Current Status Bill Number:
4694Ratification Number: 431Act Number: 354Type of Legislation: General Bill GBIntroducing Body: HouseIntroduced Date: 19960229Primary Sponsor: HarrisonAll Sponsors: Harrison, Wofford, Stuart, Hodges, Neal, Cave, Govan, Baxley, Knotts, Meacham, Bailey, Delleney, Shissias, Klauber, Simrill, Thomas, Clyburn, Wright, Fulmer, Jennings, Martin, J. Harris, Kinon, J. Young, Boan, Limbaugh, McCraw, Young-Brickell, T. Brown, Scott, Tucker, White, D. Smith and PhillipsDrafted Document Number: bbm\10594jm.96Companion Bill Number: 1224Date Bill Passed both Bodies: 19960515Date of Last Amendment: 19960509Governor's Action: SDate of Governor's Action: 19960529Subject: Telephone utilities and service
Body Date Action Description Com Leg Involved ______ ________ _______________________________________ _______ ____________ ------ 19960606 Act No. A354 ------ 19960529 Signed by Governor ------ 19960523 Ratified R431 House 19960515 Concurred in Senate amendment, enrolled for ratification Senate 19960509 Amended, read third time, returned to House with amendment Senate 19960508 Amended Senate 19960430 Read second time, notice of general amendments Senate 19960424 Committee report: Favorable with 11 SJ amendment Senate 19960423 Introduced, read first time, 11 SJ referred to Committee House 19960418 Read third time, sent to Senate House 19960417 Amended, read second time House 19960403 Objection by Representative S. Whipper L. Whipper Anderson Breeland Cobb-Hunter Howard Cato Cooper Vaughn Easterday Young- Brickell Cain Marchbanks Limbaugh House 19960402 Debate adjourned until Wednesday, 19960403 House 19960327 Committee report: Favorable with 26 HLCI amendment House 19960229 Introduced, read first time, 26 HLCI referred to CommitteeView additional legislative information at the LPITS web site.
(A354, R431, H4694)
AN ACT TO AMEND SECTION 58-9-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE REGULATION OF TELEPHONE COMPANIES AND DEFINITIONS, SO AS TO ADD PROVISIONS DEFINING "BASIC LOCAL EXCHANGE TELEPHONE SERVICE", "CARRIER OF LAST RESORT", "INCUMBENT LOCAL EXCHANGE" OR "INCUMBENT LEC", "LOCAL EXCHANGE CARRIER" OR "LEC", "NEW ENTRANT LOCAL EXCHANGE CARRIER" OR "NEW ENTRANT LEC", "SMALL LOCAL EXCHANGE CARRIER" OR "SMALL LEC", "TELECOMMUNICATIONS SERVICES", AND "UNIVERSAL SERVICE"; TO AMEND SECTION 58-9-280, RELATING TO TELEPHONE COMPANIES AND THE REQUIREMENT THAT A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY MUST BE OBTAINED BEFORE CONSTRUCTION, OPERATION, OR EXTENSION OF A PLANT OR SYSTEM, SO AS TO ADD PROVISIONS WHICH PROVIDE, AMONG OTHER THINGS, THAT AFTER NOTICE AND AN OPPORTUNITY TO BE HEARD, THE PUBLIC SERVICE COMMISSION MAY GRANT A CERTIFICATE TO OPERATE AS A TELEPHONE UTILITY TO APPLICANTS PROPOSING TO FURNISH LOCAL TELEPHONE SERVICE IN THE SERVICE TERRITORY OF AN "INCUMBENT LEC", SUBJECT TO THE CONDITIONS AND EXEMPTIONS STATED IN THIS SECTION AND IN APPLICABLE FEDERAL LAW, THAT A LEC SHALL NEGOTIATE THE RATES, TERMS, AND CONDITIONS FOR LOCAL INTERCONNECTION, THAT NOTHING IN CHAPTER 9 OF TITLE 58 SHALL BE INTERPRETED TO LIMIT OR RESTRICT ANY RIGHT THAT ANY LOCAL EXCHANGE CARRIER MAY HAVE UNDER FEDERAL LAW, AND THAT ANY LOCAL EXCHANGE CARRIER, UPON A SHOWING OF CHANGED CIRCUMSTANCES OR THAT IT IS NECESSARY OR APPROPRIATE TO REALIGN RATES WITH THE COSTS OF VARIOUS TELECOMMUNICATIONS COMPONENTS, MAY PETITION THE COMMISSION TO RE-EXAMINE ANY RATES THAT HAVE BEEN CAPPED PURSUANT TO THE PROVISIONS OF CHAPTER 9 OF TITLE 58 AND TO SET NEW PRICE CAPS; AND TO AMEND THE 1976 CODE BY ADDING SECTION 58-9-576, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT ANY LEC MAY ELECT TO HAVE RATES, TERMS, AND CONDITIONS DETERMINED PURSUANT TO THE PLAN DESCRIBED IN SECTION 58-9-576(B), AS LONG AS THE COMMISSION HAS APPROVED A LOCAL INTERCONNECTION AGREEMENT IN WHICH THE LEC IS A PARTICIPANT WITH AN ENTITY DETERMINED BY THE COMMISSION NOT TO BE AFFILIATED WITH THE LEC OR THE COMMISSION DETERMINES THAT ANOTHER PROVIDER'S SERVICE COMPETES WITH THE LEC'S BASIC LOCAL EXCHANGE TELEPHONE SERVICE; AND SECTION 58-9-577, SO AS TO PROVIDE, AMONG OTHER THINGS, THAT NOTWITHSTANDING SECTIONS 58-9-575 AND 58-9-576, ANY SMALL LEC MAY ELECT TO HAVE THE RATES, TERMS, AND CONDITIONS OF ITS SERVICES DETERMINED PURSUANT TO ALTERNATIVE FORMS OF REGULATION, WHICH MAY DIFFER AMONG COMPANIES AND MAY INCLUDE, BUT NOT BE LIMITED TO, PRICE REGULATION RATHER THAN RATE OF RETURN OR OTHER FORMS OF EARNING REGULATION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 58-9-10 of the 1976 Code is amended by adding:
