[As Amended by Senate Committee of the Whole]

          Session of 1998
Substitute for SENATE BILL No. 666
By Committee on Commerce
          10             AN ACT concerning the Kansas universal service fund; implementing
11             measures to limit fund contributions and establishing a working com-
12             mittee to examine issues related to the fund; amending K.S.A. 1997
13             Supp. 66-2008 and 66-2011 and repealing the existing sections.
15       Be it enacted by the Legislature of the State of Kansas:
16           New Section 1. (a) The commission shall facilitate a KUSF working
17       committee on or before June 1, 1998. The commission shall establish the
18       committee and its membership in conjunction with its general investi-
19       gation docket into local competition.
20           (b) The membership of the KUSF working committee shall include:
21           (1) One representative for each of the following: Local exchange car-
22       riers subject to price cap regulation, interexchange carriers, cable com-
23       panies, wireless telecommunications service providers, rural telephone
24       companies, local exchange carriers certificated after January 1, 1996, com-
25       petitive access providers, internet service providers, the citizens' utility
26       ratepayer board;
27           (2) a faculty member from a Kansas university with expertise in tel-
28       ecommunications technology, a representative of elementary and second-
29       ary schools, a representative of a public library, a large business, other
30       than a telecommunications public utility and a small business, other than
31       a telecommunications public utility; and
32           (3) four legislators as follows: One member of the house standing
33       committee on utilities appointed by the speaker of the house of repre-
34       sentatives, one member of such committee appointed by the minority
35       leader of the house of representatives, one member of the senate standing
36       committee on commerce appointed by the president of the senate and
37       one member of such committee appointed by the minority leader of the
38       senate. Legislators serving as members of the committee shall receive
39       amounts provided by subsection (e) of K.S.A. 75-3223 and amendments
40       thereto for each day of actual attendance at any meeting of the task force
41       or any subcommittee meeting approved by the task force. Such amounts
42       paid to members shall be paid from appropriations to the legislative co-
43       ordinating council pursuant to vouchers prepared by the director of leg-

Sub. SB 666--Am. by SCW


  1       islative administrative services and approved by the chairperson or vice-
  2       chairperson of the legislative coordinating council.
  3           (c) The KUSF working committee shall discuss, identify and develop
  4       recommendations regarding technology issues, KUSF funding regulatory
  5       procedures, modifications to basic universal and enhanced universal serv-
  6       ice and other issues identified by the committee, including but not limited
  7       to:
  8           (1) The definition of enhanced universal service;
  9           (2) how and when enhanced universal services should be deployed;
10           (3) what mechanism is most appropriate for the recovery of capital
11       costs; and
12           (4) how to address internet access in light of changing technology.
13           (d) On or before December 1, 1998, the KUSF working committee
14       shall submit to the commission a report of the committee's activities and
15       recommendations. The report shall include a summary of those topics
16       upon which the working committee was able to reach agreement and
17       upon which the committee disagreed. On or before the first day of the
18       regular legislative session in the year 1999, the commission shall submit
19       a report and recommendations to the legislature based on the activities
20       of the working committee.
21           Sec. 2. K.S.A. 1997 Supp. 66-2008 is hereby amended to read as
22       follows: 66-2008. On or before January 1, 1997, the commission shall
23       establish the Kansas universal service fund, hereinafter referred to as the
24       KUSF.
25           (a) The initial amount of the KUSF shall be comprised of local
26       exchange carrier revenues lost as a result of rate rebalancing pursuant to
27       subsection (c) of K.S.A. 1997 Supp. 66-2005 and subsection (a) of K.S.A.
28       1997 Supp. 66-2007. Such revenues shall be recovered on a revenue neu-
29       tral basis. The revenue neutral calculation shall be based on the volumes
30       and revenues for the 12 months prior to September 30, 1996, adjusted
31       for any rate changes.
32           (b) The commission shall require every telecommunications carrier,
33       telecommunications public utility and wireless telecommunications serv-
34       ice provider that provides intrastate telecommunications services to con-
35       tribute to the KUSF on an equitable and nondiscriminatory basis. Any
36       telecommunications carrier, telecommunications public utility or wireless
37       telecommunications service provider which contributes to the KUSF may
38       collect from customers an amount equal to such carrier's, utility's or pro-
39       vider's contribution, except that no such carrier, provider or utility shall
40       collect from customers an amount at a rate greater than the rates charged
41       on March 1, 1997 excess of 9.89% of its intrastate retail revenue
42       as provided in Docket No. 190-492-U], however, such carrier, provider
43       or utility may collect [lesser] amounts from customers at rates less than

