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IL Telecom Rewrite


9/3/2008. ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979. Leader in telecommunications regulatory reform (IL) one of the first states to implement ... – PowerPoint PPT presentation

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Title: IL Telecom Rewrite

IL Telecom Rewrite
  • The primary piece of legislation governing the
    regulation of telecommunications services in the
    state of Illinois is "Article XIII.
    Telecommunications" of the Public Utilities Act
    which was originally known as the Universal
    Telephone Service Protection Law of 1985.
  • Article XIII of the Illinois Public Utilities
    Act, also known as the IL Telecom Act, was
    scheduled to sunset on July 1, 2001.

Leader in telecommunications regulatory reform
  • one of the first states to implement regulation
    alternative to traditional Rate of Return (ROR)
    regulation (November 1989)
  • Illinois Commerce Commission (ICC) approved
    statewide alternative regulation proposed by
    Ameritech Illinois, which included profit sharing
    between Ameritech and ratepayers.
  • Illinois Second District Appellate Court ruled
    that the ICC did not have the authority to adopt
    an alternative regulatory plan
  • an explicit allocation of costs, which was
    required by Section 13-507 of the Public
    Utilities Act, had not been documented.

1992 modification to the Public Utilities Act
  • included a clear requirement for allocating
    common expenses
  • authorized the ICC to approve alternative
    regulation only after the commission has found
    seven specific conditions have been met.

Seven Conditions
  • (1) be in the public interest
  • (2) produce fair, just, and reasonable rates for
    telecommunications services
  • (3) respond to changes in technology and the
    structure of the telecommunications industry that
    are, in fact, occurring
  • (4) constitute a more appropriate form of
    regulation based on the Commission's policy
  • (5) specifically identify how ratepayers will
    benefit from efficiency gains, cost savings, and
    productivity improvements
  • (6) maintain the quality and availability of
    telecommunications services
  • (7) not unduly or unreasonably prejudice any
    customer class, including other carriers.

Section 13-103 of Article XIII presents the
current policy
  • a) Telecommunications services should be
    available to all Illinois citizens
  • b) Where possible, competition should replace
  • c) Modifications to state regulation should
    ensure orderly transition
  • d) Regulated prices should be reasonable and
  • e) Regulation should be periodically reviewed and
  • f) Competition should foster investment and

Rewrite Proposals
  • HB 0492 Bill written by Ameritech Illinois
  • Strips the ICC of much of its regulatory
  • HB 2900 Bill that actually became law.

  • Provides 30 million in funds to eliminate the
    Digital Divide.
  • Enhances Life-Line and Link-Up enrollment for
    low-income phone subscribers.
  • Requires Ameritech to offer 3 flat rate packages.
  • Sets in statute Service Quality standards and
    customer credits for carrier failure to meet
  • Strengthens protections against Slamming,
    Cramming and Jamming.
  • Provides 90 million in customer refunds for
    settlement of Ameritech's business
    reclassification case
  • Requires deployment of advanced services, such as
    high speed internet, by incumbent carriers to 80
    of their customers by 2005, except in rural

  • Increases Commission enforcement authority,
    including injunctive relief and increased fine
    levels up to .00825 of a carrier's gross annual
    intrastate revenues per day (approx. 250,000 for
    Ameritech, 33,000 for Verizon, 2,000 for
    carriers with less than 35,000 access lines).
  • Provides ICC authority to impose interim tariffs
    to allow expedited implementation of Orders.
  • Strengthens and codifies certain market-opening
    provisions and increases enforcement of
    inter-carrier disputes regarding market opening

Classifying Services as Competitive
  • 1) the number, size, and geographic distribution
    of other providers of the service
  • (2) the availability of functionally equivalent
    services in the relevant geographic area and the
    ability of telecommunications carriers or other
    persons to make the same, equivalent, or
    substitutable service readily available in the
    relevant market at comparable rates, terms, and
  • (3) the existence of economic, technological, or
    any other barriers to entry into, or exit from,
    the relevant market
  • (4) the extent to which other telecommunications
    companies must rely upon the service of another
    telecommunications carrier to provide
    telecommunications service and
  • (5) any other factors that may affect competition
    and the public interest that the Commission deems

Competitive Services
  • All services under alternative regulation
    (business greater than 4 lines Ameritech)
  • Vertical services deemed competitive 6/1/03
    except caller id and call waiting

Business Rates
  • Rates for business lines 4 or less capped at
    5/1/01 rates until 7/1/05.

High Speed
  • Every Incumbent Local Exchange Carrier shall
    offer or provide advanced telecommunications
    services (200 kbps or greater at least one
    direction) to not less than 80 of its customers
    by January 1, 2005.

3 local calling plans
  • (1) A budget package, which shall consist of
    residential access service and unlimited local
  • (2) A flat rate package, which shall consist of
    residential access service, unlimited local
    calls, and the customer's choice of 2 vertical
    services as defined in this Section.
  • (3) An enhanced flat rate package, which shall
    consist of residential access service for 2
    lines, unlimited local calls, the customer's
    choice of 2 vertical services as defined in this
    Section, and unlimited local toll service.

ICC deregulates Chicago-area local service
  • ICC passes order 06-0027 on 8/30/06
  • CUB agrees to support ATT
  • Classifies most ATT services as competitive

Filing started 11/2005
  • Competitive pressure from (75) CLECs, wireless
    and VoIP
  • Residential Market Share dropped 32 since 2001
    (claimed ATT)

CUB agreement
  • Four year rate freeze for some service plans
  • 2.5 million to CUB for consumer education plans
  • Caps on monthly usage fee increases ! Per year
    per-call increases capped at 0.005