"(9) The term `basic local exchange telephone service' means for residential and single-line business customers, access to basic voice grade local service with touchtone, access to available emergency services and directory assistance, the capability to access interconnecting carriers, relay services, access to operator services, and one annual local directory listing (white pages or equivalent).
(10) The term `carrier of last resort' means a facilities-based local exchange carrier, as determined by the commission, not inconsistent with the federal Telecommunications Act of 1996, which has the obligation to provide basic local exchange telephone service, upon reasonable request, to all residential and single-line business customers within a defined service area. Initially, the incumbent LEC must be a carrier of last resort within its existing service area.
(11) The term `incumbent local exchange carrier' or `incumbent LEC' means a telecommunications company, its affiliates, successors, or its assigns, which provide local exchange service pursuant to a certificate of public convenience and necessity issued by the commission before July 1, 1995, or operating as a local exchange carrier before that date pursuant to commission authority, to provide local exchange service within a certificated geographic service area of the State. Any such entity must be treated as the incumbent local exchange carrier only within the geographic area where it maintains service pursuant to:
(a) any certificate of public convenience and necessity issued before July 1, 1995; or
(b) any certificate of public convenience and necessity issued to supersede, in whole or in part, any certificate of public convenience and necessity issued before July 1, 1995.
(12) The term `local exchange carrier' or `LEC' means either an incumbent local exchange carrier or a new entrant local exchange carrier.
(13) The term `new entrant local exchange carrier' or `new entrant LEC' means a telecommunications company holding a certificate of public convenience and necessity issued by the commission pursuant to Section 58-9-280 (B) after December 31, 1995, to provide local exchange service within a certificated geographic service area of the State.
(14) The term `small local exchange carrier' or `small LEC' means a rural telephone company as defined on February 8, 1996, in the federal Telecommunications Act of 1996.
(15) The term `telecommunications services' means the services for the transmission of voice and data communications to the public for hire, including those nonwireline services provided in competition to landline services.
(16) The term `universal service' means the providing of basic local exchange telephone service, at affordable rates, upon reasonable request, to all residential and single-line business customers within a defined service area."
Certificate for local telephone service; etc.
SECTION 2. Section 58-9-280 of the 1976 Code is amended to read:
"Section 58-9-280. (A) No telephone utility shall begin the construction or operation of any telephone utility plant or system, or of any extension thereof, except those ordered by the commission under the provisions of Section 58-9-270, without first obtaining from the commission a certificate that public convenience and necessity require or will require such construction or operation. But this section shall not be construed to require any telephone utility to secure a certificate for any extension within any municipality or district within which it had lawfully commenced operations on June 16, 1950, or for an extension within or to territory already served by it, necessary in the ordinary course of its business, or for an extension into territory contiguous to that already occupied by it as defined by the commission and not receiving similar service from another telephone utility; but, if any telephone utility in constructing or extending its lines, plant, or system unreasonably interferes or is about to interfere unreasonably with the service or system of any other telephone utility, the commission may make such order and prescribe such terms and conditions in harmony with Articles 1 through 13 of this chapter as are just and reasonable.
