MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-Second Session
May 26, 2003
The Committee on Commerce and Laborwas called to order at 2:31 p.m., on Monday, May 26, 2003. Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Ms. Barbara Buckley, Vice Chairwoman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Mr. David Brown
Mrs. Dawn Gibbons
Ms. Chris Giunchigliani
Mr. Josh Griffin
Mr. Lynn Hettrick
Mr. Ron Knecht
Ms. Sheila Leslie
Mr. John Oceguera
Mr. David Parks
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Diane Thornton, Senior Research Analyst
Wil Keane, Committee Counsel
Diane Thornton, Senior Research Analyst
Sharee Gebhardt, Committee Secretary
OTHERS PRESENT:
Misty Grimmer, Legislative Advocate, Cox Communications Company
Dan Reaser, Legislative Advocate, SBC
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection
Lou Emmert, Vice President & General Manager, Sprint
Sylvia Samano, President, SBC Nevada
Steve Tackes, Legislative Advocate, Eschelon Telecom, & MCI/WorldCom
John Frankovich, Legislative Advocate, AT&T Communications of Nevada, Inc.
Ann Pongracz, General Counsel, Sprint of Nevada
Don Soderberg, Chairman, Public Utilities Commission of Nevada
Russell Rowe, Legislative Advocate, Churchill County Communications
We’ll bring the Committee on Commerce and Labor to order. Note for the record that all members are here, a quorum is present, and we have two items on the agenda for today. It’s our third hearing on S.B. 400. Committee members should have a mock-up of the bill (Exhibit C), as well as the proposed amendment to the bill (Exhibit D) in front of them. I think we’ll have our legal staff go through the amendment. In case we have any questions, the Committee members can refer to the [parties present].
Senate Bill 400 (1st Reprint): Makes various changes relating to telecommunication service and broadband service. (BDR 58-261)
Wil Keane, Legal Division, Legislative Counsel Bureau:
[Introduced himself.] Essentially, this amendment did exactly what the parties requested. Certainly, if they have found any differences they should let us know. In Section 6 of the bill, we took out the definition that was there before and added the definition for telecommunications service that is provided in federal law. In Section 8, on lines 16 and 17, on the mock-up, we added a reference to NRS 704.68984 to make it clear that the authority of the Board to review these issues would be present. We removed language in Section 2 and replaced it with language that made clear that this section in no way limited or modified the authority of the Commission to consider these complaints and other issues that were placed in front of the Board.
Chairman Goldwater:
I think that’s an important point and was an item of compromise. It does not limit the authority of the Board to oversee issues that are related to broadband.
Wil Keane:
Exactly. We made clear that the Board is going to be able to examine the rates, terms, and conditions of intrastate special access services, which were specifically requested by the parties. We slightly revised the definition of broadband service from 190 kilobits to 200 kilobits. I believe that was to bring us into compliance with federal law. The only other major change was in Section 28 where we clarified that the PUC (Public Utilities Commission) was going to retain its authority to hear cases and matters brought before it regarding the broadband service that was dealt with in Section 8. That’s about all there was to it.
Assemblywoman Giunchigliani:
So this leaves everything still under jurisdiction of our PUC? We’re not giving anything away to the FCC?
Wil Keane:
That is correct.
Assemblywoman Giunchigliani:
The broadband definition is exactly what the federal law has? 200 kilobits? Do we know why they picked 190 kilobits in the first place?
Wil Keane:
[You asked] two questions. The 200 kilobits does match the federal law. I don’t know if the wording is exactly the same as federal law, but the 200 kilobits does match it. [Regarding the second question], I do not know why 190 was there in the first place.
Assemblywoman Giunchigliani:
Two-way service, if I went back to my original notes, now includes cellular phones, right? Does two-way service now allow for cellular phones to be included under the definition of broadband?
Chairman Goldwater:
No, I think that was with cable. Is a representative from Cox [Communications] here? Misty, do you want to come up? I had this explained to me and it wasn’t two-way.
Misty Grimmer, Legislative Advocate, Cox Communications Company:
[Introduced herself.] I didn’t hear the question.
Assemblywoman Giunchigliani:
In the definition of broadband, is two-way service that transmits information also now expanded to include cellular phones?
