SENATE BILL 168
46th legislature - STATE OF NEW MEXICO - second session, 2004
INTRODUCED BY
Phil A. Griego
AN ACT
RELATING TO TELECOMMUNICATIONS; EQUALIZING INTRASTATE AND INTERSTATE SWITCHED ACCESS RATES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 63-9A-8.2 NMSA 1978 (being Laws 2000, Chapter 100, Section 4 and Laws 2000, Chapter 102, Section 4, as amended) is amended to read:
"63-9A-8.2. IDENTIFYING SUBSIDIES--RULES--PRICE CAPS.--
A. No later than December 31, 2000, the commission shall review existing rates for public telecommunications services offered by incumbent local exchange carriers with more than fifty thousand access lines and identify all subsidies that are included in the rates. The commission shall issue rules requiring that the identified subsidies appear on customer bills and establish a schedule not later than April 1, 2001 whereby implicit subsidies be eliminated through implementation of the state [rural universal service] telecommunications access reform fund or through revenue-neutral rate rebalancing or any other method consistent with the intent of the New Mexico Telecommunications Act.
B. No later than January 1, 2001, the commission shall adopt rules that:
(1) establish consumer protection and quality- of-service standards;
(2) ensure adequate investment in the telecommunications infrastructure in both urban and rural areas of the state;
(3) promote availability and deployment of high-speed data services in both urban and rural areas of the state;
(4) ensure the accessibility of interconnection by competitive local exchange carriers in both urban and rural areas of the state; and
(5) establish an expedited regulatory process for considering matters related to telecommunications services that are pending before the commission.
C. No later than April 1, 2001, but in no case prior to the adoption of the rules required in Subsection B of this section, the commission shall eliminate rate of return regulation of incumbent telecommunications carriers with more than fifty thousand access lines and implement an alternative form of regulation that includes reasonable price caps for basic residence and business local exchange services.
D. Rules adopted pursuant to this section shall not be applied to incumbent rural telecommunications carriers as that term is defined in Subsection I of Section 63-9H-3 NMSA 1978."
Section 2. Section 63-9H-3 NMSA 1978 (being Laws 1999, Chapter 295, Section 3) is amended to read:
"63-9H-3. DEFINITIONS.--As used in the Rural Telecommunications Act of New Mexico:
A. "affordable rates" means rates for basic service that promote universal service within a local exchange service area, giving consideration to the economic conditions and costs to provide service in the area in which service is provided;
B. "basic service" means service that is provided to a rural end-user customer that is consistent with the federal act;
C. "cable service" means the transmission to subscribers of video programming or other programming service and subscriber interaction, if any, that is required for the selection or use of the video programming or other programming service;
D. "commission" means the public regulation commission;
E. "eligible telecommunications carrier" means an eligible telecommunications carrier as defined in the federal act;
F. "federal act" means the federal Telecommunications Act of 1996;
G. "fund" means the state [rural universal service] telecommunications access reform fund;
H. "incumbent local exchange carrier" means a person that:
(1) was designated as an eligible telecommunications carrier by the state corporation commission in Docket #97-93-TC by order dated October 23, 1997, or that provided local exchange service in this state on February 8, 1996; or
(2) became a successor or assignee of an incumbent local exchange carrier;
I. "incumbent rural telecommunications carrier" means a local exchange carrier that serves fewer than fifty thousand access lines within the state and was designated as an eligible telecommunications carrier by the state corporation commission on or before November 1, 1997, including any successor in interest thereto;
J. "local exchange area" means a geographic area encompassing one or more local communities, as described in maps, tariffs or rate schedules filed with the commission, where local exchange rates apply;
K. "local exchange service" means the transmission of two-way interactive switched voice communications furnished by a telecommunications carrier within a local exchange area;
L. "long distance service" means telecommunications service between local exchange areas that originate and terminate within the state;
M. "private telecommunications service" means a system, including its construction, maintenance or operation for the provision of telecommunications service, or any portion of that service, by a person for the sole and exclusive use of that person and not for resale, directly or indirectly. For purposes of this definition, the person that may use the service includes any affiliates of the person if at least eighty percent of the assets or voting stock of the affiliates is owned by the person. If any other person uses the telecommunications service, whether for hire or not, the private telecommunications service is a public telecommunications service;
N. "public telecommunications service" means the transmission of signs, signals, writings, images, sounds, messages, data or other information of any nature by wire, radio, lightwaves or other electromagnetic means originating and terminating in this state regardless of actual call routing. "Public telecommunications service" does not include the provision of terminal equipment used to originate or terminate the service; private telecommunications service; broadcast transmissions by radio, television and satellite broadcast stations regulated by the federal communications commission; radio common carrier services, including mobile telephone service and radio paging; or cable service; and