(B) After notice and an opportunity to be heard, the commission may grant a certificate to operate as a telephone utility, as defined in Section 58-9-10(6), to applicants proposing to furnish local telephone service in the service territory of an incumbent LEC, subject to the conditions and exemptions stated in this section and in applicable federal law. The provisions of this act shall apply to any such application for a certificate pending before the commission on the effective date of this act; provided, however, that any carrier filing an application to furnish telecommunications service as a private line or special access service provider or as a carrier's carrier prior to March 25, 1996, may elect to comply with the certification requirements in effect on that date rather than those contained within this subsection (B); provided, further, however, that such carrier shall comply with subsection (B)(4) hereof. In determining whether to grant a certificate under this subsection, the commission may require, not inconsistent with the federal Telecommunications Act of 1996, that the:
(1) applicant show that it possesses technical, financial, and managerial resources sufficient to provide the services requested;
(2) service to be provided will meet the service standards that the commission may adopt;
(3) provision of the service will not adversely impact the availability of affordable local exchange service;
(4) applicant, to the extent it may be required to do so by the commission, will participate in the support of universally available telephone service at affordable rates; and
(5) provision of the service does not otherwise adversely impact the public interest.
In its application for certification, the applicant seeking to provide the service shall set forth with particularity the proposed geographic territory to be served, and a price list and informational tariff regarding the types of local exchange and exchange access services to be provided. Any person granted authority under this section shall maintain a current price list with the commission. A commission order, denying or approving an application for certification of a new local telephone service provider, shall be entered no more than sixty days from the filing of the application, except that the commission, upon notice, may extend that period not to exceed an additional sixty days.
(C) The commission shall determine the requirements applicable to all local telephone service providers necessary to implement this subsection. These requirements shall be consistent with applicable federal law and shall:
(1) provide for the reasonable interconnection of facilities between all certificated local telephone service providers upon a bona fide request for interconnection, subject to the negotiation process set forth in subsection (D) of this section;
(2) provide for the transfer of telephone numbers between local telephone service providers in a manner that is technically feasible;
(3) provide for the reasonable unbundling of network elements upon a request from a LEC where technically feasible and priced in a manner that recovers the providing LEC's cost;
(4) determine, for small LEC's, when and under what circumstances resale of local exchange telephone services is in the public interest and should be allowed. Telecommunications services that are available at retail to a specific category of subscribers only shall not be offered for resale to a different category of subscribers; and
(5) provide for the continued development and encouragement of universally available basic local exchange telephone service at reasonably affordable rates.
The final commission order implementing these requirements shall be issued within six months of the effective date of this section, except that the commission, upon notice, may extend that period up to an additional ninety days.
(D) A LEC shall negotiate the rates, terms, and conditions for local interconnection. In the event that the parties are unable to agree on appropriate rates, terms, and conditions for interconnection within one hundred thirty-five to one hundred sixty days of receipt of a bona fide request, either party may petition the commission for determination of the appropriate rates, terms, and conditions for interconnection. This period may be shortened or extended by mutual agreement of the parties. The commission shall determine the appropriate rates, terms, and conditions for interconnection within nine months from the filing of the petition in accordance with the terms of applicable federal law.
(E) In continuing South Carolina's commitment to universally available basic local exchange telephone service at affordable rates and to assist with the alignment of prices and/or cost recovery with costs, and consistent with applicable federal policies, the commission shall establish a universal service fund (USF) for distribution to a carrier(s) of last resort. The commission shall issue its final order adopting such guidelines as may be necessary for the funding and management of the USF within twelve months of the effective date of this section except that the commission, upon notice, may extend that period up to an additional ninety days. These guidelines must not be inconsistent with applicable federal law and shall address, without limitation, the following:
(1) The USF shall be administered by the commission or a third party designated by the commission under guidelines to be adopted by the commission.
(2) The commission shall require all telecommunications companies providing telecommunications services within South Carolina to contribute to the USF as determined by the commission.
(3) The commission also shall require any company providing telecommunications service to contribute to the USF if, after notice and opportunity for hearing, the commission determines that the company is providing private local exchange services or radio-based local exchange services in this State that compete with a local telecommunications service provided in this State.
