Session of 1999
         
SENATE BILL No. 85
         
By Committee on Commerce
          
1-21
          
  9             AN  ACT concerning telecommunications services; relating to enhanced
10             universal service; amending K.S.A. 1998 Supp. 66-1,187 and 66-2005
11             and repealing the existing sections.
12      
13       Be it enacted by the Legislature of the State of Kansas:
14             Section  1. K.S.A. 1998 Supp. 66-1,187 is hereby amended to read as
15       follows: 66-1,187. As used in this act:
16             (a) "Broadband" means the transmission of digital signals at rates
17       equal to or greater than 1.5 megabits per second.
18             (b) "CLASS services" means custom local area signaling services,
19       which include automatic callback, automatic recall, calling number iden-
20       tification, selective call rejection, selective call acceptance, selective call
21       forwarding, distinctive ringing and customer originated trace.
22             (c) "Commission" means the state corporation commission.
23             (d) "Dialing parity" means that a person that is not an affiliate of a
24       local exchange carrier is able to provide telecommunications services in
25       such a manner that customers have the ability to route automatically,
26       without the use of any access code, their telecommunications to the tel-
27       ecommunications carrier of the customer's designation from among two
28       or more telecommunications carriers, including such local exchange
29       carrier.
30             (e) "Federal act" means the federal telecommunications act of 1996,
31       P.L. 104-104 (amending the communications act of 1934, 47 U.S.C. 151,
32       et seq.)
33             (f) "ISDN" means integrated services digital network which is a net-
34       work and associated technology that provides simultaneous voice and data
35       communications over a single communications channel.
36             (g) "LATA" has the meaning ascribed to it in the federal act.
37             (h) "Local exchange carrier" means any telecommunications public
38       utility or its successor providing switched telecommunications service
39       within any local exchange service area, as approved by the commission
40       on or before January 1, 1996. However, with respect to the Hill City
41       exchange area, in which multiple carriers were certified by the commis-
42       sion prior to January 1, 1996, the commission's determination, subject to
43       any court appeals, of which authorized carrier shall serve as the carrier

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  1       of last resort will determine which carrier shall be deemed the local
  2       exchange carrier for that exchange.
  3             (i) "Number portability" has the meaning ascribed to it in the federal
  4       act.
  5             (j) "1 + intraLATA dialing parity" means the ability of a local exchange
  6       service customer to specify the telecommunications or local exchange
  7       carrier that will carry the intraLATA long distance messages when that
  8       customer dials either "1" or "0" plus a 10-digit number.
  9             (k) "Operating area" means:
10             (1) In the case of a rural telephone company, operating area or service
11       area means such company's study area or areas as approved by the federal
12       communications commission;
13             (2) in the case of a local exchange carrier, other than a rural telephone
14       company, operating area or service area means such carrier's local
15       exchange service area or areas as approved by the commission.
16             (l) "Rural telephone company" has the meaning ascribed to it in the
17       federal act, excluding any local exchange carrier which together with all
18       of its affiliates has 20,000 or more access lines in the state.
19             (m) "Telecommunications carrier" means a corporation, company,
20       individual, association of persons, their trustees, lessees or receivers that
21       provides a telecommunications service, including, but not limited to, in-
22       terexchange carriers and competitive access providers, but not including
23       local exchange carriers certified before January 1, 1996.
24             (n) "Telecommunications public utility" means any public utility, as
25       defined in K.S.A. 66-104, and amendments thereto, which owns, controls,
26       operates or manages any equipment, plant or generating machinery, or
27       any part thereof, for the transmission of telephone messages, as defined
28       in K.S.A. 66-104, and amendments thereto, or the provision of telecom-
29       munications services in or throughout any part of Kansas.
30             (o) "Telecommunications service" means the provision of a service
31       for the transmission of telephone messages, or two-way video or data
32       messages.
33             (p) "Universal service" means telecommunications services and fa-
34       cilities which include: single party, two-way voice grade calling; stored
35       program controlled switching with vertical service capability; E911 ca-
36       pability; tone dialing; access to operator services; access to directory as-
37       sistance; and equal access to long distance services.
38             (q) "Enhanced universal service" means telecommunications serv-
39       ices, in addition to those included in universal service, which shall include:
40       Signaling system seven capability, with CLASS service capability; basic
41       and primary rate ISDN capability, or the technological equivalent; full-
42       fiber interconnectivity, or the technological equivalent, between central
43       offices; and broadband capable facilities to: All schools accredited pur-

