rates on the basis of
199       retail rates charged subscribers for the telecommunications service re-
200       quested, excluding the portion thereof attributable to any marketing, bill-
201       ing, collection and other costs, that will be avoided by the local exchange
202       carrier. The commission shall approve resale restrictions proposed by any
203       local exchange carrier which prohibit resellers from purchasing retail tel-
204       ecommunications services offered by that local exchange carrier to one
205       category of customers and reselling those retail services to a different
206       category of customers. Upon a finding that such practice would be anti-
207       competitive, anticonsumer or detrimental to the quality of the network
208       infrastructure, the commission may prohibit the resale of retail services
209       at a rate lower than the wholesale rate. The commission shall approve any
210       other reasonable limitation on resale to the extent permitted by the fed-
211       eral act.
212             (d) As provided in the federal act, in order for telecommunications
213       carriers to provide local exchange service and exchange access service,
214       local exchange carriers shall provide the means to interconnect their re-
215       spective customers, including, but not limited to, toll access, access to
216       operator services, access to directory listings and assistance, and access to
217       E911 service.
218             (e) Customers shall be accorded number portability and local and toll
219       dialing parity in conformance with national standards to the extent eco-
220       nomically and technically feasible the federal act and federal communi-
221       cation commission rules and regulations. Terms and prices for intercon-
222       nection, unbundled facilities and resale of existing retail
223       telecommunications services shall be negotiated in good faith between
224       the parties. During the period from the 135th through the 160th day after
225       the date on which an incumbent local exchange carrier receives a request
226       for negotiation under this section, the carrier or any other party to the
227       negotiation may petition the commission to arbitrate any open issues.
228       Arbitration shall occur in conformance with the provisions of section 252
229       of the federal act.
230             (f) The commission shall require, consistent with the terms of the
231       federal act, that 1 + intraLATA dialing parity be provided by all local
232       exchange carriers and telecommunications carriers coincidentally with the
233       provision of in-region interLATA toll services in the state by local
234       exchange carriers with more than 150,000 access lines or their affiliates.
235             Sec.  5. K.S.A. 1998 Supp. 66-2005 is hereby amended to read as
236       follows: 66-2005. (a) Each local exchange carrier shall file a network in-
237       frastructure plan with the commission on or after January 1, 1997, and
238       prior to January 1, 1998. Each plan, as a part of universal service protec-
239       tion, shall include schedules, which shall be approved by the commission,
240       for deployment of universal service capabilities by July 1, 1998, and the
241       deployment of enhanced universal service capabilities by July 1, 2003, as
242       defined pursuant to subsections (p) and (q) of K.S.A. 1998 Supp. 66-1,187
243       and amendments thereto, respectively. With respect to enhanced univer-
244       sal service, such schedules shall provide for deployment of ISDN, or its
245       technological equivalent, or broadband facilities, only upon a firm cus-
246       tomer order for such service, or for deployment of other enhanced uni-
247       versal services by a local exchange carrier. After receipt of such an order
248       and upon completion of a deployment plan designed to meet the firm
249       order or otherwise provide for the deployment of enhanced universal
250       service, a local exchange carrier shall notify the commission. The com-
251       mission shall approve the plan unless the commission determines that the
252       proposed deployment plan is unnecessary, inappropriate, or not cost ef-
253       fective, or would create an unreasonable or excessive demand on the
254       KUSF. The commission shall take action within 90 days. If the commis-
255       sion fails to take action within 90 days, the deployment plan shall be
256       deemed approved. This approval process shall continue until July 1, 2000.
257       Each plan shall demonstrate the capability of the local exchange carrier
258       to comply on an ongoing basis with quality of service standards to be
259       adopted by the commission no later than January 1, 1997. The commission
260       shall establish rules and regulations by June 30, 2000, to address access
261       to enhanced telecommunications and information services that are rea-
262       sonably comparable between urban and rural areas throughout the state.
263       Such rules shall establish a method by which telecommunications services
264       providers may request supplemental funding for enhanced universal serv-
265       ices. Those local exchange carriers that have deployed enhanced universal
266       service will be eligible for reimbursement from the KUSF pending veri-
267       fication of the expenditure, the timing of the expenditure and the associ-
268       ated costs.
