As Amended by Senate Committee
Session of 1999
By Senators Brownlee, Jordan, Ranson and Steineger

11             AN  ACT concerning telecommunications; relating to rate rebalancing
12             and access to the Kansas universal service fund; amending K.S.A. 1998
13             Supp. 66-1,187, 66-2001, 66-2002, 66-2003, 66-2005, 66-2008 and 66-
14             2009 and repealing the existing sections; also repealing K.S.A. 1998
15             Supp. 66-2012 and, 66-2013 and 66-2016.
17       Be it enacted by the Legislature of the State of Kansas:
18             Section  1. K.S.A. 1998 Supp. 66-1,187 is hereby amended to read as
19       follows: 66-1,187. As used in this act:
20             (a) "Broadband" means the transmission of digital signals at rates
21       equal to or greater than 1.5 megabits per second.
22             (b) "CLASS services" means custom local area signaling services,
23       which include automatic callback, automatic recall, calling number iden-
24       tification, selective call rejection, selective call acceptance, selective call
25       forwarding, distinctive ringing and customer originated trace.
26             (c) "Commission" means the state corporation commission.
27             (d) "Dialing parity" means that a person that is not an affiliate of a
28       local exchange carrier is able to provide telecommunications services in
29       such a manner that customers have the ability to route automatically,
30       without the use of any access code, their telecommunications to the tel-
31       ecommunications carrier of the customer's designation from among two
32       or more telecommunications carriers, including such local exchange
33       carrier.
34             (e) "Federal act" means the federal telecommunications act of 1996,
35       P.L. 104-104 (amending the communications act of 1934, 47 U.S.C. 151,
36       et seq.)
37             (f) "ISDN" means integrated services digital network which is a net-
38       work and associated technology that provides simultaneous voice and data
39       communications over a single communications channel.
40             (g) "LATA" has the meaning ascribed to it in the federal act.
41             (h) "Local exchange carrier" means any telecommunications public
42       utility or its successor providing switched telecommunications service
43       within any local exchange service area, as approved by the commission
44       on or before January 1, 1996. However, with respect to the Hill City
45       exchange area, in which multiple carriers were certified by the commis-
46       sion prior to January 1, 1996, the commission's determination, subject to
47       any court appeals, of which authorized carrier shall serve as the carrier
48       of last resort will determine which carrier shall be deemed the local
49       exchange carrier for that exchange.
50             (i) "Number portability" has the meaning ascribed to it in the federal
51       act.
52             (j) "1 + intraLATA dialing parity" means the ability of a local exchange
53       service customer to specify the telecommunications or local exchange
54       carrier that will carry the intraLATA long distance messages when that
55       customer dials either "1" or "0" plus a 10-digit number.
56             (k) "Operating area" means:
57             (1) In the case of a rural telephone company, operating area or service
58       area means such company's study area or areas as approved by the federal
59       communications commission;
60             (2) in the case of a local exchange carrier, other than a rural telephone
61       company, operating area or service area means such carrier's local
62       exchange service area or areas as approved by the commission.
63             (l) "Rural telephone company" has the meaning ascribed to it in the
64       federal act, excluding any local exchange carrier which together with all
65       of its affiliates has 20,000 or more access lines in the state.
66             (m) "Telecommunications carrier" means a corporation, company,
67       individual, association of persons, their trustees, lessees or receivers that
68       provides a telecommunications service, including, but not limited to, in-
69       terexchange carriers and competitive access providers, but not including
70       local exchange carriers certified before January 1, 1996.
71             (n) "Telecommunications public utility" means any public utility, as
72       defined in K.S.A. 66-104, and amendments thereto, which owns, controls,
73       operates or manages any equipment, plant or generating machinery, or
74       any part thereof, for the transmission of telephone messages, as defined
75       in K.S.A. 66-104, and amendments thereto, or the provision of telecom-
76       munications services in or throughout any part of Kansas.
77             (o) "Telecommunications service" means the provision of a service
78       for the transmission of telephone messages, or two-way video or data
79       messages.
80             (p) "Universal service" means telecommunications services and fa-
81       cilities which include: single party, two-way voice grade calling; stored
82       program controlled switching with vertical service capability; E911 ca-
83       pability; tone dialing; access to operator services; access to directory as-
84       sistance; and equal access to long distance services; and toll blocking or
85       toll control.
86             (q) "Enhanced universal service" means telecommunications serv-
87       ices, in addition to those included in universal service, which shall include:
88       Signaling system seven capability, with CLASS service capability; basic
89       and primary rate ISDN capability, or the technological equivalent; full-
90       fiber interconnectivity, or the technological equivalent, between central
91       offices; and broadband capable facilities to: All schools accredited pur-
92       suant to K.S.A. 72-1101 et seq., and amendments thereto; hospitals as
93       defined in K.S.A. 65-425, and amendments thereto; public libraries; and
94       state and local government facilities which request broadband services,
95       without regard to any transmission, media or technology, high-speed,
96       switched, broadband telecommunications capability that enables users to
97       originate and receive high-quality voice, data, graphics and video tele-
98       communications using any technology.
