VOLUME 10, NUMBER 4               JANUARY 28, 2003

To: Members

From: David Crothers, Executive Vice President

Telecommunications bills continue to be introduced in both houses of the legislature this year at a unprecedented pace, as you will see from the attached review of bills the Association is monitoring. Last Monday was the deadline for members of the House of Representatives to introduce legislation and next Monday, January 27th, the final day for bills to be introduced in the Senate. As of this morning, 821 bills had been introduced and an additional 43 resolutions. We anticipate another 150-200 measures will be introduced before the deadline.

We were delighted with several developments during the last week, including the defeat of a mandate that telephone companies would be required to comply with a complicated matrix of notification requirements whenever there were price increases (SB 2116). Also, the House of Representatives rejected the Public Service Commission's proposal to charge each telephone, gas utility, electric company and gas pipeline a $100 annual fee (HB 1133). The Association testified against the proposal in the House Industry, Business and Labor Committee and Mick Grosz, manager of West River Telecommunications Cooperative, worked hard on the floor of the House to explain the ramifications of the legislation to his former peers. Representative Craig Headland, a director at Dakota Central Telecommunications Cooperative, spoke eloquently against the measure on the floor prior to the vote.

The House did give its approval to legislation that will require resellers of telecommuni-cations services in the State to acquire licenses annually (HB 1132), but the language creating the $100 fee the Commission anticipated receiving from each license was in the defeated HB 1133. As a result, the legislation requiring resellers to be licensed annually is still alive, but the fee that they would have to pay has been eliminated. The licensing bill will now go to the Senate for a hearing and vote and members of the Association anticipate there will be efforts to amend HB 1132 to implement the fee.

The Association has been communicating with members of the Association's Legislative Committee and managers of the independent telephone companies this week on proposals that will impose new obligations on Internet Service Providers (ISP's) and a "Do Not Call" list, as well as a host of other issues. You can find these on the attached report, as well as visiting the Association's website at www.ndatc.com for further information and position papers that have been adopted by members.

Next week will continue to be busy as six committee hearings in the House and Senate have been scheduled to debate a variety of proposals, including Qwest's efforts to eliminate the Essential Telecommunications Price Factor (ETPF), legislation to prohibit telcos from selling customer information, fees paid to State Radio for wireless 911 and a host of other issues.

If you have questions regarding any of the telecommunications legislation included in this report or thoughts on our approach to an issue, please contact me.

HB 1022 The legislation provides for the Information Technology Department's two-year appropriation, as well as allowing the State to sell $20 million in bonds to fund ConnectND. The Information Technology Department is requesting $108.1 million for the biennium and anticipates recovering $97.6 million in revenues.

Jan. 7 Introduced in House.
Jan. 7 Appropriations Committee Hearing.
Jan. 16 Appropriations Committee Hearing.

HB 1043 The bill seeks to resolve a number of issues for administering the Information Technology Department (ITD) regarding the date State agencies must submit their "technology plans" to ITD, eliminates obsolete microfilm units and eliminates the State Information Technology Advisory Committee. The Committee's role is to advise ITD regarding statewide information technology planning, including providing electronic government services for citizens and businesses, developing technology infrastructure to support economic development and workforce training, and developing other statewide information. This bill also expands the authority of ITD to purchase, finance or lease "implementation services" to carry out their mission.

Jan. 7 Introduced in House. Referred to Government and Veterans Affairs Committee.

HB 1052 The proposal reflects the agreement between Qwest and the Public Service Commission to monitor the telephone company's compliance obligations in providing interstate long distance services. Before Qwest was allowed to provide those long distance services they demonstrated to the Public Service Commission their compliance with a 14 point checklist determined by the Federal Communications Commission. This legislation established a Performance Assurance Plan, which will be used by the Public Service Commission to monitor the operation and effect of Qwest's entry into the interstate market.

Jan. 7 Introduced in House.
Jan. 9 Industry, Business and Labor Committee Recommended "Do Pass" 14-0.
Jan. 10 House Passed 89-1.

HB 1053 The proposal sought to continue the life of the Regulatory Reform Review Commission (RRRC) through December 31, 2004. The RRRC's authority to exist ended on the last day of December 2002 and needed to be reinstated by the legislative body. The 5 person Commission is designed to review ongoing telecommunications developments, both legislative and regulatory, and report back to the full legislature with recommendations for preserving and advancing telecommunications services for the State's citizens.

Jan. 7 Introduced in House.
Jan. 13 Industry Business and Labor Committee Recommended "Do Not Pass" 14-0
Jan. 14 House Defeated 89-1

HB 1105 Legislation introduced at the request of the Tax Commissioner to amend and clarify telecommunications taxation laws. Among the changes is language to include mobile wireless carriers in the tax statute, refund
procedures for telephone companies and customers, and gives the Tax Commissioner discretion to waive penalties.