269             (b) In order to protect universal service, facilitate the transition to
270       competitive markets and stimulate the construction of an advanced tel-
271       ecommunications infrastructure, each local exchange carrier shall file a
272       regulatory reform plan at the same time as it files the network infrastruc-
273       ture plan required in subsection (a). As part of its regulatory reform plan,
274       a local exchange carrier may elect traditional rate of return regulation or
275       price cap regulation. Carriers that elect price cap regulation shall be ex-
276       empt from rate base, rate of return and earnings regulation for the pur-
277       pose of establishing rates. However, the commission may resume such
278       regulation upon finding, after a hearing, that a carrier that is subject to
279       price cap regulation has: violated minimum quality of service standards
280       pursuant to subsection (l) of K.S.A. 1998 Supp. 66-2002 and amendments
281       thereto; been given reasonable notice and an opportunity to correct the
282       violation; and failed to do so. Regulatory reform plans also shall include:
283             (1) A commitment to All telecommunications public utilities shall pro-
284       vide existing and newly ordered point-to-point broadband services to: Any
285       hospital as defined in K.S.A. 65-425, and amendments thereto; any school
286       accredited pursuant to K.S.A. 72-1101 et seq., and amendments thereto;
287       any public library; or other state and local government facilities at dis-
288       counted prices close to, but not below, long-run incremental cost; and
289             (2) a commitment to provide basic rate ISDN service, or the tech-
290       nological equivalent, at prices which are uniform throughout the carrier's
291       service area. Local exchange carriers shall not be required to allow retail
292       customers purchasing the foregoing discounted services to resell those
293       services to other categories of customers. Telecommunications carriers
294       may purchase basic rate ISDN services, or the technological equivalent,
295       for resale in accordance with K.S.A. 1998 Supp. 66-2003 and amendments
296       thereto. The commission may reduce prices charged for services outlined
297       in provisions (1) and (2) of this subsection, if the commitments of the
298       local exchange carrier set forth in those provisions are not being kept.
299             (c) Subject to the commission's approval, all local exchange carriers
300       shall reduce intrastate access charges to interstate levels as provided
301       herein. Rates for intrastate switched access, and the imputed access por-
302       tion of toll, shall be reduced over a three-year period with the objective
303       of equalizing interstate and intrastate rates in a revenue neutral, specific
304       and predictable manner. Subsequent reductions in intrastate access rates
305       may be ordered by the commission in order to maintain parity with in-
306       terstate access rates. The commission is authorized to rebalance local
307       residential and business service rates to offset the initial three-year phase
308       in of the intrastate access and toll charge reductions and to offset any
309       subsequent intrastate access and toll charge reductions, to the extent jus-
310       tified, based on a cost of service investigation. Any remaining portion of
311       the initial three-year phase in of the reduction in access and toll charges
312       not recovered through local residential and business service rates shall be
313       paid out from the KUSF pursuant to K.S.A. 1998 Supp. 66-2008 and
314       amendments thereto. Thereafter, any remaining portion of subsequent
315       intrastate access and toll charge reductions not recovered through local
316       residential and business service rates shall be paid out from the KUSF, to
317       the extent justified based upon cost of service studies. Rural telephone
318       companies shall reduce their intrastate switched access rates to interstate
319       levels on March 1, 1997, and every two years thereafter, as long as
320       amounts equal to such reductions are recovered from the KUSF.
321             (d) Beginning March 1, 1997, each rural telephone company shall
322       have the authority to increase annually its monthly basic local residential
323       and business service rates by an amount not to exceed $1 in each 12
324       month period until such monthly rates reach an amount equal to the
325       statewide rural telephone company average rates for such services. The
326       statewide rural telephone company average rates shall be the arithmetic
327       mean of the lowest flat rate as of March 1, 1996, for local residential
328       service and for local business service offered by each rural telephone
329       company within the state. In the case of a rural telephone company which
330       increases its local residential service rate or its local business service rate,
331       or both, to reach the statewide rural telephone company average rate for
332       such services, the amount paid to the company from the KUSF shall be
333       reduced by an amount equal to the additional revenue received by such
334       company through such rate increase. In the case of a rural telephone
335       company which elects to maintain a local residential service rate or a local
336       business service rate, or both, below the statewide rural telephone com-
337       pany average, the amount paid to the company from the KUSF shall be
338       reduced by an amount equal to the difference between the revenue the
339       company could receive if it elected to increase such rate to the average
340       rate and the revenue received by the company.