99             Sec.  2. K.S.A. 1998 Supp. 66-2001 is hereby amended to read as
100       follows: 66-2001. It is hereby declared to be the public policy of the state
101       to:
102             (a) Ensure that every Kansan will have access to a first class telecom-
103       munications infrastructure that provides excellent services at an afforda-
104       ble price;
105             (b) ensure that conditions exist for consumers throughout the state
106       to realize the benefits of competition through increased services and im-
107       proved telecommunications facilities and infrastructure at reduced rea-
108       sonable rates;
109             (c) promote consumer access to a full range of telecommunications
110       services, including advanced telecommunications services that are com-
111       parable in urban and rural areas throughout the state;
112             (d) advance the development of a statewide telecommunications in-
113       frastructure that is capable of supporting applications, such as public
114       safety, telemedicine, services for persons with special needs, distance
115       learning, public library services, access to internet providers and others;
116       and
117             (e) protect consumers of telecommunications services from fraudu-
118       lent business practices and practices that are inconsistent with the public
119       interest, convenience and necessity.; and
120             (f) foster conditions for continuous innovation of information net-
121       working and telecommunications.
122             Sec.  3. K.S.A. 1998 Supp. 66-2002 is hereby amended to read as
123       follows: 66-2002. The commission shall:
124             (a) Adopt a definition of "universal service" and "enhanced universal
125       service," pursuant to subsections (p) and (q) of K.S.A. 1998 Supp. 66-
126       1,187;
127             (b) (a) Authorize any requesting telecommunications carrier to pro-
128       vide local exchange or exchange access service pursuant to subsection (a)
129       of K.S.A. 1998 Supp. 66-2003, and amendments thereto;
130             (c) (b) on or before July 1, 1996, the commission shall initiate a pro-
131       ceeding to adopt guidelines to ensure that all telecommunications carriers
132       and local exchange carriers preserve and enhance universal service, pro-
133       tect the public safety and welfare, ensure the continued quality of tele-
134       communications services and safeguard the rights of consumers;
135             (d) review, approve and ensure compliance with network infrastruc-
136       ture plans submitted by local exchange carriers pursuant to K.S.A. 1998
137       Supp. 66-2005;
138             (e) (c) review, approve and ensure compliance with regulatory plans
139       submitted by local exchange carriers pursuant to K.S.A. 1998 Supp. 66-
140       2005, and amendments thereto;
141             (f) (d) on or before January 1, 1997, establish, pursuant to K.S.A. 1998
142       Supp. 66-2006, and amendments thereto, the Kansas lifeline service pro-
143       gram, hereinafter referred to as the KLSP;
144             (g) (e) initiate and complete a proceeding by January 1, 1997, to es-
145       tablish a competitively neutral mechanism or mechanisms to fund: dual
146       party relay services for Kansans who are speech or hearing impaired;
147       telecommunications equipment for persons with visual impediments; and
148       telecommunications equipment for persons with other special needs. This
149       funding mechanism or mechanisms shall be implemented by March 1,
150       1997;
151             (h) (f) on or before January 1, 1997, establish the Kansas universal
152       service fund pursuant to K.S.A. 1998 Supp. 66-2008, and amendments
153       thereto, hereinafter referred to as the KUSF, and make various deter-
154       minations relating to the implementation of such fund;
155             (i) (g) authorize all local exchange carriers to provide internet access
156       as outlined in K.S.A. 1998 Supp. 66-2011, and amendments thereto, and
157       report on the status of the implementation provisions to specified legis-
158       lative committees;
159             (j) review the federal act and adopt additional standards and guide-
160       lines as necessary for enforcing slamming restrictions;
161             (k) (h) commencing on June 1, 1997, and periodically thereafter, re-
162       view and, to the extent necessary, modify the definition of universal serv-
163       ice and enhanced universal service, and adjust the KUSF as necessary,
164       establish and, to the extent necessary, modify rules and guidelines
165       to determine what services qualify as enhanced universal services,
166       pursuant to subsection (q) of K.S.A. 66-1,187 and amendments
167       thereto, taking into account advances in telecommunications and infor-
168       mation technology and services;
169             (l) (i) on or before January 1, 1997, initiate and complete a proceeding
170       to establish minimum quality of service standards which will be equally
171       applicable to all local exchange carriers and telecommunications carriers
172       in the state; any local exchange carrier or telecommunications carrier
173       violating such standards, for each occurrence, shall forfeit and pay a pen-
174       alty of not less than $100, nor more than $5,000; violations of such stan-
175       dards shall be enforced in accordance with provisions of K.S.A. 66-138
176       and 66-177, and amendments thereto; and
177             (m) (j) on January 1, 2000, prepare and submit a report to the leg-
178       islature. The report shall include an analysis of the manner in which the
179       regulatory framework has served to: Protect consumers; safeguard uni-
180       versal service; ensure that consumers have reaped the benefits of com-
181       petition; maximize the use of market forces; and promote development
182       of the telecommunications infrastructure throughout the state. The com-
183       mission also shall recommend if and how the KUSF should be modified.
