VOLUME 12, NUMBER 8             FEBRUARY 23 , 2007

To: Members

From: David Crothers, Executive Vice President

Legislators returned Wednesday from their “Cross-over” break and resumed their legislative tasks this week.  The Senate Industry, Business and Labor Committee heard Representative Delmore’s resolution asking the State of North Dakota to study the effectiveness of new Federal pretexting rules on Wednesday morning.

Members of the Association are bracing for an extremely busy second half of the sixtieth legislative assembly.  State Senators passed 318 of the 415 bills that were introduced in the Senate this year.  Those measures will now be assigned to appropriate House committees for hearings during the second half.  The House of Representatives had 521 bills introduced this year.  Fourteen of the bills have been withdrawn and an additional 153 were defeated on the floor.  The remaining 354 bills are now in the Senate.  In addition, dozens of resolutions remain in both bodies to be voted upon.

Next week will be extremely busy for members of the Association.  House Bills 1142 and 1143 will be heard first thing Monday morning in the Senate Industry, Business and Labor Committee.  The legislation was favorably received in the House of Representatives, but will require the same dedicated effort to succeed in the Senate.  Dave Dunning of Polar Communications, Dave Dircks from N.D. Telephone Company, Roger Del Fiacco of Missouri Valley Communications will once again testify on the measures.  House Bill 1142 raises the exemption from 8,000 to 18,000, while HB 1143 gives the Public Service Commission the ability to exercise needed “suspension and modification powers” envisioned by the Federal Telecommunications Act of 1996.

Also, hearings begin on House Bill 1003 in the Senate Appropriations Committee next week. All telecommunications providers are becoming increasingly concerned about the House of Representatives $2.4 million funding of the Northern Tier Network, which is also known as Internet2.  While proponents of the concept say that it is needed for university “research” purposes, private industry wants to ensure that the university system does not allow its intended use to expand into the area of competition with private providers.  If the State is allowed to prevail it will open the floodgates to governments competing with private enterprise.

As you will note in the following pages, there are also hearings regarding a resolution that studies whether nonprofit organizations should be barred from having ownership interests in for-profit organizations (HB 1226), the Public Service Commission’s appropriations bill (SB 2008) and assessing E-911 fees to prepaid wireless phones (SB 2169).

If you have any questions, please contact either myself or members of the Associations Legislative Committee. To call your legislator toll free the number is 1-888-635-3447. Bismarck-Mandan residents should call 328-3373. Members of the Legislative Committee can be found at the Association's homepage at www.ndatc.com.

HB 1003- The legislation is the appropriations bill for all of the institutions of higher
learning in the State, as well as the board of higher education.  While the independent telephone industry does not advocate positions regarding the level of spending we are concerned about a provision within the bill to fund northern tier network, which is sometimes called “Internet2”.  Northern Tier Network is reported to be a “research” network for institutions of Higher learning in the State.  The Association believes that the scope of that network’s use should be limited to “research” and not available for the universities to resell to private users, make available to their student bodies or migrate other university telecom traffic to it.

HB 1021- The bill provides authority for the Information Technology Department to increase their ability to borrow money during the biennium. Specifically, it will allow ITD to borrow money from the Bank of North Dakota in the event that e-rate funding is not received from the Schools and Libraries Division of the Universal Service Administrative Company. The Department would have to receive prior approval from the Emergency Commission before borrowing the money.

HB 1142- The legislation increases the benchmark for rate deregulation for cooperative and independent telecommunications companies from 8,000 to 18,000 subscriber lines. Currently, all telephone cooperatives and those commercial companies with fewer than 8,000 lines have rate deregulation.

HB 1143- This proposal would grant additional authority to the Public Service Commission and give the agency the ability to issue "Suspensions or Modifications" when considering rural exemptions. That expanded authority would be limited to Commission's consideration of independent telephone companies' requests for exemptions from interconnection. Although the Federal Telecommunications Act of 1996 envisions State Commissions having the ability to grant suspensions or modifications, the North Dakota legislature has never specifically authorized that jurisdiction for them.

HB 1196- Legislation that will prohibit minors from using wireless devices or cellular phones while they are operating a motor vehicle. There are many variations of this legislation throughout the United States and include a mandate to use "hands-free" devices, complete prohibitions for adults as well as minors and complete bans for minors. Similar legislation has been proposed unsuccessfully in North Dakota in the past.