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  1       suant to K.S.A. 72-1101 et seq., and amendments thereto; hospitals as
  2       defined in K.S.A. 65-425, and amendments thereto; public libraries; and
  3       state and local government facilities which request broadband services.
  4             Sec.  2. K.S.A. 1998 Supp. 66-2005 is hereby amended to read as
  5       follows: 66-2005. (a) Each local exchange carrier shall file a network in-
  6       frastructure plan with the commission on or after January 1, 1997, and
  7       prior to January 1, 1998. Each plan, as a part of universal service protec-
  8       tion, shall include schedules, which shall be approved by the commission,
  9       for deployment of universal service capabilities by July 1, 1998, and the
10       deployment of enhanced universal service capabilities by July 1, 2003, as
11       defined pursuant to subsections (p) and (q) of K.S.A. 1998 Supp. 66-1,187
12       and amendments thereto, respectively. With respect to enhanced univer-
13       sal service, such schedules shall provide for deployment of ISDN, or its
14       technological equivalent, or broadband facilities, only upon a firm cus-
15       tomer order for such service, or for deployment of other enhanced uni-
16       versal services by a local exchange carrier. After receipt of such an order
17       and upon completion of a deployment plan designed to meet the firm
18       order or otherwise provide for the deployment of enhanced universal
19       service, a local exchange carrier shall notify the commission. The com-
20       mission shall approve the plan unless the commission determines that the
21       proposed deployment plan is unnecessary, inappropriate, or not cost ef-
22       fective, or would create an unreasonable or excessive demand on the
23       KUSF. The commission shall take action within 90 days. If the commis-
24       sion fails to take action within 90 days, the deployment plan shall be
25       deemed approved. This approval process shall continue until July 1, 2000.
26       Each plan shall demonstrate the capability of the local exchange carrier
27       to comply on an ongoing basis with quality of service standards to be
28       adopted by the commission no later than January 1, 1997.
29             (b) In order to protect universal service, facilitate the transition to
30       competitive markets and stimulate the construction of an advanced tel-
31       ecommunications infrastructure, each local exchange carrier shall file a
32       regulatory reform plan at the same time as it files the network infrastruc-
33       ture plan required in subsection (a). As part of its regulatory reform plan,
34       a local exchange carrier may elect traditional rate of return regulation or
35       price cap regulation. Carriers that elect price cap regulation shall be ex-
36       empt from rate base, rate of return and earnings regulation. However,
37       the commission may resume such regulation upon finding, after a hearing,
38       that a carrier that is subject to price cap regulation has: violated minimum
39       quality of service standards pursuant to subsection (l) of K.S.A. 1998
40       Supp. 66-2002 and amendments thereto; been given reasonable notice
41       and an opportunity to correct the violation; and failed to do so. Regulatory
42       reform plans also shall include:
43             (1) A commitment to provide existing and newly ordered point-to-

