Effective 28 Aug 2008

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 allowable prices. — 1. The commission shall have the authority to ensure that rates, 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 this section shall be deemed to be just, reasonable, and lawful. As used in this chapter, "price cap regulation" shall mean establishment of maximum allowable prices for telecommunications services offered by an incumbent local exchange telecommunications company, which maximum allowable prices shall not be subject to increase except as otherwise provided in this section.

2. A large incumbent local exchange telecommunications company shall be subject to regulation under this section upon a determination by the commission that an alternative local exchange telecommunications company has been certified to provide basic local telecommunications service or an interconnected voice over internet protocol service provider has been registered to provide service under section 392.550, and is providing such service in any part of the large incumbent company's service area. A small incumbent local exchange telecommunications company may elect to be regulated under this section upon providing written notice to the commission if an alternative local exchange telecommunications company has been certified to provide basic local telecommunications service or an interconnected voice over internet protocol service provider has been registered to provide service under section 392.550, and is providing such service, or if two or more commercial mobile service providers providing wireless two-way voice communications services are providing services, in any part of the small incumbent company's service area, and the incumbent company shall remain subject to regulation under this section after such election.

3. Except as otherwise provided in this section, the maximum allowable prices established for a company under subsection 1 of this section shall be those in effect on December thirty-first of the year preceding the year in which the company is first subject to regulation under this section. Tariffs authorized under subsection 9 of this section shall be phased in as provided under such tariffs as approved by the commission.

4. (1) Except as otherwise provided in subsections 8 and 9 of this section and section 392.248, the maximum allowable prices for exchange access and basic local telecommunications services of a small, incumbent local exchange telecommunications company regulated under this section shall not be changed for a period of twelve months after the date the company is subject to regulation under this section. Except as otherwise provided in subsections 8 and 9 of this section and section 392.248, the maximum allowable prices for exchange access and basic local telecommunications services of a large, incumbent local exchange telecommunications company regulated under this section shall not be changed prior to January 1, 2000. Thereafter, the maximum allowable prices for exchange access and basic local telecommunications services of an incumbent local exchange telecommunications company shall be annually changed by the following methods:

(a) By the change in the Consumer Price Index (CPI), as published by the United States Department of Commerce or its successor agency for the preceding twelve months; provided however, that if such a change in the CPI for the preceding twelve months is negative, upon request by the company and approval by the commission for good cause shown, the commission may waive any requirement to reduce prices of exchange access and basic local telecommunications service and those existing prices shall remain the maximum allowable prices for purposes of this section until the next annual change. All revenues that are attributable to a CPI reduction waiver shall be used for the purposes approved by the commission to benefit local exchange ratepayers in a specific exchange or exchanges, including but not limited to expanded local calling scopes;

(b) Notwithstanding the foregoing, upon a finding that a company that is subject to price-cap regulation has telecommunications services in one or more exchanges classified as competitive, the company may increase the maximum allowable rate for basic local telecommunications service in noncompetitive exchanges at a level not to exceed the statewide average for basic local telecommunications service in the competitively classified exchanges of that company, provided that any annual increase in rates for residential basic local telecommunications service shall not exceed two dollars per line per month for a period of four years.

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

(3) An incumbent local exchange telecommunications company may change the rates for its services, consistent with the provisions of subsections 2 through 5 of section 392.200, but not to exceed the maximum allowable prices, by filing tariffs which shall be approved by the commission within ten days, provided that any such rate is not in excess of the maximum allowable 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 exchange telecommunications company regulated under this section shall be classified as competitive in any exchange in which at least two nonaffiliated entities in addition to the incumbent local exchange company are providing basic local telecommunications service to business or residential customers within the exchange. Each telecommunications service offered to residential customers, other than exchange access service, of an incumbent local exchange telecommunications company regulated under this section shall be classified as competitive in an exchange in which at least two nonaffiliated entities in addition to the incumbent local exchange company are providing basic local telecommunications service to residential customers within the exchange. For purposes of this subsection and not for purposes 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 as entities providing basic local telecommunications service, provided that only one such nonaffiliated provider shall be considered as providing basic local telecommunications service within an exchange. If the commercial mobile service provider does not designate customers by business or residential class, such provider will be deemed to be providing service to both business and residential customers;