(4) The size of the USF shall be determined by the commission and shall be the sum of the difference, for each carrier of last resort, between its costs of providing basic local exchange services and the maximum amount it may charge for the services. The commission may use estimates to establish the size of the USF on an annual basis, provided it establishes a mechanism for adjusting any inaccuracies in the estimates.
(5) Monies in the USF shall be distributed to a carrier of last resort upon application and demonstration of the amount of the difference between its cost of providing basic local exchange services and the maximum amount it may charge for such services.
(6) The commission shall require any carrier of last resort seeking reimbursement from the fund to file the information necessary to determine the costs of providing basic local exchange telephone services. In the event that a carrier of last resort does not currently conduct detailed cost studies relating to such services, the commission shall allow for an appropriate surrogate for such study.
(7) The commission shall have the authority to make adjustments to the contribution or distribution levels based on yearly reconciliations and to order further contributions or distributions as needed.
(8) After notice and an opportunity for hearing to all affected carriers, the commission by rule may expand the set of services within the definition of universal service based on a finding that the uniform statewide demand for such additional service is such that including the service within the definition of universal service will further the public interest; provided, however, that before implementing any such finding, the commission shall provide for recovery of unrecovered costs through the USF of such additional service by the affected carrier of last resort.
(F) Nothing in this chapter shall be interpreted to limit or restrict any right that any local exchange carrier may have under federal law.
(G) Competition exists for a particular service if, for an identifiable class or group of customers in an exchange, group of exchanges, or other clearly defined geographical area, the service, its functional equivalent, or a substitute service is available from two or more providers. The commission shall not regulate a service for which competition exists if the market for that service is sufficiently competitive to protect the public interest. If the commission finds that competition exists for a particular service, but that service is not sufficiently competitive to protect the public interest, the commission shall provide appropriate regulatory and pricing flexibility to all providers of the service.
(H) Any local exchange carrier, upon a showing of changed circumstances or that it is necessary or appropriate to realign rates with the costs of various telecommunications components, may petition the commission to reexamine any rates that have been capped pursuant to the provisions of this chapter and to set new price caps.
(I) The incumbent LEC's subject to this section shall be authorized to meet the offerings of any local exchange carrier serving the same area by packaging services together, using volume discounts and term discounts, and by offering individual contracts for services, except as restricted by federal law. Individual contracts for services or contracts with other providers of telecommunications services shall not be filed with the commission, except as required by federal law, provided that telecommunications carriers shall provide access to such contracts to the commission as required.
(J) Subject to the requirements of applicable federal law, a small LEC may define the term `cost', as used within this section and where applicable to a small LEC, to include all embedded costs as well as a reasonable contribution to universal local service, where applicable, until such time as these costs are recovered from other sources.
(K) Subject to federal law, if the commission finds that the resale of any service or unbundled capability, element, feature, or function in a small LEC area is in the public interest, then the small LEC shall not be required to offer its services at a price below its cost.
(L) Upon enactment of this section and the establishment of the Interim LEC Fund, as specified in subsection (M) of this section, the commission shall, subject to the requirements of federal law, require any electing incumbent LEC, other than an incumbent LEC operating under an alternative regulation plan approved by the commission before the effective date of this section, to immediately set its toll switched access rates at levels comparable to the toll switched access rate levels of the largest LEC operating within the State. To offset the adverse effect on the revenues of the incumbent LEC, the commission shall allow adjustment of other rates not to exceed statewide average rates, weighted by the number of access lines, and shall allow distributions from the Interim LEC Fund, as may be necessary to recover those revenues lost through the concurrent reduction of the intrastate switched access rates.
(M) The commission shall, not later than December 31, 1996, establish an Interim LEC Fund. The Interim LEC Fund shall initially be funded by those entities receiving an access or interconnection rate reduction from LEC's pursuant to subsection (L) in proportion to the amount of the rate reduction. To the extent that affected LEC's are entitled to payments from the USF, the Interim LEC Fund must transition into the USF as outlined in Section 58-9-280(E) when funding for the USF is finalized and adequate to support the obligations of the Interim LEC Fund.
(N) The commission shall ensure that any requirements implemented under Section 58-9-280(C) are appropriate for the service territory of the small LEC and may implement such alternative requirements necessary to protect the public interest in such service area. Specifically, the commission shall ensure for small LEC's that telecommunications services that are available at retail to a specific category of subscribers only shall not be offered for resale to a different category of subscribers. Additionally, consistent with the federal Telecommunications Act of 1996, LEC's shall not be required to offer for resale services which they do not make available on a retail basis.