341             (e) For regulatory reform plans in which price cap regulation has
342       been elected, price cap plans shall have three baskets: Residential and
343       single-line business, including touch-tone; switched access services; and
344       miscellaneous services. The commission shall establish price caps at the
345       prices existing when the regulatory plan is filed subject to rate rebalancing
346       as provided in subsection (c) for residential services, including touch-tone
347       services, and for single-line business services, including touch-tone serv-
348       ices, within the residential and single-line business service basket. The
349       commission shall establish a formula for adjustments to the price caps.
350       The commission also shall establish price caps at the prices existing when
351       the regulatory plan is filed for the miscellaneous services basket. The
352       commission shall approve any adjustments to the price caps for the mis-
353       cellaneous service basket, as provided in subsection (f).
354             (f) On or before January 1, 1997, the commission shall issue a final
355       order in a proceeding to determine the price cap adjustment formula that
356       shall apply to the price caps for the local residential and single-line busi-
357       ness and the miscellaneous services baskets and for sub-categories, if any,
358       within those baskets. In determining this formula, the commission shall
359       balance the public policy goals of encouraging efficiency and promoting
360       investment in a quality, advanced telecommunications network in the
361       state. The commission also shall establish any informational filing require-
362       ments necessary for the review of any price cap tariff filings, including
363       price increases or decreases within the caps, to verify such caps would
364       not be exceeded by any proposed price change. The adjustment formula
365       shall apply to the price caps for the local residential and single-line busi-
366       ness basket after December 31, 1999, and to the miscellaneous services
367       basket after December 31, 1997. The price cap formula, but not actual
368       prices, shall be reviewed every five years.
369             (g) The price caps for the residential and single-line business service
370       basket shall be capped at their initial level until January 1, 2000, except
371       for any increases authorized as a part of the revenue neutral rate rebal-
372       ancing under subsection (c). The price caps for this basket and for the
373       categories in this basket, if any, shall may be adjusted annually after De-
374       cember 31, 1999, based on the formula determined by the commission
375       under subsection (f).
376             (h) The price cap for the switched access service basket shall be set
377       based upon the local exchange carrier's intrastate access tariffs as of Jan-
378       uary 1, 1997, except for any revenue neutral rate rebalancing authorized
379       in accordance with subsection (c). Thereafter, the cap for this basket shall
380       not change except in connection with any subsequent revenue neutral
381       rebalancing authorized by the commission under subsection (c) may be
382       adjusted annually based on a formula determined by the commission un-
383       der subsection (f). Additional adjustments to the price caps may be re-
384       quired due to rebalancing authorized by the commission under subsection
385       (c).
386             (i) The price caps for the miscellaneous services basket shall be ad-
387       justed annually after December 31, 1997, based on the adjustment for-
388       mula determined by the commission under subsection (f).
389             (j) A price cap is a maximum price for all services taken as a whole
390       in a given basket. Prices for individual services may be changed within
391       the service categories, if any, established by the commission within a
392       basket. An entire service category, if any, within the residential and single-
393       line business basket or miscellaneous services basket may be priced below
394       the cap for such category. Unless otherwise approved by the commission,
395       no service shall be priced below the price floor which will be long-run
396       incremental cost and imputed access charges. Access charges equal to
397       those paid by telecommunications carriers to local exchange carriers shall
398       be imputed as part of the price floor for toll services offered by local
399       exchange carriers on a toll service basis.
400             (k) A local exchange carrier may offer promotions within an exchange
401       or group of exchanges. All promotions shall be approved by the commis-
402       sion and shall apply to all customers in a nondiscriminatory manner within
403       the exchange or group of exchanges.
404             (l) Unless the commission authorizes price deregulation at an earlier
405       date, intrastate toll services within the miscellaneous services basket shall
406       continue to be regulated until the affected local exchange carrier begins
407       to offer 1 + intraLATA dialing parity throughout its service territory, at
408       which time intrastate toll will be price deregulated, except that prices
409       cannot be set below the price floor.
