VOLUME 10, NUMBER 14               APRIL 4 , 2003

To: Members

From: David Crothers, Executive Vice President

As you will note during a review of the telecommunications legislation in this week's Legislative Report, many of the bills that we have been following are being decided...either favorably or unfavorably. Those that were passed by both houses are now being signed by the Governor.

A notable exception are the appropriations bills that remain, including those of the Public Service Commission and Information Technology Department. Members of the legislature will wait until the final few days of the session to fund the Information Technology Department's appropriation because of the significant amount of dollars and their desire to modify the agency's mission.

Among the items being discussed are proposals to restrict ITD's efforts to serve private sector entities such as hospitals, nursing homes and privately owned healthcare clinics. The Association has argued that it is bad public policy and that independent telephone companies would be unable to continue to invest and modernize their telecommunications networks if the State of North Dakota were to offer taxpayer-subsidized competition for customers.

The Association has shared that message with the Governor, the majority leaders and minority leaders in both houses of the legislature and healthcare professionals.

Please contact me if you have any questions regarding any of the bills or thoughts on how to make our Legislative Report more informative.

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. The Association was extremely gratified by language adopted by House Appropriators that prohibits ITD from selling services to the public. A new provision, section 10, was added: ITD "may provide wide area network services to a State agency, city, county, school district, or other political subdivision in this State. The information technology department may not provide wide area network services to any private, charitable or nonprofit entity." The Association strongly supports the language prohibiting the State from offering services to the public. The provisions came under harsh attack from ITD, Higher Education, North Dakota Public Health and The Hospital Association during the bill's first hearing in Senate Appropriations. Each of the groups opposed the new language and ITD said it was "bad public policy."

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.

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.

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.

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.

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. The Association testified against the measure before the Senate Industry, Business and Labor committee and said that the information the PSC sought was available from a number of other State agencies. Association Position Paper

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 State's general fund. Representative Craig Headland (R-Montpelier), a director at Dakota Central Telecommunications and other supporters of the independent telephone industry effectively created a groundswell of opposition on the floor. Association Position Paper

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.

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 joined Qwest in opposition to the Commission's attempt to expand the scope of their rulemaking. The House adopted language before final passage that will allow the Commission to implement orders "different" from Federal rules but deleted their ability to adopt orders "greater" than the Federal Communications Commission promulgates. The Association supports the amended bill.Association Position Paper

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.

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 participated in those meetings.

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.

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.

HB 1388 A proposal by sponsors to implement an "anti-spam" law in North Dakota that seeks to limit the number of misleading e-mails, require commercial e-mails to notify the recipient in the subject line and provide remedies for violations of the law. The Senate Judiciary Committee heavily amended the legislation passed by the House of Representatives and removed many of the obligations imposed on Internet Service Providers. The amendments were suggested by Attorney General Wayne Stenehjem and supported by the bill's main sponsor, Representative John Warner. Mr. Stenehjem said the new language found in House Bill 1388 closely resembled a law adopted in the State of Washington, where the language has been defended in court. Both of the original and revised versions of House Bill 1388 require commercial electronic mail messages to include "ADV" in the subject line. "ADV-ADULT" must be in the subject line if the material is of a sexual nature. Both versions of the bill also require the sender to establish a toll-free telephone number, a return electronic mail address or other means to enable the recipient of the commercial e-mail to notify the sender to stop sending commercial mail. The legislation also provides for penalties ranging from $500 to $1,000 for violations of the law.

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.

SB 2042 A bill that was introduced at the request of the Information Technology Department (ITD) that would have allowed 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 strongly opposed this measure and said it was bad public policy for government to compete against private industry. The bill was heavily amended during committee hearings to not only remove the language that would have allowed the sale of State communications services to the public, but also removed "nonprofits" from the statute's existing language, as well. Members of the Association were very pleased with the outcome of the bill, which passed unanimously in the Senate. It is important to remember, however, that the section of the North Dakota Century Code that this particular language is located only describes which services are exempt from Public Service Commission regulation. We continue to be gravely concerned about any proposals by the State to offer telecom- munications services to the public. Association Position Paper

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.

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. Associaton Position Papers

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.

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.

SB 2231 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. Before passage by the Senate, committee members amended the bill to double Qwest's proposed statute of limitations from one year to two years from when the complaint was filed.

SB 2255 The legislation establishes what is commonly called a "Do Not Call" list. The bill will set rules for when telemarketers may call and gives individuals the ability to register their telephone number as one that should not be called by telemarketers. There are exemptions in the legislation for telephone solicitations that have been permitted by the customer or when there is a established personal or business relationship between the telephone solicitor and the customer. There are also exceptions for charitable organizations in certain instances, political communications and sales calls where the actual sale will be made later in a face-to-face meeting between the caller and customer. Following a request to be included in the "Do Not Call" database the ban on contacting that number is effective for five years unless the customer asks that it be revoked. Consumers who are called after placing their number in the registry may sue for actual damages or up to $2,000 per occurrence, whichever is greater.

SB 2400 Legislation to protect independent telephone companies in North Dakota when property in which they have an easement is foreclosed upon by a county for nonpayment of property taxes. Under current law, the telephone company's ownership of a easement would revert to the county when a property owner failed to pay their taxes and the land was lost in foreclosure. Senator Randy Christmann and Representative Craig Headland are co-sponsoring the measure, along with Representative Dwight Wrangham. Language in the bill makes sure that any property interest acquired by the county in foreclosure is subject to an easement or right-of-way if properly registered.

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