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  1       point broadband services to: Any hospital as defined in K.S.A. 65-425,
  2       and amendments thereto; any school accredited pursuant to K.S.A. 72-
  3       1101 et seq., and amendments thereto; any public library; or other state
  4       and local government facilities at discounted prices close to, but not be-
  5       low, long-run incremental cost; and
  6             (2) a commitment to provide basic rate ISDN service, or the tech-
  7       nological equivalent, at prices which are uniform throughout the carrier's
  8       service area. Local exchange carriers shall not be required to allow retail
  9       customers purchasing the foregoing discounted services to resell those
10       services to other categories of customers. Telecommunications carriers
11       may purchase basic rate ISDN services, or the technological equivalent,
12       for resale in accordance with K.S.A. 1998 Supp. 66-2003 and amendments
13       thereto. The commission may reduce prices charged for services outlined
14       in provisions (1) and (2) of this subsection, if the commitments of the
15       local exchange carrier set forth in those provisions are not being kept.
16             (c) Subject to the commission's approval, all local exchange carriers
17       shall reduce intrastate access charges to interstate levels as provided
18       herein. Rates for intrastate switched access, and the imputed access por-
19       tion of toll, shall be reduced over a three-year period with the objective
20       of equalizing interstate and intrastate rates in a revenue neutral, specific
21       and predictable manner. The commission is authorized to rebalance local
22       residential and business service rates to offset the intrastate access and
23       toll charge reductions. Any remaining portion of the reduction in access
24       and toll charges not recovered through local residential and business serv-
25       ice rates shall be paid out from the KUSF pursuant to K.S.A. 1998 Supp.
26       66-2008 and amendments thereto. Rural telephone companies shall re-
27       duce their intrastate switched access rates to interstate levels on March
28       1, 1997, and every two years thereafter, as long as amounts equal to such
29       reductions are recovered from the KUSF.
30             (d) Beginning March 1, 1997, each rural telephone company shall
31       have the authority to increase annually its monthly basic local residential
32       and business service rates by an amount not to exceed $1 in each 12
33       month period until such monthly rates reach an amount equal to the
34       statewide rural telephone company average rates for such services. The
35       statewide rural telephone company average rates shall be the arithmetic
36       mean of the lowest flat rate as of March 1, 1996, for local residential
37       service and for local business service offered by each rural telephone
38       company within the state. In the case of a rural telephone company which
39       increases its local residential service rate or its local business service rate,
40       or both, to reach the statewide rural telephone company average rate for
41       such services, the amount paid to the company from the KUSF shall be
42       reduced by an amount equal to the additional revenue received by such
43       company through such rate increase. In the case of a rural telephone

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  1       company which elects to maintain a local residential service rate or a local
  2       business service rate, or both, below the statewide rural telephone com-
  3       pany average, the amount paid to the company from the KUSF shall be
  4       reduced by an amount equal to the difference between the revenue the
  5       company could receive if it elected to increase such rate to the average
  6       rate and the revenue received by the company.
  7             (e) For regulatory reform plans in which price cap regulation has
  8       been elected, price cap plans shall have three baskets: Residential and
  9       single-line business, including touch-tone; switched access services; and
10       miscellaneous services. The commission shall establish price caps at the
11       prices existing when the regulatory plan is filed subject to rate rebalancing
12       as provided in subsection (c) for residential services, including touch-tone
13       services, and for single-line business services, including touch-tone serv-
14       ices, within the residential and single-line business service basket. The
15       commission shall establish a formula for adjustments to the price caps.
16       The commission also shall establish price caps at the prices existing when
17       the regulatory plan is filed for the miscellaneous services basket. The
18       commission shall approve any adjustments to the price caps for the mis-
19       cellaneous service basket, as provided in subsection (f).
20             (f) On or before January 1, 1997, the commission shall issue a final
21       order in a proceeding to determine the price cap adjustment formula that
22       shall apply to the price caps for the local residential and single-line busi-
23       ness and the miscellaneous services baskets and for sub-categories, if any,
24       within those baskets. In determining this formula, the commission shall
25       balance the public policy goals of encouraging efficiency and promoting
26       investment in a quality, advanced telecommunications network in the
27       state. The commission also shall establish any informational filing require-
28       ments necessary for the review of any price cap tariff filings, including
29       price increases or decreases within the caps, to verify such caps would
30       not be exceeded by any proposed price change. The adjustment formula
31       shall apply to the price caps for the local residential and single-line busi-
32       ness basket after December 31, 1999, and to the miscellaneous services
33       basket after December 31, 1997. The price cap formula, but not actual
34       prices, shall be reviewed every five years.
35             (g) The price caps for the residential and single-line business service
36       basket shall be capped at their initial level until January 1, 2000, except
37       for any increases authorized as a part of the revenue neutral rate rebal-
38       ancing under subsection (c). The price caps for this basket and for the
39       categories in this basket, if any, shall be adjusted annually after December
40       31, 1999, based on the formula determined by the commission under
41       subsection (f).
42             (h) The price cap for the switched access service basket shall be set
43       based upon the local exchange carrier's intrastate access tariffs as of Jan-