410             (m) On or before July 1, 1997, the commission shall establish guide-
411       lines for reducing regulation prior to price deregulation of price cap reg-
412       ulated services in the miscellaneous services basket, the switched access
413       services basket, and the residential and single-line business basket.
414             (n) Subsequent to the adoption of guidelines pursuant to subsection
415       (m), the commission shall initiate a petitioning procedure under which
416       the local exchange carrier may request rate range pricing. The commis-
417       sion shall act upon a petition within 21 days, subject to a 30-day suspen-
418       sion. The prices within a rate range shall be tariffed and shall apply to all
419       customers in a nondiscriminatory manner in an exchange or group of
420       exchanges.
421             (o) A local exchange carrier may petition the commission to designate
422       an individual service or service category, if any, within the miscellaneous
423       services basket, the switched access services basket or the residential and
424       single-line business basket for reduced regulation. The commission shall
425       act upon a petition for reduced regulation within 21 days, subject to a
426       suspension period of an additional 30 days, and upon a good cause show-
427       ing of the commission in the suspension order, or within such shorter
428       time as the commission shall approve. The commission shall issue a final
429       order within the 21-day period or within a 51-day period if a suspension
430       has been issued. Following an order granting reduced regulation of an
431       individual service or service category, the commission shall act on any
432       request for price reductions within seven days subject to a 30-day sus-
433       pension. The commission shall act on other requests for price cap ad-
434       justments, adjustments within price cap plans and on new service offer-
435       ings within 21 days subject to a 30-day suspension. Such a change will be
436       presumed lawful unless it is determined the prices are below the price
437       floor or that the price cap for a category, if any, within the entire basket
438       has been exceeded.
439             (p) The commission may price deregulate within an exchange area,
440       or at its discretion on a statewide basis, any individual service or service
441       category upon a finding by the commission that there is a telecommuni-
442       cations carrier or an alternative provider providing a comparable product
443       or service, considering both function and price, in that exchange area.
444       The commission shall act upon a petition for price deregulation within
445       21 days, subject to a suspension period of an additional 30 days, and upon
446       a good cause showing of the commission in the suspension order, or
447       within such shorter time as the commission shall approve; provided that
448       no such petition shall be filed prior to July 1997, unless the commission
449       otherwise authorizes. The commission shall issue a final order within the
450       21-day period or within a 51-day period if a suspension has been issued.
451             (q) Upon complaint or request, the commission may investigate a
452       price deregulated service. The commission shall resume price regulation
453       of a service provided in any exchange area by placing it in the appropriate
454       service basket, as approved by the commission, upon a determination by
455       the commission that there is no longer a telecommunications carrier or
456       alternative provider providing a comparable product or service, consid-
457       ering both function and price, in that exchange area.
458             (r) The commission shall require that for all local exchange carriers
459       all such price deregulated basic intraLATA toll services be geographically
460       averaged statewide and not be priced below the price floor established
461       in subsection (j).
462             (s) Cost studies to determine price floors shall be performed as re-
463       quired by the commission in response to complaints or on the commis-
464       sion's own motion. In addition, notwithstanding the exemption in sub-
465       section (b), the commission may request information necessary to execute
466       any of its obligations under the act.
467             (t) A local exchange carrier may petition for individual customer pric-
468       ing. The commission shall respond expeditiously to the petition within a
469       period of not more than 30 days subject to a 30-day suspension.
470             (u) No audit, earnings review or rate case shall be performed with
471       reference to the initial prices filed as required herein The commission is
472       authorized to conduct audits, investigations and obtain cost and revenue
473       information as it deems necessary to carry out the commission's obliga-
474       tions under this act and the federal act.
475             (v) Telecommunications carriers shall not be subject to price regu-
476       lation, except that: Access charge reductions shall be passed through to
477       consumers by reductions in basic intrastate toll prices; and basic toll prices
478       shall remain geographically averaged statewide. As required under K.S.A.