O. "telecommunications carrier" means a person that provides public telecommunications service."
Section 3. Section 63-9H-6 NMSA 1978 (being Laws 1999, Chapter 295, Section 6) is amended to read:
"63-9H-6. STATE [RURAL UNIVERSAL SERVICE] TELECOMMUNICATIONS ACCESS REFORM FUND--ESTABLISHMENT [BOARD].--
A. No later than January 1, [2000] 2005, the commission shall implement a "state [rural universal service] telecommunications access reform fund" to [maintain and support at affordable rates those public telecommunications services as are determined by the commission] enable residents of New Mexico to have equitable access to competitive long distance markets and pricing through intrastate access reform. Toward this goal, this section mandates that intrastate switched access charges to providers of intrastate long distance service shall be reduced to levels that are comparable to interstate switched access rates. All of the balances in the existing New Mexico universal service fund as of July 1, [1999] 2004 shall be transferred into the state [rural universal service] telecommunications access reform fund.
B. The fund shall be financed by a surcharge on all intrastate retail public telecommunications services revenue, excluding revenue from services provided pursuant to a low-income telephone assistance plan billed to end-user customers by a telecommunications carrier, and excluding from revenue all amounts from surcharges, gross receipts taxes, excise taxes, franchise fees and similar charges. For the purpose of funding the fund, the commission [has the authority to] shall apply the surcharge on all intrastate retail public telecommunications services provided by telecommunications carriers and to comparable retail alternative services provided by telecommunications carriers and non-telecommunications carriers to the extent not prohibited by federal law, including commercial mobile radio services, operator services and aggregator services, offered by providers other than telecommunications carriers, at a competitively and technologically neutral rate or rates to be determined by the commission. In prescribing competitively and technologically neutral surcharge rates, the commission may make distinctions between services subject to a surcharge, but it shall require telecommunications carriers and non-telecommunications carriers to apply uniform surcharge rates for the same or comparable services. Money deposited in the fund is not public money, and the administration of the fund is not subject to the provisions of law regulating public funds. The commission shall not apply surcharges to a private telecommunications network.
C. The fund shall [be competitively and technologically neutral, equitable and nondiscriminatory in its collection and distribution of funds, portable between eligible telecommunications carriers, targeted to high-cost rural areas, and additionally shall] provide a specific, predictable and sufficient support mechanism as determined by the commission that reduces [implicit subsidies, including] intrastate switched access charges [and ensures universal service in the state] to interstate switched access charge levels in a revenue-neutral manner.
D. The commission shall:
(1) establish eligibility criteria for participation in the fund [consistent with federal law] that ensure the availability of service at affordable rates without unreasonably increasing rates for basic service [while still granting eligible telecommunications carriers a reasonable profit on supported services in geographic areas requiring support from the fund, but the eligibility criteria shall not require any investigations of the costs or rates of a telecommunications carrier receiving support from the fund other than that provided for in Subsection E of this section. The eligibility criteria shall not restrict or limit an eligible telecommunications carrier from receiving federal universal service support];
(2) establish a benchmark rate for basic services that shall be utilized in determining affordability of basic services and level of support from the fund;
[(2)] (3) provide for the collection of the surcharge on a competitively neutral basis and for the administration and disbursement of money from the fund; and
[(3) determine those geographic areas and local exchange services requiring support from the fund; and
(4) provide for the separate administration and disbursement of federal universal service funds consistent with federal law]
(4) allow telecommunications companies that reduce switched access charges to increase rates for basic services in order to implement the revenue-neutral switched access price reductions.
