Telecommunications Law CLE State Deregulation at the PUC December 2014 Pete Kirchhof Colorado Telecommunications Association

Overview HB 1327 Sales Tax Exemption/Permitting HB 1328 Creation of Broadband Fund HB 1329 VoIP Deregulation HB 1330 Update Telecom Definitions HB 1331 Voice (Basic Service) Deregulation Pending Issues

HB 1327 Sales Tax Exemption/Permitting Creates a state rebate of state sales and use taxes paid on broadband equipment installed in target areas of the state up to a cap of $1m per year and will be prorated if providers submit claims for more than the cap Requires local government permitting of broadband facilities and certain wireless service facilities to adhere to new statutory deadlines, and to allow consolidation of applications for small cell networks Requires state and local government agencies, including coordination by the Department of Transportation, to provide notice of trenching activity to broadband providers, except in emergencies, and to regulate other aspects of trenching; and clarifies that broadband service providers may utilize public rights- of-way for broadband facilities to the same extent as other telecommunication providers Source: April 21, 2014 Legislative Council Fiscal Note.

HB 1328 Creation of Broadband Fund Authorizes the Commission to repurpose a portion of the $54M state high cost fund to advance broadband in unserved areas (currently defined as providing less than 4Mbps down and 1Mbps up but must be equal to the FCC definition if faster) As the Commission determines geographic areas that have effective voice competition and are no longer eligible for support for basic service, the funding for those areas will be eliminated with the majority of the savings going into the broadband fund The balance (5-20% phased in four steps from ) will be returned to ratepayers through a decrease in the annual surcharge that is used to fund these programs A sixteen person board appointed to govern the fund including approving applications for funding – Appointments were made by Governor and Legislature representing the state, industry and local communities First broadband transfer pending Commission decision from initial effective competition review

HB 1329 VoIP Deregulation Deregulates advanced services, premium services, interLATA toll, intraLATA toll, private line, non-optional operator services Codifies deregulation of Internet protocol (IP) enabled services and VoIP service The bill explicitly retains Commission Part 3 regulation over Switched Access and does not change existing interconnection obligations or Commission authority over wholesale services No change in Commission authority to regulate Basic Emergency Services (911)

HB 1330 Update Telecom Definitions Amends statutory terms used in telecommunications regulation Definitions are added or modified to reflect current practices related to competitive markets and types of telecommunications service providers The bill also eliminates obsolete definitions and references, such as transitional provisions for the implementation of competitive markets in 1996 Source: March 24, 2014 Legislative Council Fiscal Note.

HB 1331 Voice (Basic Service) Deregulation Voice services (basic local exchange service) are deregulated as of May 9, 2014 Legislation requires that an ILEC/RLEC remain subject to obligations as provider of last resort and must charge a uniform price (subject to the FCC urban rate floor adjustments) for basic service throughout its service territory until July 1, 2016 For basic local exchange providers that accept high cost support, the Commission retains the authority to designate POLRs, determine a maximum price for basic service and prohibit the discontinuance of basic service Commission may consider re-regulation after July 1, 2018 (claw back) Maintains existing Commission authority to impose fees related to the high cost fund, 911 and Telephone Relay Service

Pending Issues Rulemaking to revise and/or eliminate telecom rules – Regulation only remains for 911, high cost support/recipients, wholesale Providers could withdraw and/or modify tariffs to comply with new statutes Regulatory issues to be addressed include but are not limited to: – Carrier registration – Reporting – Numbering – Fixed Utility Fund assessments Effective Competition Analysis (ECA) to determine high cost funding – Pending high cost rulemaking dockets could impact voice/broadband – POLR must be automatically eliminated in an ECA

Pending Issues (cont.) State decisions must consider federal issues No CAF for RLECS – Need data only broadband CAF funding from FCC – Pricing for broadband only service skewed by old regulations FCC Urban Rate Floor Transition FCC Docket on IP Transition Government owned networks (State and Federal issue)

Closing Questions or comments Contact – Pete Kirchhof