Jan. 7 Introduced in House.
Jan. 14 Finance and Tax Committee Recommended "Do Not Pass" 13-0
Jan. 15 House Passed 91-0

HB 1132 A bill that would require resellers of telecommunications services to acquire an annual license each year before they would be allowed to do business in the State of North Dakota. Public Service Commissioners Wefald and Clark testified that the measure was necessary to monitor which resellers were still offering service in the State.
Association Position Paper

Jan. 7 Introduced in House.
Jan. 14 Industry, Business and Labor Committee Hearing.
Jan. 23 House Passed 66-24

HB 1133 Legislation introduced at the request of the Public Service Commission that would require each telecommunications company, electric utility, gas utility and pipeline utility to pay the PSC a $100 fee annually. The PSC estimates 650 utilities would be subject to the measure. The Association testified against the proposal and told committee members that there should be some demonstration of need for the money. The bill, as written, would require the monies to be deposited in the States general fund. Association Position Paper

Jan. 7 Introduced in House.
Jan. 14 Industry, Business and Labor Committee Recommended "Do Pass" 11-2.
Jan. 23 House Defeated 54-37.

HB 1134 In North Dakota, it is law that customers have the right to purchase "essential telecommunications services" separate from other telecom services that a telephone company offers. Under this proposal, only
telephone companies that "provides essential telecommunications services" must be required to offer essential services only. It was introduced because there are a number of telecommunications carriers
operating in the state who do not offer essential services to the public and should not be required to unbundle those services.

Jan. 7 Introduced in House.
Jan. 14 Industry, Business and Labor Committee Recommended "Do Pass" 14-0.
Jan. 23 House Passed 87-0.

HB 1135 The Public Service Commission in this bill is requesting the authority to resolve numbering issues such as the recent implementation of 211 (Mental Health), 511 (State Transportation) and future N11 assignments, as well as jurisdiction over future area codes. Separately, the Commission also seeks to have language dropped that limits their authority to impose obligations on telephone companies that are greater or different than Federal obligations. The Association has joined Qwest in opposition to the Commission's attempt to expand the scope of their rulemaking. Association Position Paper

Jan. 7 Introduced in House.
Jan. 14 Industry, Business and Labor Committee Hearing.

HB 1284 Legislation that would prohibit telecommunications companies from selling or disclosing information, including any profiling information, about their customers. Telecommunications companies that violate the proposed law would be subject to both criminal and civil prosecution. The Association has expressed its concern that this would prohibit actions as simple as selling customer names, addresses and telephone numbers to competing telephone directory companies. The Association urged Industry, Business and Labor committee members to oppose the measure during a hearing on HB 1284 and testified that Federal law in many instances dictated our disclosure of customer information.

Jan. 13 Introduced in House.
Jan. 28 Industry, Business and Labor Committee Hearing.

HB 1314 A bill to expand the North Dakota One Call ( Call Before You Dig) law to exempt excavations down to a depth of 24 inches. Under the current law, a excavator can only dig to 18 inches before calling North Dakota One Call. Additionally, sponsors of the bill have also added language that would allow excavations down to a depth of 18 inches in the right- of-way of a road or highway. The Association believes that sponsors of the bill are responding to the requests of soil testers operating in the State who take many, many samples from a single field. Committee Chairman Glen Froseth (R-Kenmare) appointed a subcommittee of legislators, soil samplers and utilities at the conclusion of the hearing and asked them to try and resolve their differences. The Association will participate in those meetings.

Jan. 13 Introduced in House.
Jan. 24 Political Subdivisions Committee Hearing.

HB 1363 Legislation that will reduce the amount of time that the Public Service Commission may suspend a utility's price increase or decrease from seven months to five months. Under existing law, whenever a company files a contract, price change, contract or new rule with the Commission the agency has the ability to "suspend" that action for up to seven months after the change was to take effect. This bill will reduce the time frame to five months.

Jan. 16 Introduced in House.
Jan. 30 Government and Veterans Affairs Committee Hearing.

HB 1364 A bill that would extend the jurisdiction of the Public Service Commission to include cable television lines and other wires that are attached to poles to the definition of "communication lines". Currently, the statute gives the Commission authority to regulate raising and lowering electric and communications lines on the poles.

Jan. 16 Introduced in House.
Jan. 30 Government and Veterans Affairs Committee Hearing.

HB 1388 A proposal that will limit the amount of customer information that a Internet Service Provider (ISP) may transmit when a customer uses its facilities and establishes rules that will regulate the sending of "commercial electronic mail messages", which are sometimes known as "spam". It is a two-prong bill that affects Internet privacy and unsolicited email. The first section of the bill prohibits a Internet Service Provider from disclosing a customer's "personally identifiable information", which is information that identifies a consumer's physical or electronic address or telephone number; a consumer who has requested goods or services from a ISP (customer profile); any online sites visited by a consumer; or any information from the consumer's data storage device. The second section of the legislation prohibits false or misleading information in the subject line of commercial emails and requires those that transmit commercial emails to provide an toll-free number, valid email address or other electronic method for allowing customers to notify the sender that they do not want to receive commercial messages. Those that transmit commercial email after being notified by the customer that transmissions should stop are subject to fines of $2,000 per occurrence or $35,000 per day. Unlike "Do Not Call" lists, which will provide a central database for customers to register and all telemarketers will have to review before making calls, this legislation will require customers to notify each sender of commercial messages individually.

