392.245. Companies to be regulated, when--maximum prices, determined how, changed how--classification--change of rates--nonwireless basic local telecommunications services, exempt from maximum allowab - Missouri Statutes

Companies to be regulated, when--maximum prices, determined how,changed how--classification--change of rates--nonwireless basiclocal telecommunications services, exempt from maximum allowableprices.

392.245. 1. The commission shall have the authority to ensure thatrates, charges, tolls and rentals for telecommunications services are just,reasonable and lawful by employing price cap regulation. Any rate, charge,toll, or rental that does not exceed the maximum allowable price under thissection shall be deemed to be just, reasonable, and lawful. As used inthis chapter, "price cap regulation" shall mean establishment of maximumallowable prices for telecommunications services offered by an incumbentlocal exchange telecommunications company, which maximum allowable pricesshall not be subject to increase except as otherwise provided in thissection.

2. A large incumbent local exchange telecommunications company shallbe subject to regulation under this section upon a determination by thecommission that an alternative local exchange telecommunications companyhas been certified to provide basic local telecommunications service or aninterconnected voice over Internet protocol service provider has beenregistered to provide service under section 392.550, and is providing suchservice in any part of the large incumbent company's service area. A smallincumbent local exchange telecommunications company may elect to beregulated under this section upon providing written notice to thecommission if an alternative local exchange telecommunications company hasbeen certified to provide basic local telecommunications service or aninterconnected voice over Internet protocol service provider has beenregistered to provide service under section 392.550, and is providing suchservice, or if two or more commercial mobile service providers providingwireless two-way voice communications services are providing services, inany part of the small incumbent company's service area, and the incumbentcompany shall remain subject to regulation under this section after suchelection.

3. Except as otherwise provided in this section, the maximumallowable prices established for a company under subsection 1 of thissection shall be those in effect on December thirty-first of the yearpreceding the year in which the company is first subject to regulationunder this section. Tariffs authorized under subsection 9 of this sectionshall be phased in as provided under such tariffs as approved by thecommission.

4. (1) Except as otherwise provided in subsections 8 and 9 of thissection and section 392.248, the maximum allowable prices for exchangeaccess and basic local telecommunications services of a small, incumbentlocal exchange telecommunications company regulated under this sectionshall not be changed for a period of twelve months after the date thecompany is subject to regulation under this section. Except as otherwiseprovided in subsections 8 and 9 of this section and section 392.248, themaximum allowable prices for exchange access and basic localtelecommunications services of a large, incumbent local exchangetelecommunications company regulated under this section shall not bechanged prior to January 1, 2000. Thereafter, the maximum allowable pricesfor exchange access and basic local telecommunications services of anincumbent local exchange telecommunications company shall be annuallychanged by the following methods:

(a) By the change in the Consumer Price Index (CPI), as published bythe United States Department of Commerce or its successor agency for thepreceding twelve months; provided however, that if such a change in the CPIfor the preceding twelve months is negative, upon request by the companyand approval by the commission for good cause shown, the commission maywaive any requirement to reduce prices of exchange access and basic localtelecommunications service and those existing prices shall remain themaximum allowable prices for purposes of this section until the next annualchange. All revenues that are attributable to a CPI reduction waiver shallbe used for the purposes approved by the commission to benefit localexchange ratepayers in a specific exchange or exchanges, including but notlimited to expanded local calling scopes;

(b) Notwithstanding the foregoing, upon a finding that a company thatis subject to price-cap regulation has telecommunications services in oneor more exchanges classified as competitive, the company may increase themaximum allowable rate for basic local telecommunications service innoncompetitive exchanges at a level not to exceed the statewide average forbasic local telecommunications service in the competitively classifiedexchanges of that company, provided that any annual increase in rates forresidential basic local telecommunications service shall not exceed twodollars per line per month for a period of four years.

(2) The commission shall approve a change to a maximum allowableprice or make a determination regarding a request for waiver filed pursuantto subdivision (1) of this subsection within forty-five days of filing ofnotice by the local exchange telecommunications company. An incumbentlocal exchange telecommunications company shall file a tariff to reduce therates charged for any service in any case in which the current rate exceedsthe maximum allowable price established under this subsection.