Misty Grimmer:
I don’t have the answer to that. I don’t think we even looked at that.
Dan Reaser, Legislative Advocate, SBC:
[Introduced himself.] If technology would allow in a particular cell system for a speed up to 200, then it would apply.
Assemblywoman Giunchigliani:
Was that the intent of what this legislation was to capture?
Dan Reaser:
The intent was to capture all available and coming technologies that would allow for a broadband platform.
Assemblywoman Giunchigliani:
If that’s the case, then I don’t remember any discussion regarding expanding into the area of cellular phones.
Dan Reaser:
If I might ask a clarification question, when I’m answering that, I’m talking about like Wi-Fi [broadband]. Is that what you are thinking about? I thought perhaps you had a particular technology in mind.
Assemblywoman Giunchigliani:
No, I don’t think so.
Dan Reaser:
For instance, at Carnegie Mellon University all the students have laptops and can access the Internet using wireless because of the facilities installed at Carnegie Mellon. To the extent that there was a wireless broadband access network at a campus that used a wireless technology, this would cover it. It wouldn’t cover the cell phone that you or I use.
Chairman Goldwater:
Gardner Gillespie answered that question. See if you can ask him, and then get back to Ms. Giunchigliani.
Assemblywoman Giunchigliani:
I just wanted to make sure that we all know what we are considering, especially [since] we have not discussed it to any great depth and considering how contentious this piece of legislation has been.
Assemblyman Beers:
So this is running a Cisco wireless PCMCIA Cord? We have routers and switches all over the place. We’re now under PUC? Did I hear that correctly that wireless LANS (Local Area Networks) would qualify as broadband access?
Dan Reaser:
No, you wouldn’t be under PUC jurisdiction. Perhaps the provider, a telecommunications company, might be, but under this provision it’s basically saying the Commission will not regulate broadband with certain limited exceptions:
Assemblyman Beers:
On the second floor, all of our wireless comes together in either a wire or a fiber optic connection and someone is our ISP (Internet service provider)? Or someone is providing us a connect activity to the outside?
Dan Reaser:
Are you making a statement?
Assemblyman Beers:
I’m trying to find out where the end of the PUC jurisdiction falls, or if it is involved there at all. I thought I heard you say that this system, set up on a campus back East, is described in this bill.
Dan Reaser:
Whatever technological means are used, as long as it has 200 kilobits in one direction would be broadband. I guess the answer is “yes,” if that has that attribute, it could be broadband.
Assemblyman Beers:
But only wireless?
Dan Reaser:
No, not only wireless. The intent was not to try to capture one existing technology as it exists in 2003, but to write a definition that was broad enough to change as technology changed.
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection:
[Introduced himself.] We have a one-sentence amendment (Exhibit E) that would be a new section, which was actually presented in another bill heard on the Senate side. It addresses the issue of potentially deceptive billing in long distance services so that a customer can more clearly identify exactly how they are being billed. It was agreed to by Sprint on the Senate side, but the bill never progressed. We thought we’d present it to you for inclusion. This is more relative to our ability to enforce deceptive trade laws for telephone companies that bill in unusual ways rather than being related to the intrinsic merits of the bill. It seems to fit into this bill.
Also, in response to Assemblywoman Giunchigliani’s question, the broadband definition in this bill still is not quite the same as the federal one. The federal definition says that the service has to be at the speed in both directions. This says only one [direction]. I don’t think it’s really germane to the policy issue before you, but I wanted you to be informed that this was not quite the federal broadband definition.
Assemblywoman Giunchigliani:
If that’s the case, do we create another problem that we’ll be dealing with next session because it’s not a two-way? Is there some unfair competition that comes into play there?
Timothy Hay:
The significance of “in two directions” could have implications for certain uses like satellite providers in which the downlengths speed is substantially faster than the uplengths speed. I don’t believe, for the issues that concern the CLECs (Competitive Local Exchange Carriers) and the ILECs (Incumbent Local Exchange Carriers) before you, that is a substantial issue or that it will create unforeseen problems. Either the CLECs or the ILECs may have something more to say on that. I wanted to make sure the record was clear that we’re still not quite using the same terminology as the FCC. There may be valid reasons for that.