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  1       uary 1, 1997, except for any revenue neutral rate rebalancing authorized
  2       in accordance with subsection (c). Thereafter, the cap for this basket shall
  3       not change except in connection with any subsequent revenue neutral
  4       rebalancing authorized by the commission under subsection (c).
  5             (i) The price caps for the miscellaneous services basket shall be ad-
  6       justed annually after December 31, 1997, based on the adjustment for-
  7       mula determined by the commission under subsection (f).
  8             (j) A price cap is a maximum price for all services taken as a whole
  9       in a given basket. Prices for individual services may be changed within
10       the service categories, if any, established by the commission within a
11       basket. An entire service category, if any, within the residential and single-
12       line business basket or miscellaneous services basket may be priced below
13       the cap for such category. Unless otherwise approved by the commission,
14       no service shall be priced below the price floor which will be long-run
15       incremental cost and imputed access charges. Access charges equal to
16       those paid by telecommunications carriers to local exchange carriers shall
17       be imputed as part of the price floor for toll services offered by local
18       exchange carriers on a toll service basis.
19             (k) A local exchange carrier may offer promotions within an exchange
20       or group of exchanges. All promotions shall be approved by the commis-
21       sion and shall apply to all customers in a nondiscriminatory manner within
22       the exchange or group of exchanges.
23             (l) Unless the commission authorizes price deregulation at an earlier
24       date, intrastate toll services within the miscellaneous services basket shall
25       continue to be regulated until the affected local exchange carrier begins
26       to offer 1+ intraLATA dialing parity throughout its service territory, at
27       which time intrastate toll will be price deregulated, except that prices
28       cannot be set below the price floor.
29             (m) On or before July 1, 1997, the commission shall establish guide-
30       lines for reducing regulation prior to price deregulation of price cap reg-
31       ulated services in the miscellaneous services basket, the switched access
32       services basket, and the residential and single-line business basket.
33             (n) Subsequent to the adoption of guidelines pursuant to subsection
34       (m), the commission shall initiate a petitioning procedure under which
35       the local exchange carrier may request rate range pricing. The commis-
36       sion shall act upon a petition within 21 days, subject to a 30-day suspen-
37       sion. The prices within a rate range shall be tariffed and shall apply to all
38       customers in a nondiscriminatory manner in an exchange or group of
39       exchanges.
40             (o) A local exchange carrier may petition the commission to designate
41       an individual service or service category, if any, within the miscellaneous
42       services basket, the switched access services basket or the residential and
43       single-line business basket for reduced regulation. The commission shall