184       The commission may submit the report by posting the report's contents
185       on the commission's internet homepage and notifying the legislature of
186       the report's availability.
187             Sec.  4. K.S.A. 1998 Supp. 66-2003 is hereby amended to read as
188       follows: 66-2003. (a) On or before September 1, 1996, the commission
189       shall begin to authorize applications for certificates of public convenience
190       and necessity to provide local exchange or exchange access service.
191             (b) A local exchange carrier shall be required to offer to allow rea-
192       sonable resale of its retail telecommunications services and to sell un-
193       bundled local loop, switch and trunk facilities to telecommunications car-
194       riers, as required by the federal act and pursuant to negotiated
195       agreements or a statement of terms and conditions generally available to
196       telecommunications carriers.
197             (c) To encourage telecommunications carriers to build or install tel-
198       ecommunications facilities, including, but not limited to, local loop and
199       switching facilities in the state, and except as otherwise negotiated by a
200       local exchange carrier and a telecommunications carrier, the prices for
201       such unbundled facilities shall be determined by the commission, on a
202       nondiscriminatory basis, to permit the recovery of costs and a reasonable
203       profit. The commission shall determine wholesale rates on the basis of
204       retail rates charged subscribers for the telecommunications service re-
205       quested, excluding the portion thereof attributable to any marketing, bill-
206       ing, collection and other costs, that will be avoided by the local exchange
207       carrier. The commission shall approve resale restrictions proposed by any
208       local exchange carrier which prohibit resellers from purchasing retail tel-
209       ecommunications services offered by that local exchange carrier to one
210       category of customers and reselling those retail services to a different
211       category of customers. Upon a finding that such practice would be anti-
212       competitive, anticonsumer or detrimental to the quality of the network
213       infrastructure, the commission may prohibit the resale of retail services
214       at a rate lower than the wholesale rate. The commission shall approve any
215       other reasonable limitation on resale to the extent permitted by the fed-
216       eral act.
217             (d) As provided in the federal act, in order for telecommunications
218       carriers to provide local exchange service and exchange access service,
219       local exchange carriers shall provide the means to interconnect their re-
220       spective customers, including, but not limited to, toll access, access to
221       operator services, access to directory listings and assistance, and access to
222       E911 service.
223             (e) Customers shall be accorded number portability and local and toll
224       dialing parity in conformance with national standards to the extent eco-
225       nomically and technically feasible the federal act and federal communi-
226       cation commission rules and regulations. Terms and prices for intercon-
227       nection, unbundled facilities and resale of existing retail
228       telecommunications services shall be negotiated in good faith between
229       the parties. During the period from the 135th through the 160th day after
230       the date on which an incumbent local exchange carrier receives a request
231       for negotiation under this section, the carrier or any other party to the
232       negotiation may petition the commission to arbitrate any open issues.
233       Arbitration shall occur in conformance with the provisions of section 252
234       of the federal act.
235             (f) The commission shall require, consistent with the terms of the
236       federal act, that 1 + intraLATA dialing parity be provided by all local
237       exchange carriers and telecommunications carriers coincidentally with the
238       provision of in-region interLATA toll services in the state by local
239       exchange carriers with more than 150,000 access lines or their affiliates.
240             Sec.  5. K.S.A. 1998 Supp. 66-2005 is hereby amended to read as
241       follows: 66-2005. (a) Each local exchange carrier shall file a network in-
242       frastructure plan with the commission on or after January 1, 1997, and
243       prior to January 1, 1998. Each plan, as a part of universal service protec-
244       tion, shall include schedules, which shall be approved by the commission,
245       for deployment of universal service capabilities by July 1, 1998, and the
246       deployment of enhanced universal service capabilities by July 1, 2003, as
247       defined pursuant to subsections (p) and (q) of K.S.A. 1998 Supp. 66-1,187
248       and amendments thereto, respectively. With respect to enhanced univer-
249       sal service, such schedules shall provide for deployment of ISDN, or its
250       technological equivalent, or broadband facilities, only upon a firm cus-
251       tomer order for such service, or for deployment of other enhanced uni-
252       versal services by a local exchange carrier. After receipt of such an order
253       and upon completion of a deployment plan designed to meet the firm
254       order or otherwise provide for the deployment of enhanced universal
255       service, a local exchange carrier shall notify the commission. The com-
256       mission shall approve the plan unless the commission determines that the
257       proposed deployment plan is unnecessary, inappropriate, or not cost ef-
258       fective, or would create an unreasonable or excessive demand on the
259       KUSF. The commission shall take action within 90 days. If the commis-
260       sion fails to take action within 90 days, the deployment plan shall be
261       deemed approved. This approval process shall continue until July 1, 2000.
