IL Telecom Rewrite

1
IL Telecom Rewrite
2
Background

• The primary piece of legislation governing the
  regulation of telecommunications services in the
  state of Illinois is "Article XIII.
  Telecommunications" of the Public Utilities Act
  which was originally known as the Universal
  Telephone Service Protection Law of 1985.
• Article XIII of the Illinois Public Utilities
  Act, also known as the IL Telecom Act, was
  scheduled to sunset on July 1, 2001.

3
Leader in telecommunications regulatory reform
(IL)

• one of the first states to implement regulation
  alternative to traditional Rate of Return (ROR)
  regulation (November 1989)
• Illinois Commerce Commission (ICC) approved
  statewide alternative regulation proposed by
  Ameritech Illinois, which included profit sharing
  between Ameritech and ratepayers.
• Illinois Second District Appellate Court ruled
  that the ICC did not have the authority to adopt
  an alternative regulatory plan
• an explicit allocation of costs, which was
  required by Section 13-507 of the Public
  Utilities Act, had not been documented.

4
1992 modification to the Public Utilities Act

• included a clear requirement for allocating
  common expenses
• authorized the ICC to approve alternative
  regulation only after the commission has found
  seven specific conditions have been met.

5
Seven Conditions

• (1) be in the public interest
• (2) produce fair, just, and reasonable rates for
  telecommunications services
• (3) respond to changes in technology and the
  structure of the telecommunications industry that
  are, in fact, occurring
• (4) constitute a more appropriate form of
  regulation based on the Commission's policy
  goals
• (5) specifically identify how ratepayers will
  benefit from efficiency gains, cost savings, and
  productivity improvements
• (6) maintain the quality and availability of
  telecommunications services
• (7) not unduly or unreasonably prejudice any
  customer class, including other carriers.

6
Section 13-103 of Article XIII presents the
current policy

• a) Telecommunications services should be
  available to all Illinois citizens
• b) Where possible, competition should replace
  regulation
• c) Modifications to state regulation should
  ensure orderly transition
• d) Regulated prices should be reasonable and
  non-discriminatory
• e) Regulation should be periodically reviewed and
  evaluated
• f) Competition should foster investment and
  innovation

7
Rewrite Proposals

• HB 0492 Bill written by Ameritech Illinois
• Strips the ICC of much of its regulatory
  oversight
• HB 2900 Bill that actually became law.

8
Rewrite - BENEFITS TO CONSUMERS

• Provides 30 million in funds to eliminate the
  Digital Divide.
• Enhances Life-Line and Link-Up enrollment for
  low-income phone subscribers.
• Requires Ameritech to offer 3 flat rate packages.
  
• Sets in statute Service Quality standards and
  customer credits for carrier failure to meet
  standards.
• Strengthens protections against Slamming,
  Cramming and Jamming.
• Provides 90 million in customer refunds for
  settlement of Ameritech's business
  reclassification case
• Requires deployment of advanced services, such as
  high speed internet, by incumbent carriers to 80
  of their customers by 2005, except in rural
  areas.

9
ENHANCEMENTS FOR INDUSTRY COMPETITION

• Increases Commission enforcement authority,
  including injunctive relief and increased fine
  levels up to .00825 of a carrier's gross annual
  intrastate revenues per day (approx. 250,000 for
  Ameritech, 33,000 for Verizon, 2,000 for
  carriers with less than 35,000 access lines).
• Provides ICC authority to impose interim tariffs
  to allow expedited implementation of Orders.
• Strengthens and codifies certain market-opening
  provisions and increases enforcement of
  inter-carrier disputes regarding market opening
  provisions.

10
Classifying Services as Competitive

• 1) the number, size, and geographic distribution
  of other providers of the service
• (2) the availability of functionally equivalent
  services in the relevant geographic area and the
  ability of telecommunications carriers or other
  persons to make the same, equivalent, or
  substitutable service readily available in the
  relevant market at comparable rates, terms, and
  conditions
• (3) the existence of economic, technological, or
  any other barriers to entry into, or exit from,
  the relevant market
• (4) the extent to which other telecommunications
  companies must rely upon the service of another
  telecommunications carrier to provide
  telecommunications service and
• (5) any other factors that may affect competition
  and the public interest that the Commission deems
  appropriate.

11
Competitive Services

• All services under alternative regulation
  (business greater than 4 lines Ameritech)
• Vertical services deemed competitive 6/1/03
  except caller id and call waiting

12
Business Rates

• Rates for business lines 4 or less capped at
  5/1/01 rates until 7/1/05.

13
High Speed

• Every Incumbent Local Exchange Carrier shall
  offer or provide advanced telecommunications
  services (200 kbps or greater at least one
  direction) to not less than 80 of its customers
  by January 1, 2005.

14
3 local calling plans

• (1) A budget package, which shall consist of
  residential access service and unlimited local
  calls.
• (2) A flat rate package, which shall consist of
  residential access service, unlimited local
  calls, and the customer's choice of 2 vertical
  services as defined in this Section.
• (3) An enhanced flat rate package, which shall
  consist of residential access service for 2
  lines, unlimited local calls, the customer's
  choice of 2 vertical services as defined in this
  Section, and unlimited local toll service.

15
ICC deregulates Chicago-area local service

• ICC passes order 06-0027 on 8/30/06
• CUB agrees to support ATT
• Classifies most ATT services as competitive

16
Filing started 11/2005

• Competitive pressure from (75) CLECs, wireless
  and VoIP
• Residential Market Share dropped 32 since 2001
  (claimed ATT)

17
CUB agreement

• Four year rate freeze for some service plans
• 2.5 million to CUB for consumer education plans
• Caps on monthly usage fee increases ! Per year
  per-call increases capped at 0.005