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Public Utilities and Technology Interim Committee

MINUTES OF THE

    
PUBLIC UTILITIES AND TECHNOLOGY INTERIM COMMITTEE

Wednesday, June 17, 1998 - 2:00 p.m. - Room 223 - State Capitol


Members Present:
    Rep. Beverly Ann Evans, Co-Chair
    Sen. Mike Dmitrich
    Sen. John P. Holmgren
    Sen. Alarik Myrin
    Rep. Jeff Alexander
    Rep. Orville D. Carnahan
    Rep. Gary F. Cox
    Rep. Christine R. Fox-Finlinson
    Rep. Brent H. Goodfellow
    Rep. Tom Hatch
    Rep. J. Brent Haymond
    Rep. Dennis H. Iverson
    Rep. David M. Jones
    Rep. Swen Nielsen
    Rep. Jack Seitz
    

Members Absent:
    Sen. Craig A. Peterson
    Rep. Daniel H. Tuttle

Members Excused:
    Sen. Lorin V. Jones, Co-Chair
    Rep. Ralph Becker

Staff Present:
    Mr. Richard North,
     Research Analyst
    Ms. Tani Pack Downing,
     Associate General Counsel
    Ms. Junie G. Anderson,

     Legislative Secretary

Note:    A list of others present and a copy of materials distributed in the meeting are on file in the Office of Legislative Research and General Counsel.

1.    Call to Order - Chair Evans called the meeting to order at 2:15 p.m.

    MOTION: Rep. Cox moved to approve the minutes of the May 20, 1998 meeting. The motion passed unanimously, with Sen. Dmitrich, Rep. Carnahan, and Rep. Seitz absent for the vote.
                                
2.     Natural Gas Distribution Issues - Mr. Ruland Gill, Questar Corporation, briefed the committee on natural gas issues. Mr. Alan Allred, Questar Corporation , gave a slide presentation which included an introduction to gas industry restructuring, where Questar is in the process, lessons learned, and what restructuring changes are likely to happen next. A copy of the presentation was distributed.
    
3.    Telecommunications - Prioritizing the Top Three Competitive Issues - Chair Evans asked committee members to review the Study Item Survey included with the monthly mailing and after listening to presentations, return them to staff marked with their top three choices. She also invited members of the audience to make suggestions for items to possibly study.

    Ms. Nancy Gibbs, Independent Telephone Association, and Mr. Eddie Cox, Central Utah Telephone, Inc., gave a slide presentation representing Exchange Carriers of Utah. A copy of the presentation was distributed. Mr. Cox was concerned with continuance of universal service and funding, investment cost recovery, and reciprocity.

    Mr. Ted Smith, U S West, addressed the issue of competition in Utah. He named four major competitors - ELI, Nextlink, TCG (which is being acquired by AT&T), and Brooks (recently acquired by WorldCom, and is acquiring MCI.) He said competitors have captured nearly one-half of the market. He suggested the committee examine the following three issues.

    1)    Regulatory parity _ reporting requirements, carrier of last resort, subsidies, etc. He also suggested the Legislature review these issues for prospective purposes.

    2)    Long distance market _ Mr. Smith stated that he believed it would be appropriate for legislators to take a position on opening both interstate and intrastate markets.

    3)    General examination of the progress of competition in the state.

    Mr. L.J. Godfrey, AT&T, spoke about access to buildings. He indicated that barriers in commercial buildings, put up by the landlord or developer, in which fees are imposed for access to the property could potentially provide discriminatory treatment of competitive carriers. He also noted that it may limit telecommunications choices for business owners.

    Mr. Godfrey also spoke on the subject of "slamming" which is the unauthorized switching of someone's long distance service. He said the state's slamming policies must be consistent with those at the federal level and encouraged the committee to keep the state competitively neutral. He distributed a document titled "Complaint Ratios for Long Distance Companies Served with More Than 250 Slamming Complaints," and "Let's Put the Brakes on Slamming!"

    Ms. Betsy Wolfe, Consumers Alliance, Community Action Program, requested that the committee examine all issues of telecommunication deregulation and revisit the 1995 Utah Telecommunications Act. She suggested a review of fundamental assumptions of the 1995 Act and added that an important issue to consider is market power and its effect on competition. She said there is a changed environment since the '95 Act was passed. She also was concerned about captive- rate payers.

    Mr. Jerry Oldroyd, Consortium - Competitive Providers, suggested the committee explore industry-wide solutions rather than a legislative solution for competitive issues. He spoke about the cost of unbundled loops which are currently priced at levels that are not competitive. Consequently, few companies are buying unbundled loops. He urged the committee to review the cost of an unbundled loop.

    Mr. Oldroyd also spoke on the subject of access to buildings, and indicated that because of high fees charged for allowing entry to the buildings, customers demanding alternative local exchange services are being denied the right to choose providers.

    He also spoke about interconnection. He said it is important to establish and reinforce incentives so that carriers will create open and efficient networks. He requested a clear definition of "subsidies" and "imputation."

4.    Slamming, Cramming, Spamming, Telemarketing - Ms. Francine Giani, Director, Division of Consumer Protection, spoke about Utah's telemarketing history and discussed the issue of slamming. She informed the committee that the National Fraud Information Center received 25,500 slamming complaints in the first six months of 1997. She also suggested written verification be mandatory for consumers to change long-distance providers.

    Mr. Garth Howard, President, Direct Broadcast Satellite, Matrixx Corporation, addressed the issues of telemarketing fraud and telecommunications abuse. He informed the committee of what his company is doing to resolve the problem. Mr. Garth defined spamming, cramming, and slamming (SCS). He also discussed the federal and state regulations on SCS.

    Mr. Ted Smith, U S West, distributed a packet containing documents titled "Long-Distance Slamming Complaints," "Don't Get Slammed"; two news releases titled "U S WEST Launches New Consumer Alert Public Education Campaign Against Long-Distance Slamming," "U S WEST Communications Cracks Down on Firms That Engage in Phone-Bill "Cramming" - Urges Customers to Help by Checking Their Bills"; four Salt Lake Tribune articles titled "Utahns: Be Wary of Phone 'Slamming'," "Beware of Slammers Who Say They're From U S WEST," "U S WEST Campaigns Against 'Slamming'," and "Phone Company Warns of 'Cramming' on Bills."

    Mr. Smith recommended the committee study the issues more closely and, if legislation is needed, he recommended the solutions include: 1) tough penalties imposed on repeat slammers, 2) imposing greater verification procedures on repeat offenders, 3) studying a means to control the money sent to the offending slammer during the time someone was slammed, and 4) drafting a statute regarding SCS.

    Mr. Smith spoke on the issue of "cramming" which means consumers are billed for services that were not authorized, or were fraudulently induced to purchase. He informed the committee of his company's efforts to reduce cramming.

    Commissioner Steve Mecham, Public Service Commission, said the Commission is logging complaints pertaining to slamming and is working with U S West on resolving the problem.

    Virginia VanLuen, West Valley, spoke about unauthorized charges on her phone bill.

5.    Adjournment - The meeting adjourned at 4:20 p.m.

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