262       Each plan shall demonstrate the capability of the local exchange carrier
263       to comply on an ongoing basis with quality of service standards to be
264       adopted by the commission no later than January 1, 1997. The commission
265       shall establish rules and regulations guidelines by June 30, 2000, to ad-
266       dress access to enhanced telecommunications and information services
267       that are reasonably comparable between urban and rural areas through-
268       out the state. Such rules shall establish a method by which telecommu-
269       nications services providers may request supplemental funding for en-
270       hanced universal services. Those local exchange carriers that have
271       deployed enhanced universal service will be eligible for reimbursement
272       from the KUSF pending verification of the expenditure, the timing of the
273       expenditure and the associated costs.
274             (b) In order to protect universal service, facilitate the transition to
275       competitive markets and stimulate the construction of an advanced tel-
276       ecommunications infrastructure, each local exchange carrier shall file a
277       regulatory reform plan at the same time as it files the network infrastruc-
278       ture plan required in subsection (a). As part of its regulatory reform plan,
279       a local exchange carrier may elect traditional rate of return regulation or
280       price cap regulation. A company that has elected price cap regulation
281       may, at its option, rescind the price cap regulation election at any
282       time. Carriers that elect price cap regulation shall be exempt from rate
283       base, rate of return and earnings regulation for the purpose of establishing
284       rates. However, the commission may resume such regulation upon find-
285       ing, after a hearing, that a carrier that is subject to price cap regulation
286       has: violated minimum quality of service standards pursuant to subsection
287       (l) of K.S.A. 1998 Supp. 66-2002 and amendments thereto; been given
288       reasonable notice and an opportunity to correct the violation; and failed
289       to do so. Regulatory reform plans also shall include:
290             (1) A commitment to All telecommunications public utilities shall pro-
291       vide existing and newly ordered point-to-point broadband services to: Any
292       hospital as defined in K.S.A. 65-425, and amendments thereto; any school
293       accredited pursuant to K.S.A. 72-1101 et seq., and amendments thereto;
294       any public library; or other state and local government facilities at dis-
295       counted prices close to, but not below, long-run incremental cost; and
296             (2) a commitment to provide basic rate ISDN service, or the tech-
297       nological equivalent, at prices which are uniform throughout the carrier's
298       service area. Local exchange carriers shall not be required to allow retail
299       customers purchasing the foregoing discounted services to resell those
300       services to other categories of customers. Telecommunications carriers
301       may purchase basic rate ISDN services, or the technological equivalent,
302       for resale in accordance with K.S.A. 1998 Supp. 66-2003 and amendments
303       thereto. The commission may reduce prices charged for services outlined
304       in provisions (1) and (2) of this subsection, if the commitments of the
305       local exchange carrier set forth in those provisions are not being kept.
306             (c) Subject to the commission's approval, all local exchange carriers
307       shall reduce intrastate access charges to interstate levels as provided
308       herein. Rates for intrastate switched access, and the imputed access por-
309       tion of toll, shall be reduced over a three-year period with the objective
310       of equalizing interstate and intrastate rates in a revenue neutral, specific
311       and predictable manner. Subsequent reductions in intrastate access rates
312       may be ordered by the commission in order to maintain parity with in-
313       terstate access rates and structure including end-user charges. The
314       commission is authorized to rebalance local residential and business serv-
315       ice rates to offset the initial three-year phase in of the intrastate access
316       and toll charge reductions and to offset any subsequent intrastate access
317       and toll charge reductions, to the extent justified, based on a cost of service
318       investigation. Any remaining portion of the initial three-year phase in of
319       the reduction in access and toll charges not recovered through local res-
320       idential and business service rates shall be paid out from the KUSF pur-
321       suant to K.S.A. 1998 Supp. 66-2008 and amendments thereto. Thereafter,
322       any remaining portion of subsequent intrastate access and toll charge
323       reductions not recovered through local residential and business service
324       rates shall be paid out from the KUSF, to the extent justified based upon
325       cost of service studies. Rural telephone companies shall reduce their in-
326       trastate switched access rates to interstate levels on March 1, 1997, and
327       every two years thereafter, as long as amounts equal to such reductions
328       are recovered from the KUSF.