(2) Any entity providing local voice service in whole or in part over telecommunications facilities or other facilities in which it or one of its affiliates have an ownership interest shall be considered as providing basic local telecommunications service regardless of whether such entity is subject to regulation by the commission, including any interconnected voice over 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 the origination of local voice service shall not be considered a basic local telecommunications service provider. For purposes of this subsection only, a "broadband network" is defined as a connection that delivers services at speeds 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 provider of basic local telecommunications services as defined by subdivision (4) of section 386.020;

(4) Telecommunications companies only offering prepaid telecommunications service or only reselling telecommunications service as defined in subdivision (54) of section 386.020 in the exchange being considered for competitive classification shall not be considered entities providing basic telecommunications service;

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

(6) Upon request of an incumbent local exchange telecommunications company seeking competitive classification of its services under this subsection, the commission shall, within thirty days of the request, determine whether there are at least two entities providing basic local telecommunications service in an exchange and if so shall approve tariffs designating all such services other than exchange access service as competitive within such exchange. Notwithstanding any other provision of this subsection, any incumbent local exchange company may petition the commission for competitive classification within an exchange based on competition from any entity providing local voice service in whole or in part by using its own telecommunications facilities or other facilities or the telecommunications facilities or other facilities of a third party, including those of the incumbent local exchange company as well as providers that rely on an unaffiliated third-party internet service. The commission shall approve such petition within sixty days. The commission shall maintain records of certified and registered providers of local voice service, including those providers who provide local voice service over their own facilities, or through the use of facilities of another provider of local voice service. In reviewing an incumbent local exchange telephone company's request for competitive status in an exchange, the commission shall consider their own records concerning ownership of facilities and shall make all inquiries as are necessary and appropriate from certified and registered providers of local voice service to determine the extent and presence of local voice providers in an exchange. If the services of an incumbent local exchange telecommunications company are classified as competitive under this subsection, the local exchange telecommunications company may thereafter adjust its rates for such competitive services upward or downward as it determines appropriate in its competitive environment, upon filing tariffs which shall become effective within the time lines identified in section 392.500. The commission may not more than once every two years review those exchanges where an incumbent local exchange carrier's services have been classified as competitive, to determine if the conditions of this subsection for competitive classification continue to exist in the exchange and if the commission determines, after hearing, that such conditions no longer exist for the incumbent local exchange telecommunications company in such exchange, it shall reimpose upon the incumbent local exchange telecommunications company, in such exchange, the provisions of paragraph (c) of subdivision (2) of subsection 4 of section 392.200 and the new maximum allowable prices for basic local telecommunications service in such exchange shall be established by the provisions of subsection 4 of this section;

(7) Upon a finding that fifty-five percent or more of an incumbent local exchange telecommunications company's total subscriber access lines are in exchanges where such company's services have been declared competitive, the incumbent local exchange telecommunications company shall be deemed competitive and shall no longer be subject to price-cap regulation, except that rates charged for basic local telecommunications service in exchanges that were noncompetitive immediately prior to this finding can be increased to a rate that is no higher than the statewide average rate for basic local telecommunications service in the incumbent local exchange company's competitively classified exchanges for a period of four years. During the four year period, any annual increase in rates for residential basic local telecommunications service shall not exceed two dollars per line per month. Rates charged for exchange access service by an incumbent local exchange telecommunications company deemed competitive shall not exceed the rates charged at the time the company was deemed competitive;