Assemblywoman Giunchigliani:
That probably is some of the premise of why we wouldn’t be, because we’ve been fighting over the definition. Second, as this bill is recommended for amendment, if a person chooses to vote for it, can one comfortably go home and tell one’s constituents that they are not going to see a rate increase, based on any of this language?
Timothy Hay:
If I were in your position, I probably would not be totally comfortable making a blanket statement like that. Obviously, a lot depends on the circumstances of an individual consumer: what sort of services they purchase, and what sort of bundles they may end up buying that may have components that they don’t actually need, to inflate the price of the service. I do think it is critically important that some of the concepts that Assemblyman Parks put in the study resolution be adequately addressed so that if there are unforeseen consequences, this Committee, as well as your other colleagues in the legislative building, can revisit some of these issues in the 2005 Session, if that proves to be necessary.
I think it would be very helpful to all of us who vote on the regulatory side, as well as on the legislative policy side, to have an agreed set of basic empirical data that we can look at in more detail in 2005 and determine exactly what the impact of this legislation has been if there are some areas that need to be clarified or potentially corrected from the consumers’ standpoint. Obviously, the telecommunications industry is in a state of economic evolution, as well as technological evolution. Regardless of what we do in this session, I believe there will be further telecommunications issues for you to consider.
Assemblywoman Giunchigliani:
Is this further considered a deregulation of this industry?
Timothy Hay:
I certainly consider it that, yes.
Chairman Goldwater:
Would the PUC be able to do this by regulation?
Timothy Hay:
No. We believe it takes statutory authority to clarify the billing circumstances. That’s why we proposed it in an unrelated piece of legislation, but since it is related to this topic, we thought it would be useful to have that included in the bill.
[There were no further questions. Additional testifiers were invited to come forward.]
Chairman Goldwater:
We certainly don’t want to do anything that unintentionally harms our consumers, as I know you don’t. Also, it’s been represented by you and your labor representatives that this will not decrease the jobs at your respective companies and you would keep those jobs in-house. We wouldn’t want to see those jobs go away. That was a major portion of why I think this committee favorably saw many of your issues. We would like your assurance that we won’t be adversely affecting your respective companies.
Lou Emmert, Vice President & General Manager, Sprint:
[Introduced herself.] Obviously this bill will put us in a much better position to react to the changing market conditions, and, as we see it today, we’ll continue to need those employees to put the services in.
Sylvia Samano, President, SBC Nevada:
[Introduced herself.] As I stated in my last testimony at the second hearing when this question arose, we weren’t holding this bill hostage for jobs or anything like that. We were trying to ensure this bill would be able to make more investment in the state of Nevada, which would create more work for our employees to keep them in jobs.
Assemblyman Knecht:
Unless I missed something, Mr. Hay is proposing an amendment. I would like to hear from the other parties if they are comfortable with his amendment.
Chairman Goldwater:
I imagine that amendment would affect Sprint and AT&T the most.
Assemblyman Knecht:
And I would suggest the Commission also.
Steve Tackes, Legislative Advocate, Eschelon Telecom, & MCI/WorldCom:
[Introduced himself.] We have no objection to Mr. Hay’s amendment.
John Frankovich, Legislative Advocate, AT&T Communications of Nevada, Inc.:
[Introduced himself.] We have no objection to the amendment.
Ann Pongracz, General Counsel, Sprint of Nevada:
[Introduced herself.] Sprint has no objection to the proposed amendment.
Don Soderberg, Chairman, Public Utilities Commission of Nevada:
[Introduced himself.] We don’t see a problem with the language.
Dan Reaser:
On the amendment proposed by Mr. Hay, SBC does not have any problem with that. In discussions, he agreed it is not intended to reach flat rate plans by local carriers. With that understanding, we have no objection.
Chairman Goldwater:
Mr. Tackes, we have forged a compromise in S.B. 400. I know that compromise does not make you happy; it is something that you did in an effort to make something not so bad. Are we, at least, moving along with decent public policy here? Are we moving in a direction that’s good for the people of Nevada?
Steve Tackes:
That’s a pretty tough question. I honestly don’t know the answer. As you know, we did not support S.B. 400. As we sit here today, we do not support it, but in the interests of the direction of this committee, we did negotiate a compromise. We are sticking to that compromise and we will not be taking actions to oppose the bill.