479       66-131, and amendments thereto, and except as provided for in subsec-
480       tion (c) of K.S.A. 1998 Supp. 66-2004 and amendments thereto, telecom-
481       munications carriers that were not authorized to provide switched local
482       exchange telecommunications services in this state as of July 1, 1996,
483       including cable television operators who have not previously offered tel-
484       ecommunications services, must receive a certificate of convenience
485       based upon a demonstration of technical, managerial and financial via-
486       bility and the ability to meet quality of service standards established by
487       the commission. Any telecommunications carrier or other entity seeking
488       such certificate shall file a statement, which shall be subject to the com-
489       mission's approval, specifying with particularity the areas in which it will
490       offer service, the manner in which it will provide the service in such areas
491       and whether it will serve both business customers and residential custom-
492       ers in such areas. Any structurally separate affiliate of a local exchange
493       carrier that provides telecommunications services shall be subject to the
494       same regulatory obligations and oversight as a telecommunications car-
495       rier, as long as the local exchange carrier's affiliate obtains access to any
496       services or facilities from its affiliated local exchange carrier on the same
497       terms and conditions as the local exchange carrier makes those services
498       and facilities available to other telecommunications carriers. The com-
499       mission shall oversee telecommunications carriers to prevent fraud and
500       other practices harmful to consumers and to ensure compliance with
501       quality of service standards adopted for all local exchange carriers and
502       telecommunications carriers in the state.
503             Sec.  6. K.S.A. 1998 Supp. 66-2008 is hereby amended to read as
504       follows: 66-2008. On or before January 1, 1997, the commission shall
505       establish the Kansas universal service fund, hereinafter referred to as the
506       KUSF.
507             (a) The initial amount of the KUSF shall be comprised of local
508       exchange carrier revenues lost as a result of rate rebalancing pursuant to
509       the initial three-year phase down of access rates as set forth in subsection
510       (c) of K.S.A. 1998 Supp. 66-2005 and amendments thereto and subsection
511       (a) of K.S.A. 1998 Supp. 66-2007 and amendments thereto. Such reve-
512       nues shall be recovered on a revenue neutral basis. The revenue neutral
513       calculation shall be based on the volumes and revenues for the 12 months
514       prior to September 30, 1996, adjusted for any rate changes.
515             (b) The commission shall require every telecommunications carrier,
516       telecommunications public utility and wireless telecommunications serv-
517       ice provider that provides intrastate telecommunications services to con-
518       tribute to the KUSF on an equitable and nondiscriminatory basis. Any
519       telecommunications carrier, telecommunications public utility or wireless
520       telecommunications service provider which contributes to the KUSF may
521       collect from customers an amount equal to such carrier's, utility's or pro-
522       vider's contribution, except that before January 1, 2000, no such carrier,
523       provider or utility shall collect from customers an amount in excess of
524       8.89% of its intrastate retail revenues as provided in commission docket
525       no. 190-492-U but such carrier, provider or utility may collect a lesser
526       amount from its customer.
527             Prior to January 1, 2000, With respect to wireless telecommunications
528       service providers, an equitable and nondiscriminatory rate shall be an
529       amount equal to the rate of contributions of wireline telecommunications
530       service providers, as determined by the commission, reduced by the per-
531       centage minutes of usage initiated and terminated entirely over the wire-
532       less network as determined by the commission. The commission shall
533       establish such rate for wireless telecommunications service providers no
534       later than December 31, 1998. Any contributions in excess of distributions
535       collected in any reporting year shall be applied to reduce the estimated
536       contribution that would otherwise be necessary for the following year.
537             (c) Pursuant to the federal act, distributions from the KUSF shall be
538       made in a competitively neutral manner to qualified telecommunications
539       public utilities, telecommunications carriers and wireless telecommuni-
540       cations providers, that are deemed eligible both under subsection (e)(1)
541       of section 214 of the federal act and by the commission.
542             (d) The commission shall periodically review the KUSF to determine
543       if the costs of qualified telecommunications public utilities, telecommu-
544       nications carriers and wireless telecommunications service providers to
545       provide local service justify modification of the KUSF. If the commission
546       determines that any changes are needed, the commission shall modify
547       the KUSF accordingly On the first day of the month, 60 days after the
548       effective date of this legislation, distributions from the KUSF to any price
549       cap regulated company shall be limited to the amount of support estab-
550       lished by the commission in Docket No. 190.492-U, $36.88 per high cost
551       residential and single line business loop, or any amount established by
552       subsequent modification of that order. This modification of the KUSF
553       distribution shall not alter the commission's responsibility to ensure that
554       the KUSF is based on cost consistent with the federal act. No rate rebal-
555       ancing shall occur unless justified by cost studies. The commission shall
556       have continuing responsibility to ensure that contributions to and distri-
557       butions from the KUSF are competitively neutral. Any company may file
558       an application for support in excess of $36.88. Such application shall con-
559       tain cost justification for such excess support. If an application for such
560       support is filed within 60 days of the company's reduction to $36.88 per
561       high cost residential and single line business loop, a commission order
562       granting support in excess of the $36.88 shall be retroactive to the date
563       of filing the application if justified by the cost studies.