(3) An incumbent local exchange telecommunications company may changethe rates for its services, consistent with the provisions of subsections 2through 5 of section 392.200, but not to exceed the maximum allowableprices, by filing tariffs which shall be approved by the commission withinten days, provided that any such rate is not in excess of the maximumallowable price established for such service under this section.

5. Each telecommunications service offered to business customers,other than exchange access service, of an incumbent local exchangetelecommunications company regulated under this section shall be classifiedas competitive in any exchange in which at least two nonaffiliated entitiesin addition to the incumbent local exchange company are providing basiclocal telecommunications service to business or residential customerswithin the exchange. Each telecommunications service offered toresidential customers, other than exchange access service, of an incumbentlocal exchange telecommunications company regulated under this sectionshall be classified as competitive in an exchange in which at least twononaffiliated entities in addition to the incumbent local exchange companyare providing basic local telecommunications service to residentialcustomers within the exchange. For purposes of this subsection and not forpurposes of defining the commission's jurisdiction:

(1) Commercial mobile service providers as identified in 47 U.S.C.Section 332(d)(1) and 47 C.F.R. Parts 22 or 24 shall be considered asentities providing basic local telecommunications service, provided thatonly one such nonaffiliated provider shall be considered as providing basiclocal telecommunications service within an exchange. If the commercialmobile service provider does not designate customers by business orresidential class, such provider will be deemed to be providing service toboth business and residential customers;

(2) Any entity providing local voice service in whole or in part overtelecommunications facilities or other facilities in which it or one of itsaffiliates have an ownership interest shall be considered as providingbasic local telecommunications service regardless of whether such entity issubject to regulation by the commission, including any interconnected voiceover Internet protocol service provider registered under section 392.550.A provider of local voice service that requires the use of a third party,unaffiliated broadband network or dial-up Internet network for theorigination of local voice service shall not be considered a basic localtelecommunications service provider. For purposes of this subsection only,a "broadband network" is defined as a connection that delivers services atspeeds exceeding two hundred kilobits per second in at least one direction;

(3) Regardless of the technology utilized, "local voice service"shall mean two-way voice service capable of receiving calls from a providerof basic local telecommunications services as defined by subdivision (4) ofsection 386.020, RSMo;

(4) Telecommunications companies only offering prepaidtelecommunications service or only reselling telecommunications service asdefined in subdivision (54) of section 386.020, RSMo, in the exchange beingconsidered for competitive classification shall not be considered entitiesproviding basic telecommunications service;

(5) "Prepaid telecommunications service" shall mean a local servicefor which payment is made in advance that excludes access to operatorassistance and long distance service;

(6) Upon request of an incumbent local exchange telecommunicationscompany seeking competitive classification of its services under thissubsection, the commission shall, within thirty days of the request,determine whether there are at least two entities providing basic localtelecommunications service in an exchange and if so shall approve tariffsdesignating all such services other than exchange access service ascompetitive within such exchange. Notwithstanding any other provision ofthis subsection, any incumbent local exchange company may petition thecommission for competitive classification within an exchange based oncompetition from any entity providing local voice service in whole or inpart by using its own telecommunications facilities or other facilities orthe telecommunications facilities or other facilities of a third party,including those of the incumbent local exchange company as well asproviders that rely on an unaffiliated third-party Internet service. Thecommission shall approve such petition within sixty days. The commissionshall maintain records of certified and registered providers of local voiceservice, including those providers who provide local voice service overtheir own facilities, or through the use of facilities of another providerof local voice service. In reviewing an incumbent local exchange telephonecompany's request for competitive status in an exchange, the commissionshall consider their own records concerning ownership of facilities andshall make all inquiries as are necessary and appropriate from certifiedand registered providers of local voice service to determine the extent andpresence of local voice providers in an exchange. If the services of anincumbent local exchange telecommunications company are classified ascompetitive under this subsection, the local exchange telecommunicationscompany may thereafter adjust its rates for such competitive servicesupward or downward as it determines appropriate in its competitiveenvironment, upon filing tariffs which shall become effective within thetime lines identified in section 392.500. The commission may not more thanonce every two years review those exchanges where an incumbent localexchange carrier's services have been classified as competitive, todetermine if the conditions of this subsection for competitiveclassification continue to exist in the exchange and if the commissiondetermines, after hearing, that such conditions no longer exist for theincumbent local exchange telecommunications company in such exchange, itshall reimpose upon the incumbent local exchange telecommunicationscompany, in such exchange, the provisions of paragraph (c) of subdivision(2) of subsection 4 of section 392.200 and the new maximum allowable pricesfor basic local telecommunications service in such exchange shall beestablished by the provisions of subsection 4 of this section;