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

(9) The commission may reimpose its customer billing rules, network engineering and maintenance rules, and rules requiring the recording and submitting of service objectives or surveillance levels, as applicable, on an incumbent local exchange telecommunications company that has been deemed competitive under this section, only upon a finding that the incumbent local exchange telecommunications company has engaged in a pattern or practice of inadequate service in these subject areas and that the reimposition of such rules is necessary to ensure the protection of consumer rights and/or the public safety. Prior to formal notice and hearing, the commission shall notify the incumbent local exchange telecommunications company of any deficiencies and provide such company an opportunity to remedy such deficiencies in a reasonable amount of time, but not less than sixty days. Should the incumbent local exchange telecommunications company remedy such deficiencies within a reasonable amount of time, the commission shall not reimpose the applicable customer billing rules, network engineering and maintenance rules, and rules requiring the recording and submitting of service objectives or surveillance levels. Should the incumbent local exchange telecommunications company fail to remedy such deficiencies, the commission shall reimpose the applicable customer billing rules, network engineering and maintenance rules, and rules requiring the recording and submitting of service objectives or surveillance levels, if it finds that:

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

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

(c) Competitive market forces have been and will continue to be insufficient to protect the majority of the incumbent local exchange telecommunications company's customers;

(10) Should the commission determine that an emergency exists that impacts public safety or is essential for the protection of a majority of customers of all local exchange telecommunications companies operating in this state, the commission may, on an emergency basis, impose its customer billing rules, network engineering and maintenance rules, and rules requiring the recording and submitting of service objectives or surveillance levels, as applicable, on all local exchange telecommunications companies on a uniform and nondiscriminatory basis through the promulgation of emergency rules pursuant to section 536.025. The commission shall only promulgate such emergency rules after determining that:

(a) The rules are essential for the protection of a majority of customers of local exchange telecommunications companies operating in this state;

(b) No alternative or less burdensome mechanism will suffice to protect the majority of customers of local exchange telecommunications companies operating in this state; and

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

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

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

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

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

9. Other provisions of this section to the contrary notwithstanding, the commission shall allow an incumbent local exchange telecommunications company regulated under this section which reduces its intrastate access service rates pursuant to subsection 8 of this section to offset the annual revenue loss resulting from its access service rate reduction by increasing each year its monthly maximum allowable prices applicable to basic local exchange telecommunications services by an amount not to exceed one dollar fifty cents. A large incumbent local exchange telecommunications company shall not increase its monthly rates applicable to basic local telecommunications service under this subsection unless it also reduces its rates for intraLATA interexchange telecommunications services by at least ten percent in the year it first exercises its option to rebalance rates under subsection 8 of this section. The total annual revenue increase due to the increase to the monthly maximum allowable prices for basic local telecommunications service shall not exceed the total annual revenue loss resulting from the reduction to intrastate access service rates.

10. Any telecommunications company whose intrastate access costs are reduced pursuant to subsections 8 and 9 of this section shall decrease its rates for intrastate toll telecommunications service to flow through such reduced costs to its customers. The commission may permit a telecommunications company to defer a rate reduction required by this subdivision until such reductions, on a cumulative basis, reach a level that is practical to flow through to its customers.

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

12. The commission shall permit an incumbent local exchange telecommunications company regulated under this section to determine and set its own depreciation rates which shall be used for all intrastate regulatory purposes. Provided, however, that such a determination is not binding on the commission in determining eligibility for or reimbursement under the universal service fund established under section 392.248.

13. Prior to January 1, 2006, the commission shall determine the weighted, statewide average rate of nonwireless basic local telecommunications services as of August 28, 2005. The commission shall likewise determine the weighted, statewide average rate of nonwireless basic local telecommunications services two years and five years after August 28, 2005. The commission shall report its findings to the general assembly by January 30, 2008, and provide a second study by January 30, 2011. If the commission finds that the weighted, statewide average rate of nonwireless basic local telecommunications service in 2008 or 2011 is greater than the weighted, statewide average rate of nonwireless basic local telecommunications service in 2006 multiplied by one plus the percentage increase in the Consumer Price Index for all goods and services for the study periods, the commission shall recommend to the general assembly such changes in state law as the commission deems appropriate to achieve the purposes set forth in section 392.185. In determining the weighted, statewide average rate of nonwireless basic local telecommunications service, the commission shall exclude rate increases to nonwireless basic telecommunications service permitted under subsections 8 and 9 of this section and section 392.240 or exogenous costs incurred by the 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)