E. The commission shall adopt rules for the implementation and administration of the fund in accordance with the provisions of this section [The cost basis for establishing the fund and determining the rate of distribution of the fund for areas served by an incumbent rural telecommunications carrier shall be the same cost of and shall be consistent with the federal support mechanisms for providing the supported service by geographic area, determined by the federal communications commission. The cost basis established by the commission for areas served by incumbent rural telecommunications carriers shall include the same return authorized by the federal communications commission for use in rates filed by the national exchange carriers association, or its successor, at the federal communications commission for member carriers. The revenue basis for rural telecommunications carriers with fewer than fifty thousand access lines shall include only revenues from public telecommunications services provided by the eligible telecommunications carrier] and variances requested by carriers for good cause shown.
F. The commission shall, upon implementation of the fund, select a neutral third party administrator to collect, administer and disburse money from the fund under the supervision and control of the commission pursuant to established criteria and rules promulgated by the commission. The administrator may be reasonably compensated for the specified services from the surcharge proceeds to be received by the fund pursuant to Subsection B of this section. [The administrator shall consult with an advisory board established by the commission composed of representatives from all participating providers and the attorney general or one other customer representative, provided that the total number of individual representatives on the advisory board shall not exceed thirteen.] For purposes of this subsection, the commission shall not be a neutral third party administrator.
G. [The fund established by the commission shall ensure the availability of local exchange service as determined by the commission at affordable rates in rural high cost areas of the state.] Beginning January 1, 2005, the commission shall commence the phase-in of reductions in intrastate switched access charges. By February 1, 2007, the commission shall ensure that intrastate switched access charges are equal to interstate switched access charges established by the federal communications commission as of January 1, 2004. Nothing in this section shall preclude the commission from considering further adjustments to intrastate switched access charges based on changes to interstate switched access charges after February 1, 2007.
H. To ensure that providers of intrastate [long distance] retail telecommunications service contribute to the fund and to further ensure that the surcharge to be paid by the end-user customer will be held to a minimum, [no later than December 31, 1999] the commission shall adopt rules, or take other appropriate action, to require all such providers to participate in a plan to ensure accurate reporting of intrastate retail [long distance] telecommunications revenues.
I. [Upon commission action to replace implicit subsidies with explicit subsidies] The commission shall [reduce in a revenue-neutral basis rates for intrastate telecommunications services, other than basic local exchange service, excluding rates affected by the low-income telephone assistance program, in an amount equal to payments received by a rural telecommunications carrier from the fund. Any] authorize payments from the fund to eligible carriers, in combination with revenue-neutral rate rebalancing up to the benchmark rate, in an amount equal to the reduction in revenue that occurs as a result of reduced intrastate switched access charges. Reductions in charges for access services resulting from compliance with this section shall be passed [on] through for the benefit of consumers in New Mexico.
J. By December 1, 2007, telecommunications carriers and the commission shall submit a joint report to the legislature. The report shall include the effects of access reductions and make recommendations for any changes to the structure, size or purposes of the fund."
Section 4. Section 63-9H-7 NMSA 1978 (being Laws 1999, Chapter 295, Section 7) is amended to read:
"63-9H-7. REGULATION OF RETAIL RATES OF INCUMBENT RURAL TELECOMMUNICATIONS CARRIER.--
A. Rates for retail rural public telecommunications services provided by an incumbent rural telecommunications carrier shall be subject to regulation by the commission only in the manner and to the extent authorized by this section.
