VOLUME 11, NUMBER 2               JANUARY 14, 2005

To: Members

From: David Crothers, Executive Vice President

The long anticipated Qwest legislation was introduced this week in the State Senate. The bill is quite long in length and features both substantive and housekeeping changes to the State's telecommunications statutes.

As presumed, the bill, SB 2216, seeks to deregulate all of their customers' lines except for a primary residential phone. Second residential lines, business lines and combination residential/business will all be deregulated. Additionally, while the legislation keeps the definition of "nonessential services", it removes all of the "examples" of nonessential.

Senate Bill 2216 also embarks on an ambitious "cleansing" of the telecommunications statutes by proposing to 9 separate sections of Chapter 49-21. Many of them are duplicates of Federal law while 3 others deal with party line connections.

The Association's Legislative Committee has not made a determination on whether they will seek to amend the Qwest legislation, but the bill has already been scheduled for a hearing on Wednesday, January 19, before the Senate Industry, Business and Labor Committee.

Please review the attached bill summaries of telecommunications legislation in the Legislative Report. There have been a number of new bills introduced this week that will be of interest to the independent telephone industry in the State.

Finally, please note the committee hearings that are scheduled next week, as well.

The Association was gratified by the attendance of both directors, employees and legislators during our biennial Legislative Dinner at the Ramkota Hotel in Bismarck on Tuesday evening. Our final totals indicate that 323 dinners were served, with even more attending the Association's reception prior to dinner.

Please contact me or any of the members of the Association's Legislative Committee if you have any questions or comments regarding any of the legislation that was introduced this week or hearings scheduled for next week. Members of the Legislative Committee can be found on the Association's homepage at www.ndatc.com.

HB 1008- The two-year appropriation for the North Dakota Public Service Commission (PSC). The Commission is asking for $11.1 million and anticipates income of almost $6 million. The requested appropriation is approximately the same as for the last biennium, but for $900,000 additionally for a complaint against rail rates.

HB 1105- Legislation giving the Public Service Commission the authority to bar competitive local exchange carriers (CLEC's) from "slamming" or "cramming" services on their customers' bills. Although CLEC's are subject to PSC jurisdiction in a number of areas, including cross- subsidization, discrimination, dialing parity, quality of service, refunds and others, they have not been previously been part of the slamming and cramming statute. The Association is supportive of the legislation.

HB 1106- A bill to modify the Public Service Commission's "Performance Assurance Fund" to ensure that it continually has a balance of $100,000, rather than funding it once to that level. The Performance Assurance Fund is a special fund within the North Dakota treasury that is part of Qwest's section 271 agreement with the Public Service Commission. It is related to the Commission's approval of Qwest's petition to offer long distance telecommunications service within the State.

HB 1156- Legislation that will require telecommunications companies that are not incumbent telcos to register under a new system developed by the State's Public Service Commission. Those telephone companies that are not incumbents will have to register with the State prior to offering service to North Dakota residents.

HB 1207- A bill that would reduce the amount that counties can assess from $1.00 to 75 cents to fund emergency communications systems, which are more commonly referred to as Public Service Answering Points (PSAPs). The assessment is collected by telecommunications companies and remitted to individual counties. It applies equally to wireline and wireless telecommunications companies. There is a provision within the draft legislation that exempts 911 surcharges that were adopted prior to August 1st, 2005 if the assessment does not exceed the 75 cent threshold. The intent of the legislation is to roll-back the amount that most counties in the State are assessing.

HB 1219- Language has been drafted to modify the reverse E 911 statute to allow Public Safety Coordinators to include unpublished telephone numbers in the calls that the PSAP makes. Under the current statute only the identity and location of the individual with an unpublished telephone number may be used. If this legislation is approved the E 911 coordinator or Public Safety Answering Point may contact the unpublished number directly and notify them of an emergency.

HB 1257- Legislation that will extend the E 911 tax adopted by a county to prepaid wireless telephones. There are a number of options for the location in which the tax will be paid, including the location of the purchase or the customer's billing address or the location associated with the mobile telephone number.

