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House passes both RCA bills

Posted: Monday, May 19, 2003

JUNEAU (AP) The House threw a lifeline to the Regulatory Commission of Alaska, giving the agency that oversees utilities a four-year extension on Monday.

But not before it ordered the embattled agency to make significant changes in the way it does business.

During hours of contentious debate, lawmakers approved legislation that extends the sunset date of the agency that was set to enter a yearlong phase-out beginning June 30.

Some lawmakers critical of the agency say it is inhibiting Alaska Communications System Inc. the state's largest telephone company from competing with General Communications Inc.

ACS has a majority of the state's telephone business but competes with GCI in the state's three largest markets, Anchorage, Fairbanks and Juneau.

''I think this bill gives them a nudge ... to go forward and make this state competitive,'' said Rep. David Guttenberg, D-Fairbanks.

The debate centered on so-called ''phone wars'' that see the companies lobbying the Legislature nearly annually over changing the way the agency regulates them. Last year, the issue thrust the Legislature into a special session. After several hours of debate late Sunday and early Monday, the House approved two measures.

House Bill 111 extends the commission until 2007 and requires it to review its telecommunications regulations, hold public hearings and issue proposals for improvement by Nov. 15.

The bill says in conducting the review, the agency must treat companies providing local and long-distance services fairly. It also says that a carrier will pay a fair price for using another carrier's equipment and facilities, a direct reference to GCI.

Rep. Jim Whitaker, R-Fairbanks, was successful in getting the commission extended from two to four years. The Murkowski administration had asked the Legislature to extend the agency for four years.

''We have to give it time to work,'' Whitaker said.

House Bill 106 directs the five-member commission to make specific changes in several areas, including how it determines what is a competitive market, the process a majority company must go through when applying for a rate increase, and the use of accelerated rates of depreciation. The vote was 23-16.

ACS has long-complained that the rates RCA allows it to charge for the leasing of some of its lines to GCI amounts to subsidizing its competitor. ACS, which has about 300,000 lines statewide, owns the part of the line that brings service into homes and businesses.

GCI argues that without regulation, ACS could hold the phone system hostage by increasing lease rates to GCI. That forces GCI to raise prices to its customers, the company said.

Dana Tindall, senior vice president for GCI, said rates could also spiral upward without regulation.

Either way, if House Bill 106 becomes law, customers will pay higher rates, Tindall said.

''Neither the competitor nor the consumer are protected anymore,'' she said.

GCI favors a simple four-year extension of the commission's work without any statutory changes. ACS would like the commission phased out.

Both companies offer local and long-distance service mostly in Anchorage, Juneau and Fairbanks. While they are head-to-head competitors in some areas for the local market, ACS has about 10 percent of the long-distance market and lags far behind GCI with about 47 percent.

ACS lawyer Leonard Steinberg told a House committee earlier that the telephone company loses about $500,000 a month due to leasing agreements approved by the agency. He said in Fairbanks it costs ACS $32 a month on each line it leases to GCI, but is allowed to collect only $19.

Rep. Dan Ogg, R-Kodiak, said the regulatory issues taken up by the Legislature are too complicated for lawmakers and should be the purview of specialists within the agency.

''I don't feel comfortable I understand these rules,'' said Rep. Les Gara, D-Anchorage, a lawyer. He said House Bill 106 was the wrong approach. ''We don't understand a lot of this,'' he said.

The bills now go to the Senate, which is considering a measure to extend the agency for three years.



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