564             (e) Any qualified telecommunications carrier, telecommunications
565       public utility, which has not elected price cap regulation or wireless tel-
566       ecommunications service provider may request supplemental funding
567       from the KUSF based upon a percentage increase in access lines over
568       the 12-month period prior to the request. The supplemental funding shall
569       be incurred for the purpose of providing services to and within the service
570       area of the qualified telecommunications carrier, telecommunications
571       public utility or wireless telecommunications service provider. Supple-
572       mental funding from the KUSF shall be used for infrastructure expend-
573       itures necessary to serve additional customers within the service area of
574       such qualifying utility, provider or carrier. All affected parties shall be
575       allowed to review and verify a request of such a qualified utility, carrier
576       or provider for supplemental funding from the KUSF, and to intervene
577       in any commission proceeding regarding such request. The commission
578       shall issue an order on the request within 120 days of filing. Additional
579       funding also may be requested for: The recovery of shortfalls due to
580       additional rebalancing of rates to continue maintenance of parity with
581       interstate access rates; shortfalls due to changes to access revenue
582       requirements resulting from changes in federal rules; additional invest-
583       ment required to provide universal service and enhanced universal serv-
584       ice, deployed subject to subsection (a) of K.S.A. 66-2005, and amend-
585       ments thereto; and for infrastructure expenditures in response to facility
586       or service requirements established by any legislative, regulatory or ju-
587       dicial authority. Such requests shall be subject to simplified filing pro-
588       cedures and the expedited review procedures, as outlined in the stipu-
589       lation attached to the order of November 19, 1990 in docket no.
590       127,140-U (Phase IV).
591             Supplemental funding from the KUSF for price cap regulated compa-
592       nies may be requested to cover upward exogenous cost adjustments. Sup-
593       plemental funding for exogenous adjustments shall be approved by the
594       commission at the commission's discretion.
595             (f) Additional supplemental funding from the KUSF, other than as
596       provided in subsection (e) of this section, may be authorized at the dis-
597       cretion of the commission. However, the commission may require ap-
598       proval of such funding to be based upon a general rate case filing. With
599       respect to any request for additional supplemental funding from the
600       KUSF, the commission shall act expeditiously, but shall not be subject to
601       the 120 day deadline set forth in subsection (e).
602             Sec.  7. K.S.A. 1998 Supp. 60-2009 is hereby amended to read as
603       follows: 60-2009. (a) Local exchange carriers that provided switched local
604       exchange services in the state prior to January 1, 1996, or their successors,
605       shall serve as the carrier of last resort in their exchanges and shall be
606       eligible to receive KUSF funding. However, with respect to the Hill City
607       exchange area in which multiple carriers were certified prior to January
608       1, 1996, the commission's determination, subject to court appeals, shall
609       determine which authorized carrier shall serve as carrier of last resort.
610       The local exchange carrier serving as the carrier of last resort shall remain
611       the carrier of last resort and shall be entitled to recover the costs of serving
612       as carrier of last resort.
613             (b) Beginning March 1, 1997, the amount of KUSF funds owed to
614       each qualifying telecommunications carrier, telecommunications public
615       utility or wireless telecommunications service provider in the state, based
616       upon the revenue requirements assigned to the funds for such qualifying
617       utility, carrier or provider, shall be allocated by the fund administrator in
618       equal monthly installments. 
619       Sec.  8. K.S.A. 1998 Supp. 66-1,187, 66-2001, 66-2002, 66-2003, 66-
620       2005, 66-2008, 66-2009, 66-2012 and 66-2013 are hereby repealed.
621        Sec.  9. This act shall take effect and be in force from and after its
622       publication in the Kansas register.