329             (d) Beginning March 1, 1997, each rural telephone company shall
330       have the authority to increase annually its monthly basic local residential
331       and business service rates by an amount not to exceed $1 in each 12
332       month period until such monthly rates reach an amount equal to the
333       statewide rural telephone company average rates for such services. The
334       statewide rural telephone company average rates shall be the arithmetic
335       mean of the lowest flat rate as of March 1, 1996, for local residential
336       service and for local business service offered by each rural telephone
337       company within the state. In the case of a rural telephone company which
338       increases its local residential service rate or its local business service rate,
339       or both, to reach the statewide rural telephone company average rate for
340       such services, the amount paid to the company from the KUSF shall be
341       reduced by an amount equal to the additional revenue received by such
342       company through such rate increase. In the case of a rural telephone
343       company which elects to maintain a local residential service rate or a local
344       business service rate, or both, below the statewide rural telephone com-
345       pany average, the amount paid to the company from the KUSF shall be
346       reduced by an amount equal to the difference between the revenue the
347       company could receive if it elected to increase such rate to the average
348       rate and the revenue received by the company.
349             (e) For regulatory reform plans in which price cap regulation has
350       been elected, price cap plans shall have three baskets: Residential and
351       single-line business, including touch-tone tone dialing; switched access
352       services; and miscellaneous services. The commission shall establish price
353       caps at the prices existing when the regulatory plan is filed subject to rate
354       rebalancing as provided in subsection (c) for residential services, includ-
355       ing touch-tone tone dialing services, and for single-line business services,
356       including touch-tone tone dialing services, within the residential and
357       single-line business service basket. The commission shall establish a for-
358       mula for adjustments to the price caps. The commission also shall estab-
359       lish price caps at the prices existing when the regulatory plan is filed for
360       the miscellaneous services basket. The commission shall approve any ad-
361       justments to the price caps for the miscellaneous service basket, as pro-
362       vided in subsection (f).
363             (f) On or before January 1, 1997, the commission shall issue a final
364       order in a proceeding to determine the price cap adjustment formula that
365       shall apply to the price caps for the local residential and single-line busi-
366       ness and the miscellaneous services baskets and for sub-categories, if any,
367       within those baskets. In determining this formula, the commission shall
368       balance the public policy goals of encouraging efficiency and promoting
369       investment in a quality, advanced telecommunications network in the
370       state. The commission also shall establish any informational filing require-
371       ments necessary for the review of any price cap tariff filings, including
372       price increases or decreases within the caps, to verify such caps would
373       not be exceeded by any proposed price change. The adjustment formula
374       shall apply to the price caps for the local residential and single-line busi-
375       ness basket after December 31, 1999, and to the miscellaneous services
376       basket after December 31, 1997. The price cap formula, but not actual
377       prices, shall be reviewed every five years.
378             (g) The price caps for the residential and single-line business service
379       basket shall be capped at their initial level until January 1, 2000, except
380       for any increases authorized as a part of the revenue neutral rate rebal-
381       ancing under subsection (c). The price caps for this basket and for the
382       categories in this basket, if any, shall may be adjusted annually after De-
383       cember 31, 1999, based on the formula determined by the commission
384       under subsection (f).
385             (h) The price cap for the switched access service basket shall be set
386       based upon the local exchange carrier's intrastate access tariffs as of Jan-
387       uary 1, 1997, except for any revenue neutral rate rebalancing authorized
388       in accordance with subsection (c). Thereafter, the cap for this basket shall
389       not change except in connection with any subsequent revenue neutral
390       rebalancing authorized by the commission under subsection (c) may be
391       adjusted annually based on a formula determined by the commission un-
392       der subsection (f). Additional adjustments to the price caps may be re-
393       quired due to rebalancing authorized by the commission under subsection
394       (c).
395             (i) The price caps for the miscellaneous services basket shall be ad-
396       justed annually after December 31, 1997, based on the adjustment for-
397       mula determined by the commission under subsection (f).
398             (j) A price cap is a maximum price for all services taken as a whole
399       in a given basket. Prices for individual services may be changed within
400       the service categories, if any, established by the commission within a
401       basket. An entire service category, if any, within the residential and single-
402       line business basket or miscellaneous services basket may be priced below
403       the cap for such category. Unless otherwise approved by the commission,
404       no service shall be priced below the price floor which will be long-run
405       incremental cost and imputed access charges. Access charges equal to
406       those paid by telecommunications carriers to local exchange carriers shall
407       be imputed as part of the price floor for toll services offered by local
408       exchange carriers on a toll service basis.