(7) Upon a finding that fifty-five percent or more of an incumbentlocal exchange telecommunications company's total subscriber access linesare in exchanges where such company's services have been declaredcompetitive, the incumbent local exchange telecommunications company shallbe deemed competitive and shall no longer be subject to price-capregulation, except that rates charged for basic local telecommunicationsservice in exchanges that were noncompetitive immediately prior to thisfinding can be increased to a rate that is no higher than the statewideaverage rate for basic local telecommunications service in the incumbentlocal exchange company's competitively classified exchanges for a period offour years. During the four year period, any annual increase in rates forresidential basic local telecommunications service shall not exceed twodollars per line per month. Rates charged for exchange access service byan incumbent local exchange telecommunications company deemed competitiveshall not exceed the rates charged at the time the company was deemedcompetitive;

(8) An incumbent local exchange telecommunications company deemedcompetitive under this section and all alternative local exchangetelecommunications companies shall not be required to comply with customerbilling rules, network engineering and maintenance rules, and rulesrequiring the recording and submitting of service objectives orsurveillance levels established by the commission, but shall be subject tocommission authority to hear and resolve customer complaints to the extentthe customer complaint is based on Truth-in-Billing regulations establishedby the Federal Communications Commission, or network engineering andmaintenance standards established within the National Electric Safety Code.In addition, the commission shall continue to have authority to hear andresolve customer complaints to the extent such complaints are based on afailure to comply with the provisions of applicable tariffs, or a failureto comply with the rules of the commission other than those rules relatedto customer billing, network engineering and maintenance, and serviceobjectives and surveillance levels or a failure to provide service in amanner that is safe, adequate, usual and customary in thetelecommunications industry;

(9) The commission may reimpose its customer billing rules, networkengineering and maintenance rules, and rules requiring the recording andsubmitting of service objectives or surveillance levels, as applicable, onan incumbent local exchange telecommunications company that has been deemedcompetitive under this section, only upon a finding that the incumbentlocal exchange telecommunications company has engaged in a pattern orpractice of inadequate service in these subject areas and that thereimposition of such rules is necessary to ensure the protection ofconsumer rights and/or the public safety. Prior to formal notice andhearing, the commission shall notify the incumbent local exchangetelecommunications company of any deficiencies and provide such company anopportunity to remedy such deficiencies in a reasonable amount of time, butnot less than sixty days. Should the incumbent local exchangetelecommunications company remedy such deficiencies within a reasonableamount of time, the commission shall not reimpose the applicable customerbilling rules, network engineering and maintenance rules, and rulesrequiring the recording and submitting of service objectives orsurveillance levels. Should the incumbent local exchangetelecommunications company fail to remedy such deficiencies, the commissionshall reimpose the applicable customer billing rules, network engineeringand maintenance rules, and rules requiring the recording and submitting ofservice objectives or surveillance levels, if it finds that:

(a) The reimposition of such rules is necessary for the protection ofthe majority of the incumbent local exchange telecommunications company'scustomers or for the public safety;

(b) No alternative or less burdensome action is adequate to protectthe majority of the incumbent local exchange telecommunications company'scustomers; and

(c) Competitive market forces have been and will continue to beinsufficient to protect the majority of the incumbent local exchangetelecommunications company's customers;

(10) Should the commission determine that an emergency exists thatimpacts public safety or is essential for the protection of a majority ofcustomers of all local exchange telecommunications companies operating inthis state, the commission may, on an emergency basis, impose its customerbilling rules, network engineering and maintenance rules, and rulesrequiring the recording and submitting of service objectives orsurveillance levels, as applicable, on all local exchangetelecommunications companies on a uniform and nondiscriminatory basisthrough the promulgation of emergency rules pursuant to section 536.025,RSMo. The commission shall only promulgate such emergency rules afterdetermining that:

(a) The rules are essential for the protection of a majority ofcustomers of local exchange telecommunications companies operating in thisstate;

(b) No alternative or less burdensome mechanism will suffice toprotect the majority of customers of local exchange telecommunicationscompanies operating in this state; and

(c) Competitive market forces have been and will continue to beinsufficient to protect the majority of customers of local exchangetelecommunications companies operating in this state.