(O) If any provision or section of this chapter is held invalid or held not to apply to a particular local exchange carrier, such holding shall not affect the remaining provisions of this chapter or their application to any local exchange carrier to which they might apply."
Election by LEC; alternative forms of regulation; etc.
SECTION 3. The 1976 Code is amended by adding:
"Section 58-9-576. (A) Any LEC may elect to have rates, terms, and conditions determined pursuant to the plan described in subsection (B), provided the commission has approved a local interconnection agreement in which the LEC is a participant with an entity determined by the commission not to be affiliated with the LEC or the commission determines that another provider's service competes with the LEC's basic local exchange telephone service.
(B) Notwithstanding any other provision of this chapter, effective July 1, 1996, any LEC may elect to have its rates, terms, and conditions for its services determined pursuant to the plan described in this subsection, in lieu of other forms of regulation including, but not limited to, rate of return or rate base monitoring or regulation, upon the filing of notice with the commission as follows:
(1) If the provisions of (A) have been met, the plan under this subsection becomes effective on the date specified by the electing LEC but in no event sooner than thirty days after such notice is filed with the commission.
(2) On the date a LEC notifies the commission of its intent to elect the plan described in this section, existing rates, terms, and conditions for the services provided by the electing LEC contained in the then-existing tariffs and contracts are considered just and reasonable.
(3) The rates for flat-rated local exchange services for residential and single-line business customers on the date of election shall be the maximum rates that such LEC may charge for these local exchange services for a period of two years from the date the election is filed with the commission. During such period, the local exchange company may charge less than the authorized maximum rates for these services. For those small LEC's whose prices are below the statewide average local service rate, weighted by number of access lines, the commission shall waive the requirements of this paragraph.
(4) For those companies to which item (3) applies, after the expiration of the period set forth above, the rates for flat-rate local exchange residential and single-line business service provided by a LEC may be adjusted on an annual basis pursuant to an inflation-based index.
(5) The LEC's shall set rates for all other services on a basis that does not unreasonably discriminate between similarly situated customers; provided, however, that all such rates are subject to a complaint process for abuse of market position in accordance with guidelines to be adopted by the commission.
(6) A LEC subject to this section shall file tariffs for its local exchange services that set out the terms and conditions of the services and the rates for such services. The tariff shall be presumed valid and become effective seven days after filing for price decreases and fourteen days after filing for price increases and new services.
(7) Any incumbent LEC operating under an alternative regulatory plan approved by the commission before the effective date of this section must adhere to such plan until such plan expires or is terminated by the commission, whichever is sooner.
Section 58-9-577. Notwithstanding Sections 58-9-575 and 58-9-576, any small LEC may elect to have the rates, terms, and conditions of its services determined pursuant to alternative forms of regulation, which may differ among companies and may include, but not be limited to, price regulation, rather than rate of return or other forms of earning regulation. Upon application, the commission shall approve such alternative regulation or price regulation, which may differ among local exchange companies, upon finding that the plan as proposed:
(1) protects the affordability of basic local exchange telephone service, as such service is defined by the commission;
(2) reasonably assures the continuation of basic local exchange telephone service that meets reasonable service standards that the commission may adopt;
(3) will not unreasonably prejudice any class of telephone customers, including telecommunications companies;
(4) is not inconsistent with the federal Telecommunications Act of 1996; and
(5) is otherwise consistent with the public interest.
Upon approval of a price regulation plan, price regulation shall be the sole form of regulation imposed upon the electing local exchange carrier, and the commission shall regulate the electing local exchange carrier's prices rather than its earnings. The small LEC shall file a tariff for its local exchange services that sets out the terms and conditions of the services and the rates for these services. The tariff shall be presumed valid and shall become effective seven days after filing for price decreases and fourteen days after filing for price increases and new services, subject to a complaint process in accordance with guidelines to be adopted by the commission. The commission shall issue an order denying or approving the proposed plan for alternative regulation or price regulation, with or without modification, not more than ninety days from the filing of the application. However, the commission may extend the time period for an additional sixty days, in the discretion of the commission. If the commission approves the application with modifications, the local exchange carrier, subject to such approval, may accept the modifications and implement the proposed plan as modified or may at its option:
(1) withdraw its application and continue to be regulated under the form of regulation that existed immediately before the filing of the application, or
(2) file another proposed plan for price regulation."
SECTION 4. This act takes effect upon approval by the Governor.
Approved the 29th day of May, 1996.