HB 1226- A proposal to prevent certain nonprofit organizations from having ownership interests in for-profit organizations that competes with other for-profit companies. The legislation is specifically directed at those non-profits registered with the IRS under Section 501(c) (3), 501(c)(10), 509(a)(1), 509(a)(3), or a trust described in Section 4947 for which a deduction is allow-able under Section 170. The legislation mandates that an entity organized under one of these sections and that directly or indirectly receives Federal, State, or local tax revenues may not have an ownership interest in for-profit companies. Members of the NDATC Legislative Committee reviewed the bill thoroughly and expressed their concerns over any potential impact it may have on any of the entities that telephone cooperatives use to deliver services in North Dakota. Members of the Association were pleased during the bill's committee hearing when its sponsor, George Keiser (R-Bismarck) asked that it be converted into a study resolution.

HB 1316- Legislation introduced to add additional protection to a consumer's telephone records. The language will make it illegal for someone to attempt to procure another person's telephone records without the permission of the telco's customer. It will also make it illegal to sell or attempt to sell another's telephone records. The proposal seems to be an attempt to avoid the problems that arose during the Hewlett-Packard "pretexting" scandal in California in 2006. Of concern to the Association is language that will impose obligations on telecom companies to develop policies and constraints on the use of customer information. The Association was extremely pleased this week when the sponsor of the bill, Representative Lois Delmore (D-Grand Forks) appeared before the Committee and asked that the proposal be converted into a study resolution.

HCR 3026- A resolution that asks the Legislative Council and members of the legislature to study the appropriateness of implementing fines and other civil penalties for violating North Dakota's One-Call statutes. There has been discussion within the one-call community for many years regarding the inability of anyone to fine violators of the "call before you dig" rules without any resolution of the problem. In fact, members of the One-Call board of directors originally had a bill draft circulating that would have given themselves the ability to issue fines. A further provision made the State responsible for defending the board in courts of law. That idea was not very warmly received.

SB 2008- The appropriations bill for the Public Service Commission. The legislation does not envision great changes from their appropriations bill of two years ago, although it provides for a new employee to handle GIS specialist. The bill again asks for approximately $900,000 to pursue a rail rate case on behalf of North Dakotans.

SB 2169- Legislation advocated by the North Dakota Association of Counties that will begin to assess prepaid wireless phones and VoIP providers for a county's E-911 assessed fee. Additionally, the bill comprehensively revises the relationship between the counties and the Public Service Answering Points (PSAP's), while renaming an existing committee that oversees E-911 best practices. The Association has spent a substantial amount of time negotiating with the counties over the language that would be included within the bill. Earlier drafts included language that would have reduced the amount that telecom companies were able to retain for administration of the monies and a separate proposal to prohibit telcos from charging counties for their work changing the data base. The Association was very pleased that these items were not included in the bill's final version.

SB 2195- Legislation that expands the technologies covered under prohibited practices that telephone solicitors must abide by in North Dakota. The new language extends the prohibitions to those using satellite, VoIP, broadband "PSC" (there is currently a typo in the bill), microwave and other terrestrial phone service. The proposal does not currently add or subtract from the substantive language of the existing statute regulating telephone solicitors.

SB 2255- Another "pretexting" piece of legislation that will, if adopted, criminalize the unauthorized or fraudulent procurement of another's telephone records. It also bans the sale and receipt of those same records. The bill imposes far fewer obligations on telecommunications companies than previously introduced legislation addressing the same subject. The Association continues to have a number of concerns and have met with representatives of the Attorney General's office. The Association requested that no greater obligations be imposed on telcos than the already stringent standards imposed by the Federal Communications Commission and existing CPNI rules.

SB 2383- A bill that is a mechanism to implement an accompanying Senate Concurrent Resolution that calls for an amendment to the North Dakota Constitution reducing the size of the Public Service Commission from 3 commissioners to one. The change becomes effective under the legislation on January 1, 2011.

SB 2409- Legislation that codifies the obligations of wireless companies to disclose a multitude of items to their customers and make those facts available online. It also requires the Public Service Commission to develop rules regulating the form and substance of the contents of the contract between the wireless provider and subscriber. The bill also requires wireless companies to develop maps detailing where wireless coverage is available on a county-by-county basis.

SCR 4014- A resolution that proposes to replace the three-member Public Service Commission with a single public service commissioner and to change the term of office from six to four years. The North Dakota Constitution would have to be amended by the voters in 2008 to make the change.

CALL YOUR LEGISLATOR TOLL-FREE: 1-888-635-3447
LOCAL TELEPHONE NUMBER: 328-3373
WEB PAGE ADDRESS: www.state.nd.us/lr/