Notwithstanding the provisions of subsection 7 of section 536.025, RSMo,emergency rules promulgated by the commission pursuant to this subdivisionshall remain in effect until the legislature concludes its next regularlegislative session following the imposition of any such rules.

6. Nothing in this section shall be interpreted to alter thecommission's jurisdiction over quality and conditions of noncompetitivetelecommunications services or to relieve noncompetitive telecommunicationscompanies from the obligation to comply with commission rules relating tominimum basic local and interexchange telecommunications service.

7. A company regulated under this section shall not be subject toregulation under subsection 1 of section 392.240.

8. An incumbent local exchange telecommunications company regulatedunder this section may reduce intrastate access rates, including carriercommon line charges, subject to the provisions of subsection 9 of thissection, to a level not to exceed one hundred fifty percent of thecompany's interstate rates for similar access services in effect as ofDecember thirty-first of the year preceding the year in which the companyfirst exercises its option to rebalance rates under this subsection.Nothing in this subsection shall preclude an incumbent local exchangetelecommunications company from establishing its intrastate access rates ata level lower than one hundred fifty percent of the company's interstaterates for similar access services in effect as of December thirty-first ofthe year preceding the year in which the company first exercises its optionto rebalance rates under this subsection.

9. Other provisions of this section to the contrary notwithstanding,the commission shall allow an incumbent local exchange telecommunicationscompany regulated under this section which reduces its intrastate accessservice rates pursuant to subsection 8 of this section to offset the annualrevenue loss resulting from its access service rate reduction by increasingeach year its monthly maximum allowable prices applicable to basic localexchange telecommunications services by an amount not to exceed one dollarfifty cents. A large incumbent local exchange telecommunications companyshall not increase its monthly rates applicable to basic localtelecommunications service under this subsection unless it also reduces itsrates for intraLATA interexchange telecommunications services by at leastten percent in the year it first exercises its option to rebalance ratesunder subsection 8 of this section. The total annual revenue increase dueto the increase to the monthly maximum allowable prices for basic localtelecommunications service shall not exceed the total annual revenue lossresulting from the reduction to intrastate access service rates.

10. Any telecommunications company whose intrastate access costs arereduced pursuant to subsections 8 and 9 of this section shall decrease itsrates for intrastate toll telecommunications service to flow through suchreduced costs to its customers. The commission may permit atelecommunications company to defer a rate reduction required by thissubdivision until such reductions, on a cumulative basis, reach a levelthat is practical to flow through to its customers.

11. All nonbasic telecommunications services of an incumbent localexchange telecommunications company that is subject to price-cap regulationshall be exempt from limitations on maximum allowable prices.

12. The commission shall permit an incumbent local exchangetelecommunications company regulated under this section to determine andset its own depreciation rates which shall be used for all intrastateregulatory purposes. Provided, however, that such a determination is notbinding on the commission in determining eligibility for or reimbursementunder the universal service fund established under section 392.248.

13. Prior to January 1, 2006, the commission shall determine theweighted, statewide average rate of nonwireless basic localtelecommunications services as of August 28, 2005. The commission shalllikewise determine the weighted, statewide average rate of nonwirelessbasic local telecommunications services two years and five years afterAugust 28, 2005. The commission shall report its findings to the generalassembly by January 30, 2008, and provide a second study by January 30,2011. If the commission finds that the weighted, statewide average rate ofnonwireless basic local telecommunications service in 2008 or 2011 isgreater than the weighted, statewide average rate of nonwireless basiclocal telecommunications service in 2006 multiplied by one plus thepercentage increase in the Consumer Price Index for all goods and servicesfor the study periods, the commission shall recommend to the generalassembly such changes in state law as the commission deems appropriate toachieve the purposes set forth in section 392.185. In determining theweighted, statewide average rate of nonwireless basic localtelecommunications service, the commission shall exclude rate increases tononwireless basic telecommunications service permitted under subsections 8and 9 of this section and section 392.240 or exogenous costs incurred bythe providers of nonwireless basic local telecommunications service.

(L. 1996 S.B. 507, A.L. 2005 S.B. 237, A.L. 2006 S.B. 1066, A.L. 2008 H.B. 1779)