Jan. 20 Introduced in House. Referred to Judiciary Committee.

SB 2008 The two-year appropriation for the North Dakota Public Service Commission (PSC). The Commission is asking for $10.1 million and anticipates income of $6.1 million during the biennium.

Jan. 7 Introduced in House.
Jan. 20 Appropriations Committee Hearing.

SB 2042 A bill introduced at the request of the Information Technology Department (ITD) that will allow school districts or institutions of higher learning to allow members of the public to use State facilities for "videoconferencing or associated network services" when a private provider is unavailable and allowing the access "does not inhibit future private provider service." The Association testified against the proposal and said it was bad public policy for government to compete against private enterprise. The infrastructure to support videoconferencing is widely available throughout rural North Dakota, but requires expensive special equipment. The Association has argued that "Price" should not be a determining factor or whether the State should compete with private providers of the same service. It is unfair competition. The government does not pay taxes and the State's residents subsidize the offering. Association Position Paper

Jan. 7 Introduced in Senate.
Jan. 17 Education Committee Recommended "Do Not Pass" 4-2.
Jan. 20 Rereferred to Education Committee.

SB 2064 A State Radio proposal that requires fees collected under the 911 wireless provisions of State law to be charged and paid to the political subdivisions that enter into contracts with State Radio. Current statutes allow counties with fewer than 20,000 residents to receive their 911 service from State Radio. Today, there are 23 Public Safety Answering Points (PSAP's) in the State. An additional 22 counties have their calls answered by State Radio. A representative from the Association of Counties testified that Phase I, which will give the wireless telephone
number and location of the tower, is to be operational by mid-summer 2003.

Jan. 7 Introduced in Senate.
Jan. 15 Industry, Business and Labor Committee Recommended "Do Pass" 7-0.
Jan. 21 Referred to Appropriations Committee.
Jan. 28 Appropriations Committee Hearing.

SB 2116 Legislation introduced at the request of the Public Service Commission (PSC) that would require local telecommunications companies, as well as providers of intrastate telecommunications services to provide a notice to customers any time there is a price increase. Local telcos would be required to give notice at least fifteen days beforehand if there is an increase of more than 1 percent for essential local exchange service, as well as a 1 day notice if there is in increase of more than 5 percent for any nonessential local exchange service. Providers of intrastate service would be required to give any presubscribed customer a 1 day notice if there was a change in the terms or conditions of that service that results in a price increase. The Association testified against the measure and told members of the committee that local telephone companies and North Dakota Long Distance has an outstanding record of notifying customers of changes in their telephone bills.
Position Papers

Jan. 7 Introduced in Senate.
Jan. 21 Industry, Business and Labor Committee Recommended "Do Not Pass" 6-1.
Jan. 22 Senate Defeated 35-12.

SB 2117 This proposal is captioned as modifying the jurisdiction of the Public Service Commission to assess costs to public utilities for their rate hearings, but the language limits the PSC authority to rate proceedings affecting gas or electric public utilities. It is not applicable to the telephone industry at this time, but the Association will monitor to ensure that the concept is not expanded.

Jan. 7 Introduced in Senate.
Jan. 21 Industry, Business and Labor Committee Recommended "Do Not Pass" 5-2.
Jan. 22 Senate Defeated 47-0.

SB 2192 Legislation that extends the immunity from liability that telephone providers receive when providing access to emergency systems to include automated notification systems. Those systems are identified as, "a telecommunications system that provides rapid notice of emergency situations to the public through a public safety answering point." The immunity is also extended to public agencies, public safety agencies and wireless providers, as well as employees and agents of those entities. The immunity does not exist in instances of willful misconduct or gross negligence.

Jan. 13 Introduced in Senate.
Jan. 29 Judiciary Committee Hearing.

SB 2255 Legislation introduced at the request of Qwest that eliminates the Essential Telecommunications Price Factor (ETPF) formula used by Qwest and other price cap companies to determine the amount of increases permissible by law. It applies to both local and intrastate toll access rates. The ETPF factor is determined annually by the Public Service Commission. While the PSC does not regulate the rates of cooperatives and independents with fewer than 8,000 lines, the agency does regulate those companies' access rates. The conventional wisdom is that the ETPF, which was adopted by the State of North Dakota in 1989, had become less and less relevant in an era of reduced access rates and deregulation of the industry. It also proved to not be a very significant factor and resulted in minuscule increases or decreases each year. Testimony in the Senate Industry, Business and Labor Committee instead focused on two other provisions of the legislation, including the appropriate demarcation line between customer and telecommunications company for inside wire and a compacted time that customers may recover damages or refunds when a telco has violated the law or Commission order. Currently, the State's statute of limitations for such an action is six years, although Qwest proposes a 1 year window from the time the complaint was filed.

Jan. 20 Introduced in Senate. Referred to Judiciary Committee.
Jan. 27 Senate Industry, Business and Labor Committee hearing.