HB 1275- A bill that obligates certain government entities to report to the Information Technology Advisory Committee whenever their information technology projects that exceed $100,000 are over budget by 20 percent or those projects are delayed by more than six months. The law would apply to the executive branch, judicial branch and institutions under control of the State Board of Higher Education. The report must specify the corrective actions being taken.

HB 1323- Legislation that would give customers of wireless telephone companies credit when they complain to the wireless carrier about the quality of service of a particular call within sixty days of the billing date. If the Public Service Commission finds that provisions of this language have been violated by a wireless company and it receives universal service funds, then the Commission shall remove eligible telecommunications carrier status of the company.

SB 2021- The appropriation bill for the Information Technology Department. ITD is requesting a spending authorization of $109,640,934 and anticipates income of $98,830,575. A majority of their income is received from other State agencies entities that ITD provides service to throughout the State. There is also language in the bill extending the amount of time the agency can finance the acquisition of equipment or software from three years to five years.

SB 2037- This legislation is the Information Technology Department's revisions to their policies and operating procedures. It is a substantial piece of legislation that makes both large and small changes to the way the agency operates. Included within the 12 page bill is language that gives the State board of higher education the right to manage and regulate information technology planning and services for institutions under its control. It is a significant policy change from ITD's central planning for all of those who receive its services. The bill language also significantly modifies the content that ITD must provide in their annual report. Additionally, agency also seeks to exempt "any policy, standard and guideline" they adopt from North Dakota's Administrative Agencies Practice Act.

SB 2038- A bill to establish a statewide information technology improvements revolving fund and to appropriate $1 million. The fund is to be used by a State agency or agencies working together to improve efficiency. The agency will submit a proposal to ITD's chief information officer for review and recommendation. For worthy projects the CIO will recommend to the Legislative Council's Budget Section that they fund the initiative. Only the Budget Section will have the authority to fund a project. Funds dispersed under the program will have to be repaid into the revolving fund by the agency receiving the money.

SB 2090- Legislation introduced at the request of the Public Service Commission to expand the agency's jurisdiction to implement Lifeline and Link-Up programs. The Commission is seeking the increased authority following the Federal Communications Commission's revision of existing Lifeline and Link-Up rules. The independent telecommunications industry in North Dakota has been working with the PSC to implement the new Federal rules. There has been discussion that telcos within the State may wish to advocate for some parameters around the Commission's jurisdiction in this legislation.

SB 2091- A bill relaxing the requirement that telecommunications companies file price
schedules with the Public Service Commission. Under existing rules a telco must file schedules showing all prices with the Commission. The legislation, however, would modify the standard by requiring only schedules for "essential" services be filed. The Association does not believe that this section applies to cooperatives or telecommunications companies with fewer than 8,000 access lines.

SB 2134- Legislation to expand the Public Service Commission's jurisdiction to be able to order refunds when a utility has charged an "unreasonable" rate. There is no definition of the word "unreasonable" in the statute. The Association is very concerned about this bill and will be working with members of the legislative committee to ensure that independent telecommunications companies are not harmed by a capricious application of the rule.

SB 2209- A bill that amends the North Dakota One Call statute by including the State's Department of Transportation as an "operator" for their underground facilities in rights-of-way. An "operator" under North Dakota law is the owner of underground facilities. Currently, the Department of Transportation is specifically exempted from being considered an "operator" under the law.

SB 2216- Legislation that is introduced at the request of Qwest. The bill is a 12 page document that is both substantive and housekeeping in its nature. Specifically, Qwest proposes to eliminate both second lines and business lines from Public Service Commission jurisdiction. Primary lines would remain an essential service. The legislation also removes all of the "examples" of nonessential services, but retains the "nonessential" section of the code. The legislation also proposes to "clean-up" some of the telecommunications sections of NDCC 49-21 by repealing 9 separate sections. The Association agrees with a number of these proposals, but is concerned about the proposed repeal of NDCC 49-21-24, which includes some of the rural protections for interconnection. The Association strongly recommends that independent telcos in the State review this legislation for any negative impact it may have on their ability to provide service in their territory.

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