Sub. SB 666--Am. by SCW


  1       the rate in effect on March 1, 1997. With respect to wireless telecommu-
  2       nications service providers, an equitable and nondiscriminatory contri-
  3       bution shall be the basis of the assessment for contributions by wireline
  4       telecommunications service providers, as determined by the commission,
  5       reduced by the individual wireless telecommunications service provider's
  6       percentage of minutes of usage initiated and terminated entirely over the
  7       wireless network, divided by two.
  8           (c) Pursuant to the federal act, distributions from the KUSF shall be
  9       made in a competitively neutral manner to qualified telecommunications
10       public utilities, telecommunications carriers and wireless telecommuni-
11       cations providers, that are deemed eligible both under subsection (e)(1)
12       of section 214 of the federal act and by the commission.
13           (d) The commission shall periodically review the KUSF to determine
14       if the costs of qualified telecommunications public utilities, telecommu-
15       nications carriers and wireless telecommunications service providers to
16       provide local service justify modification of the KUSF. If the commission
17       determines that any changes are needed, the commission shall modify
18       the KUSF accordingly.
19           (e) Any qualified telecommunications carrier, telecommunications
20       public utility or wireless telecommunications service provider may re-
21       quest supplemental funding from the KUSF based upon a percentage
22       increase in access lines over the 12 month period prior to its request. The
23       supplemental funding shall be incurred for the purpose of providing serv-
24       ices to and within the service area of the qualified telecommunications
25       carrier, telecommunications public utility or wireless telecommunications
26       service provider. Supplemental funding from the KUSF shall be used for
27       infrastructure expenditures necessary to serve additional customers
28       within the service area of such qualifying utility, provider or carrier. All
29       affected parties shall be allowed to review and verify a request of such a
30       qualified utility, carrier or provider for supplemental funding from the
31       KUSF, and to intervene in any commission proceeding regarding such
32       request. The commission shall issue an order on the request within 120
33       days of filing. Additional funding also may be requested for: the recovery
34       of shortfalls due to additional rebalancing of rates to continue mainte-
35       nance of parity with interstate access rates; shortfalls due to changes to
36       access revenue requirements resulting from changes in federal rules; ad-
37       ditional investment required to provide universal service and enhanced
38       universal service; and for infrastructure expenditures in response to fa-
39       cility or service requirements established by any legislative, regulatory or
40       judicial authority. Such requests shall be subject to simplified filing pro-
41       cedures and the expedited review procedures, as outlined in the stipu-
42       lation attached to the order of November 19, 1990 in docket no. 127,140-
43       U (Phase IV).

Sub. SB 666--Am. by SCW


  1           After the effective date of this act, and prior to July 1, 1999, no request
  2       for additional funding shall be approved for additional investment re-
  3       quired to provide universal service or enhanced universal service or for
  4       infrastructure expenditures in response to facility or service requirements
  5       established by any legislative, judicial or regulatory authority as could
  6       otherwise be approved pursuant to this subsection.
  7           (f) Additional supplemental funding from the KUSF, other than as
  8       provided in subsection (e) of this section, may be authorized at the dis-
  9       cretion of the commission. However, the commission may require ap-
10       proval of such funding to be based upon a general rate case filing. With
11       respect to any request for additional supplemental funding from the
12       KUSF, the commission shall act expeditiously, but shall not be subject to
13       the 120 day deadline set forth in subsection (e).
14           Sec. 3. K.S.A. 1997 Supp. 66-2011 is hereby amended to read as
15       follows: 66-2011. (a) As used in this section, ``the internet'' means the
16       international network of interconnected government, educational, and
17       commercial computer networks. An ``internet service provider'' means an
18       entity that provides end user access to the internet. Nothing in this section
19       shall be construed to mean that the commission has any regulatory juris-
20       diction over internet service providers. The provisions of this section ap-
21       ply only to those locations of the state where local (7-digit) internet access,
22       which supports at least 14.4 kilobits per second service with no more than
23       5% blockage during the busiest hour of the service, is not available on
24       October 1, 1996. The provisions of this section also apply to those loca-
25       tions where local access has been discontinued as of October 1, 1996, or
26       access to the service deteriorates to more than 5% blockage during the
27       busiest hour of the service.
28           (b) On or after July 1, 1996 and prior to October 1, 1996, rural tel-
29       ephone companies shall file concurring tariffs to offer internet access in
30       locations identified in subsection (a) to an intraLATA internet service
31       provider of the customer's choice. All rural telephone companies, includ-
32       ing local exchange carriers pursuant to subsection (c), shall provide dial-
33       up access to support at least 14.4 kilobit per second service ubiquitously
34       throughout the exchange service area, with 28.8 kilobit per second service
35       made available to any requesting customer on or after July 1, 1999 the
36       highest quality service that is technically and economically feasible, as
37       determined by the working group established in section 1 and as the
38       commission may subsequently determine.
39           (c) On or after July 1, 1996 and prior to October 1, 1996, all local
40       exchange carriers, other than rural telephone companies, shall file tariffs
41       with the commission for two flat-rate dial-up plans, which would provide
42       internet access in locations identified in subsection (a) to an intraLATA
43       internet service provider of the customer's choice. All such plans shall be

Sub. SB 666--Am. by SCW


  1       approved by the commission if they meet the criteria established in this
  2       section. The first plan includes: (1) For off-peak users, a monthly rate of
  3       not more than $15 per line for the hours of 5 p.m. through 7:59 a.m.
  4       weekdays and all hours on weekends and federal holidays. Calls placed
  5       outside this specified off-peak period shall be billed at prevailing toll rates.
  6       (2) For unlimited usage, the rate shall not exceed $30 per line per month.
  7       The commission shall waive imputation considerations in reviewing and
  8       approving these service offerings.
  9           (d) All internet service providers operating in the state shall register
10       with the commission. Such registration shall include the name of the
11       internet service provider and the provider's address, contact name, phone
12       number, and access line numbers. This information shall be maintained
13       by the commission and disseminated to all local exchange carriers and
14       rural telephone companies providing access to internet service providers
15       in accordance with provisions of this section. This information shall be
16       used to validate customer service requests.
17           (e) During the 1999 session of the Kansas legislature, the commission
18       shall transmit a report to the chairperson, vice-chairperson and ranking
19       minority member of the house standing committee on energy and natural
20       resources utilities, the senate standing committee on transportation and
21       utilities commerce and the joint committee on computers and telecom-
22       munications concerning implementation of this section. The report shall
23       include recommendations for revisions in this section necessitated by
24       technological innovation or market changes in the telecommunications
25       industry. The report also may include an expiration date for this section.
26           Sec. 4. K.S.A. 1997 Supp. 66-2008 and 66-2011 are hereby repealed.
27           Sec. 5. This act shall take effect and be in force from and after its
28       publication in the Kansas register.