B. An incumbent rural telecommunications carrier shall file tariffs for all retail public telecommunications services, other than residential local exchange service, which shall be effective after ten days' notice to the commission and publication in a local newspaper in the incumbent service area. An incumbent rural telecommunications carrier shall remain subject to complaint by an interested party subject to Section [10 of the Rural Telecommunications Act of New Mexico] 63-9H-10 NMSA 1978.
C. Rates for residential local exchange service may be increased by an incumbent rural telecommunications carrier only after sixty days' notice to all affected subscribers. The notice of increase shall include:
(1) the reasons for the rate increase;
(2) a description of the affected service;
(3) an explanation of the right of the subscriber to petition the commission for a public hearing on the rate increase;
(4) a list of local exchange areas that are affected by the proposed rate increase; and
(5) the dates, times and places for the public informational meetings required by this section.
D. An incumbent rural telecommunications carrier may increase its rates for residential local exchange service in the manner otherwise provided in this section as necessary to recover a reasonable allocation of costs incurred due to requirements imposed by any federal or state law or rule. An incumbent rural telecommunications carrier that proposes to increase its rates for residential local exchange service shall hold at least one public informational meeting in each public regulation commissioner's district as established by the Public Regulation Commission Apportionment Act in which there is a local exchange area affected by the rate change.
E. Residential local exchange service rates increased by a rural telecommunications carrier pursuant to Subsection D of this section shall be reviewed by the commission only upon written protest signed by two and one-half percent of all affected subscribers or upon the commission staff's own motion for good cause. The protest shall specifically set forth the particular rate or charge as to which review is requested, the reasons for the requested review and the relief that the persons protesting desire. If a proper protest is presented to the commission within sixty days from the date notice of the rate change was sent to affected subscribers of an incumbent rural telecommunications carrier, the commission may accept and file the complaint and, upon proper notice, may suspend the rates at issue during the pendency of the proceedings and reinstate the rates previously in effect and shall hold and complete a hearing thereon within ninety days after filing to determine if the rates as proposed are fair, just and reasonable. The commission may, within sixty days after close of the hearing, enter an order adjusting the rates at issue, except that the commission shall not set any rate below the intrastate cost of providing the service [that will include cost and rate of return in accordance with Subsection E of Section 6 of the Rural Telecommunications Act of New Mexico]. The cost basis established by the commission for areas served by incumbent rural telecommunications carriers shall include the same return authorized by the federal communications commission for use in rates filed by the national exchange carriers association, or its successor, at the federal communications commission for member carriers. The revenue basis for rural telecommunications carriers with fewer than fifty thousand access lines shall include only revenues from public telecommunications services provided by the eligible telecommunications carrier. In the order, the commission may order a refund of amounts collected in excess of the rates and charges as approved at the hearing, which may be paid as a credit against billings for future services. If the complaint is denied, the commission shall enter an order denying the complaint within sixty days after the close of the hearing, and the rates shall be deemed approved. For purposes of this section, cost shall also include a reasonable amount of joint and common costs incurred by the telecommunications carrier in its operations and may include other accounting adjustments authorized by the commission.
F. A rural telecommunications carrier that serves less than five percent of the state's aggregate statewide subscriber lines may at any time elect to file an application with the commission requesting the commission to prescribe fair, just and reasonable rates for the carrier based on the carrier's revenue, expenses and investment in accordance with traditional rate-making principles.
G. Rates for local exchange, vertical and long distance service to retail end-user customers may be reduced to a level equal to, but not below, the intrastate cost, which shall include cost and rate of return pursuant to Subsection E of this section [6 of the Rural Telecommunications Act of New Mexico]. If an incumbent rural telecommunications carrier loses its exemption pursuant to Section 251 of the federal act, the rate for a service, excluding basic service, must cover the cost of the service, including the imputed rate of wholesale service elements as may be required by the commission. The cost of long distance service must also include any interexchange access rates charged to another telecommunications carrier for the service.
H. An incumbent rural telecommunications carrier operating pursuant to this section shall have the ability to offer or discontinue offering special incentives, discounts, packaged offerings, temporary rate waivers or other promotions, or to offer individual contracts."