409             (k) A local exchange carrier may offer promotions within an exchange
410       or group of exchanges. All promotions shall be approved by the commis-
411       sion and shall apply to all customers in a nondiscriminatory manner within
412       the exchange or group of exchanges.
413             (l) Unless the commission authorizes price deregulation at an earlier
414       date, intrastate toll services within the miscellaneous services basket shall
415       continue to be regulated until the affected local exchange carrier begins
416       to offer 1 + intraLATA dialing parity throughout its service territory, at
417       which time intrastate toll will be price deregulated, except that prices
418       cannot be set below the price floor.
419             (m) On or before July 1, 1997, the commission shall establish guide-
420       lines for reducing regulation prior to price deregulation of price cap reg-
421       ulated services in the miscellaneous services basket, the switched access
422       services basket, and the residential and single-line business basket.
423             (n) Subsequent to the adoption of guidelines pursuant to subsection
424       (m), the commission shall initiate a petitioning procedure under which
425       the local exchange carrier may request rate range pricing. The commis-
426       sion shall act upon a petition within 21 days, subject to a 30-day suspen-
427       sion. The prices within a rate range shall be tariffed and shall apply to all
428       customers in a nondiscriminatory manner in an exchange or group of
429       exchanges.
430             (o) A local exchange carrier may petition the commission to designate
431       an individual service or service category, if any, within the miscellaneous
432       services basket, the switched access services basket or the residential and
433       single-line business basket for reduced regulation. The commission shall
434       act upon a petition for reduced regulation within 21 days, subject to a
435       suspension period of an additional 30 days, and upon a good cause show-
436       ing of the commission in the suspension order, or within such shorter
437       time as the commission shall approve. The commission shall issue a final
438       order within the 21-day period or within a 51-day period if a suspension
439       has been issued. Following an order granting reduced regulation of an
440       individual service or service category, the commission shall act on any
441       request for price reductions within seven days subject to a 30-day sus-
442       pension. The commission shall act on other requests for price cap ad-
443       justments, adjustments within price cap plans and on new service offer-
444       ings within 21 days subject to a 30-day suspension. Such a change will be
445       presumed lawful unless it is determined the prices are below the price
446       floor or that the price cap for a category, if any, within the entire basket
447       has been exceeded.
448             (p) The commission may price deregulate within an exchange area,
449       or at its discretion on a statewide basis, any individual service or service
450       category upon a finding by the commission that there is a telecommuni-
451       cations carrier or an alternative provider providing a comparable product
452       or service, considering both function and price, in that exchange area.
453       The commission shall act upon a petition for price deregulation within
454       21 days, subject to a suspension period of an additional 30 days, and upon
455       a good cause showing of the commission in the suspension order, or
456       within such shorter time as the commission shall approve; provided that
457       no such petition shall be filed prior to July 1997, unless the commission
458       otherwise authorizes. The commission shall issue a final order within the
459       21-day period or within a 51-day period if a suspension has been issued.
460             (q) Upon complaint or request, the commission may investigate a
461       price deregulated service. The commission shall resume price regulation
462       of a service provided in any exchange area by placing it in the appropriate
463       service basket, as approved by the commission, upon a determination by
464       the commission that there is no longer a telecommunications carrier or
465       alternative provider providing a comparable product or service, consid-
466       ering both function and price, in that exchange area.
467             (r) The commission shall require that for all local exchange carriers
468       all such price deregulated basic intraLATA toll services be geographically
469       averaged statewide and not be priced below the price floor established
470       in subsection (j).
471             (s) Cost studies to determine price floors shall be performed as re-
472       quired by the commission in response to complaints or on the commis-
473       sion's own motion. In addition, notwithstanding the exemption in sub-
474       section (b), the commission may request information necessary to execute
475       any of its obligations under the act.
476             (t) A local exchange carrier may petition for individual customer pric-
477       ing. The commission shall respond expeditiously to the petition within a
478       period of not more than 30 days subject to a 30-day suspension.
479             (u) No audit, earnings review or rate case shall be performed with
480       reference to the initial prices filed as required herein The commission is
481       authorized to conduct audits, investigations and obtain cost and revenue
482       information as it deems necessary to carry out the commission's obliga-
483       tions under this act and the federal act. No such audit or investigation
484       and related cost and revenue information shall be used to regulate
485       a price cap company's earnings in any manner. An adjustment to a
486       price cap company's KUSF support does not constitute regulation
487       of earnings so long as the adjustment is based on the cost of provid-
488       ing universal service and enhanced universal service.
489             (v) Telecommunications carriers shall not be subject to price regu-
490       lation, except that: Access charge reductions shall be passed through to
491       consumers by reductions in basic intrastate toll prices; and basic toll prices
492       shall remain geographically averaged statewide. As required under K.S.A.