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  1       act upon a petition for reduced regulation within 21 days, subject to a
  2       suspension period of an additional 30 days, and upon a good cause show-
  3       ing of the commission in the suspension order, or within such shorter
  4       time as the commission shall approve. The commission shall issue a final
  5       order within the 21-day period or within a 51-day period if a suspension
  6       has been issued. Following an order granting reduced regulation of an
  7       individual service or service category, the commission shall act on any
  8       request for price reductions within seven days subject to a 30-day sus-
  9       pension. The commission shall act on other requests for price cap ad-
10       justments, adjustments within price cap plans and on new service offer-
11       ings within 21 days subject to a 30-day suspension. Such a change will be
12       presumed lawful unless it is determined the prices are below the price
13       floor or that the price cap for a category, if any, within the entire basket
14       has been exceeded.
15             (p) The commission may price deregulate within an exchange area,
16       or at its discretion on a statewide basis, any individual service or service
17       category upon a finding by the commission that there is a telecommuni-
18       cations carrier or an alternative provider providing a comparable product
19       or service, considering both function and price, in that exchange area.
20       The commission shall act upon a petition for price deregulation within
21       21 days, subject to a suspension period of an additional 30 days, and upon
22       a good cause showing of the commission in the suspension order, or
23       within such shorter time as the commission shall approve; provided that
24       no such petition shall be filed prior to July 1997, unless the commission
25       otherwise authorizes. The commission shall issue a final order within the
26       21-day period or within a 51-day period if a suspension has been issued.
27             (q) Upon complaint or request, the commission may investigate a
28       price deregulated service. The commission shall resume price regulation
29       of a service provided in any exchange area by placing it in the appropriate
30       service basket, as approved by the commission, upon a determination by
31       the commission that there is no longer a telecommunications carrier or
32       alternative provider providing a comparable product or service, consid-
33       ering both function and price, in that exchange area.
34             (r) The commission shall require that for all local exchange carriers
35       all such price deregulated basic intraLATA toll services be geographically
36       averaged statewide and not be priced below the price floor established
37       in subsection (j).
38             (s) Cost studies to determine price floors shall be performed as re-
39       quired by the commission in response to complaints. In addition, not-
40       withstanding the exemption in subsection (b), the commission may re-
41       quest information necessary to execute any of its obligations under the
42       act.
43             (t) A local exchange carrier may petition for individual customer pric-

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  1       ing. The commission shall respond expeditiously to the petition within a
  2       period of not more than 30 days subject to a 30-day suspension.
  3             (u) No audit, earnings review or rate case shall be performed with
  4       reference to the initial prices filed as required herein.
  5             (v) Telecommunications carriers shall not be subject to price regu-
  6       lation, except that: Access charge reductions shall be passed through to
  7       consumers by reductions in basic intrastate toll prices; and basic toll prices
  8       shall remain geographically averaged statewide. As required under K.S.A.
  9       66-131, and amendments thereto, and except as provided for in subsec-
10       tion (c) of K.S.A. 1998 Supp. 66-2004 and amendments thereto, telecom-
11       munications carriers that were not authorized to provide switched local
12       exchange telecommunications services in this state as of July 1, 1996,
13       including cable television operators who have not previously offered tel-
14       ecommunications services, must receive a certificate of convenience
15       based upon a demonstration of technical, managerial and financial via-
16       bility and the ability to meet quality of service standards established by
17       the commission. Any telecommunications carrier or other entity seeking
18       such certificate shall file a statement, which shall be subject to the com-
19       mission's approval, specifying with particularity the areas in which it will
20       offer service, the manner in which it will provide the service in such areas
21       and whether it will serve both business customers and residential custom-
22       ers in such areas. Any structurally separate affiliate of a local exchange
23       carrier that provides telecommunications services shall be subject to the
24       same regulatory obligations and oversight as a telecommunications car-
25       rier, as long as the local exchange carrier's affiliate obtains access to any
26       services or facilities from its affiliated local exchange carrier on the same
27       terms and conditions as the local exchange carrier makes those services
28       and facilities available to other telecommunications carriers. The com-
29       mission shall oversee telecommunications carriers to prevent fraud and
30       other practices harmful to consumers and to ensure compliance with
31       quality of service standards adopted for all local exchange carriers and
32       telecommunications carriers in the state. 
33       Sec.  3. K.S.A. 1998 Supp. 66-1,187 and 66-2005 are hereby repealed.
34        Sec.  4. This act shall take effect and be in force from and after its
35       publication in the statute book.