493       66-131, and amendments thereto, and except as provided for in subsec-
494       tion (c) of K.S.A. 1998 Supp. 66-2004 and amendments thereto, telecom-
495       munications carriers that were not authorized to provide switched local
496       exchange telecommunications services in this state as of July 1, 1996,
497       including cable television operators who have not previously offered tel-
498       ecommunications services, must receive a certificate of convenience
499       based upon a demonstration of technical, managerial and financial via-
500       bility and the ability to meet quality of service standards established by
501       the commission. Any telecommunications carrier or other entity seeking
502       such certificate shall file a statement, which shall be subject to the com-
503       mission's approval, specifying with particularity the areas in which it will
504       offer service, the manner in which it will provide the service in such areas
505       and whether it will serve both business customers and residential custom-
506       ers in such areas. Any structurally separate affiliate of a local exchange
507       carrier that provides telecommunications services shall be subject to the
508       same regulatory obligations and oversight as a telecommunications car-
509       rier, as long as the local exchange carrier's affiliate obtains access to any
510       services or facilities from its affiliated local exchange carrier on the same
511       terms and conditions as the local exchange carrier makes those services
512       and facilities available to other telecommunications carriers. The com-
513       mission shall oversee telecommunications carriers to prevent fraud and
514       other practices harmful to consumers and to ensure compliance with
515       quality of service standards adopted for all local exchange carriers and
516       telecommunications carriers in the state.
517             Sec.  6. K.S.A. 1998 Supp. 66-2008 is hereby amended to read as
518       follows: 66-2008. On or before January 1, 1997, the commission shall
519       establish the Kansas universal service fund, hereinafter referred to as the
520       KUSF.
521             (a) The initial amount of the KUSF shall be comprised of local
522       exchange carrier revenues lost as a result of rate rebalancing pursuant to
523       the initial three-year phase down of access rates as set forth in subsection
524       (c) of K.S.A. 1998 Supp. 66-2005 and amendments thereto and subsection
525       (a) of K.S.A. 1998 Supp. 66-2007 and amendments thereto. Such reve-
526       nues shall be recovered on a revenue neutral basis. The revenue neutral
527       calculation shall be based on the volumes and revenues for the 12 months
528       prior to September 30, 1996, adjusted for any rate changes.
529             (b) The commission shall require every telecommunications carrier,
530       telecommunications public utility and wireless telecommunications serv-
531       ice provider that provides intrastate telecommunications services to con-
532       tribute to the KUSF on an equitable and nondiscriminatory basis. Any
533       telecommunications carrier, telecommunications public utility or wireless
534       telecommunications service provider which contributes to the KUSF may
535       collect from customers an amount equal to such carrier's, utility's or pro-
536       vider's contribution, except that before January 1, 2000, no such carrier,
537       provider or utility shall collect from customers an amount in excess of
538       8.89% of its intrastate retail revenues as provided in commission docket
539       no. 190-492-U but such carrier, provider or utility may collect a lesser
540       amount from its customer.
541             Prior to January 1, 2000, With respect to wireless telecommunications
542       service providers, an equitable and nondiscriminatory rate shall be an
543       amount equal to the rate of contributions of wireline telecommunications
544       service providers, as determined by the commission, reduced by the per-
545       centage minutes of usage initiated and terminated entirely over the wire-
546       less network as determined by the commission. The commission shall
547       establish such rate for wireless telecommunications service providers no
548       later than December 31, 1998. Any contributions in excess of distributions
549       collected in any reporting year shall be applied to reduce the estimated
550       contribution that would otherwise be necessary for the following year.
551             (c) Pursuant to the federal act, distributions from the KUSF shall be
552       made in a competitively neutral manner to qualified telecommunications
553       public utilities, telecommunications carriers and wireless telecommuni-
554       cations providers, that are deemed eligible both under subsection (e)(1)
555       of section 214 of the federal act and by the commission.
556             (d) The commission shall periodically review the KUSF to determine
557       if the costs of qualified telecommunications public utilities, telecommu-
558       nications carriers and wireless telecommunications service providers to
559       provide local service justify modification of the KUSF. If the commission
560       determines that any changes are needed, the commission shall modify
561       the KUSF accordingly Any pending dockets before the commission,
562       initiated pursuant to this subsection, shall be completed on or be-
563       fore October 1, 1999. Thereafter, all such reviews shall be com-
564       pleted within 180 days of initiation or application. The commission
565       shall make use of any data obtained pursuant to subsection (u) of
566       K.S.A. 66-2005 and amendments thereto to resolve any such inves-
567       tigation and review. On the first day of the month, 60 days after the
568       effective date of this legislation, October 1, 1999 distributions from the
569       KUSF to any price cap regulated company, which currently does not
570       receive funds from the federal universal service fund pursuant to
571       part 36 of the federal communication commission rules, shall be lim-
572       ited to the amount of support established by the commission in Docket
573       No. 190.492-U, $36.88 per high cost residential and single line business
574       loop, or any amount established by subsequent modification of that order.
575       This modification of the KUSF distribution shall not alter the commis-
576       sion's responsibility to ensure that the KUSF is based on cost consistent
577       with the federal act. No rate rebalancing shall occur unless justified by
578       cost studies. The commission shall have continuing responsibility to ensure
579       that contributions to and distributions from the KUSF are competitively
580       neutral. Any such company may file an application for support in excess
581       of $36.88. Such application shall contain cost justification for such excess
582       support. If an application for such support is filed within 60 days of the
583       company's reduction to $36.88 per high cost residential and single line
584       business loop, a commission order granting support in excess of the $36.88
585       shall be retroactive to the date of filing the application if justified by the
586       cost studies.
587             (e) Any qualified telecommunications carrier, telecommunications
588       public utility, which has not elected price cap regulation or wireless tel-
589       ecommunications service provider may request supplemental funding
590       from the KUSF based upon a percentage increase in access lines over
591       the 12-month period prior to the request. The supplemental funding shall
592       be incurred for the purpose of providing services to and within the service
593       area of the qualified telecommunications carrier, telecommunications
594       public utility or wireless telecommunications service provider. Supple-
595       mental funding from the KUSF shall be used for infrastructure expend-
596       itures necessary to serve additional customers within the service area of
597       such qualifying utility, provider or carrier. All affected parties shall be
598       allowed to review and verify a request of such a qualified utility, carrier
599       or provider for supplemental funding from the KUSF, and to intervene
600       in any commission proceeding regarding such request. The commission
601       shall issue an order on the request within 120 days of filing. Additional
602       funding also may be requested for: The recovery of shortfalls due to
603       additional rebalancing of rates to continue maintenance of parity with
604       interstate access rates; shortfalls due to changes to access revenue
605       requirements resulting from changes in federal rules; additional invest-
606       ment required to provide universal service and enhanced universal serv-
607       ice, deployed subject to subsection (a) of K.S.A. 66-2005, and amend-
608       ments thereto; and for infrastructure expenditures in response to facility
609       or service requirements established by any legislative, regulatory or ju-
610       dicial authority. Such requests shall be subject to simplified filing pro-
611       cedures and the expedited review procedures, as outlined in the stipu-
612       lation attached to the order of November 19, 1990 in docket no.
613       127,140-U (Phase IV).
614             Supplemental funding from the KUSF for price cap regulated compa-
615       nies may be requested to cover upward exogenous cost adjustments. Sup-
616       plemental funding for exogenous adjustments shall be approved by the
617       commission at the commission's discretion.
618             (f) Additional supplemental funding from the KUSF, other than as
619       provided in subsection (e) of this section, may be authorized at the dis-
620       cretion of the commission. However, the commission may require ap-
621       proval of such funding to be based upon a general rate case filing. With
622       respect to any request for additional supplemental funding from the
623       KUSF, the commission shall act expeditiously, but shall not be subject to
624       the 120 day deadline set forth in subsection (e).
625        (g) Any carrier that collects amounts from its customers to offset
626       its KUSF contribution shall specifically identify the amount as a
627       separate item on each bill.
628             Sec.  7. K.S.A. 1998 Supp. 66-2009 is hereby amended to read as
629       follows: 66-2009. (a) Local exchange carriers that provided switched local
630       exchange services in the state prior to January 1, 1996, or their successors,
631       shall serve as the carrier of last resort in their exchanges and shall be
632       eligible to receive KUSF funding. However, with respect to the Hill City
633       exchange area in which multiple carriers were certified prior to January
634       1, 1996, the commission's determination, subject to court appeals, shall
635       determine which authorized carrier shall serve as carrier of last resort.
636       The local exchange carrier serving as the carrier of last resort shall remain
637       the carrier of last resort and shall be entitled to recover the costs of serving
638       as carrier of last resort.
639             (b) Beginning March 1, 1997, the amount of KUSF funds owed to
640       each qualifying telecommunications carrier, telecommunications public
641       utility or wireless telecommunications service provider in the state, based
642       upon the revenue requirements assigned to the funds for such qualifying
643       utility, carrier or provider, shall be allocated by the fund administrator in
644       equal monthly installments. 
645       Sec.  8. K.S.A. 1998 Supp. 66-1,187, 66-2001, 66-2002, 66-2003, 66-
646       2005, 66-2008, 66-2009, 66-2012 and, 66-2013 and 66-2016 are hereby
647       repealed.
648        Sec.  9. This act shall take effect and be in force from and after its
649       publication in the Kansas register.