John Frankovich:
I would echo Mr. Tackes’ remarks, but indicate that we might be able to learn the impacts if we adopt A.C.R. 19, which is also on your agenda today. That may be the most appropriate mechanism to answer your question.
Chairman Goldwater:
That’s important to know. Is there anybody else who wishes to say something for the record? [There was no one.] Okay. We’ll look at a motion.
ASSEMBLYMAN KNECHT MOVED TO AMEND AND DO PASS S.B. 400 INCLUDING THE STAFF PROPOSED AMENDMENTS AND MR. HAY’S AMENDMENT.
ASSEMBLYMAN HETTRICK SECONDED THE MOTION.
Chairman Goldwater:
Is there any discussion on the motion?
Assemblyman Knecht:
This is a good bill.
Speaker Perkins:
In light of a few remarks I made a week and a half ago, I want to thank the parties for coming together. I recognize all the hard work that they put into this. I know it was not an easy thing to do. I offer my thanks and that of the Assembly for finding some middle ground and setting some hard feelings aside to reach a compromise that appears to be one that will be good for the state.
Chairman Goldwater:
That being said, Mr. Speaker, thank you for those good words. Although it has been said so much this session, I further commend our staff that does yeoman’s work making sure we have information to make good decisions, [and] making sure everything is accurate and timely. As you might imagine, getting a detailed mockup at this level of compromise of acrimony, in the amount of time that we had to do it, was very impressive. It was a great job, Diane Thornton, Wil Keane, and Vance Hughey.
Assemblywoman Buckley:
I wanted to say, too, in light of some comments that were made [at a previous hearing on the matter] that one of the reasons I am going to support the bill is the language in the bill that indicates basic rates will not change for consumers. Sprint is in a very difficult position, as well as SBC, being a monopoly and having to compete with others and that was harming them. On the other hand, because they are a monopoly and handle things such as basic rates, it’s very important that consumers also be protected. This bill does that. We’ll look forward, over the next interim, to learning more about how the state needs to evolve with regard to these issues. I thank you for your leadership in getting us the information that we needed on a very tough issue.
THE MOTION CARRIED. (Ms. Giunchigliani was absent for the vote.)
Chairman Goldwater:
We will bring up A.C.R. 19.
Assembly Concurrent Resolution 19: Directs Legislative Commission to conduct interim study of telecommunication services in Nevada. (BDR R-1188)
Assemblyman David Parks, Clark County, District No. 41:
[Introduced himself.] I am here before you today with A.C.R. 19. It was a BDR I’d asked to be drafted that would address the issue of telecommunications. I don’t have too much to say other than, with all we’ve heard from S.B. 400 and some of the concerns that seemed to come to light, maybe it’s time we looked at telecommunications as an interim study, especially in light of all of the changes that have taken place in recent years and are continuing to take place. Quite frankly, I’m totally amazed every time I see how things have changed. There have been several amendments suggested to A.C.R. 19.
Timothy Hay:
You should have before you some proposed amendments (Exhibit F), which we have authored and the sponsor of the resolution has reviewed as well. Our intent is to clarify some of the economic and technical [matters] that need to be examined in order for the legislative interim committee and the advisory committee to bring substantive data and recommendations to the 73rd Legislative Session. [It would show], relative to the development of competitive markets, how pricing is affected by those developments, the methods to ensure that we are able to get affordable broadband service to all classes of customers, and what the state may need to do in the future in order to encourage that. Also, we have indicated that we have technical assistance in our office that we’d be very happy to provide to both the legislative and the advisory committees. Not only are the regulatory constructs fairly complicated in this area, but even getting basic data, such as the true level of competition and trends in competition, may not be as easy as it is in some other regulated industries, such as the electric or gas industry. We want to make sure the charts the Legislature was giving to both its own committee as well as the advisory committee were appropriate in their scope. We believe these amendments accomplish that.
I’m also aware of an amendment that would add another member to the advisory committee (Exhibit G) who would basically represent those citizens who are in the smaller, rural areas. The amendment is offered on behalf of Churchill County Communications so we have the rural areas of the state with their unique circumstances also represented on the advisory committee. Mr. Rowe is here to expound on that, if necessary.
Chairman Goldwater:
Mr. Rowe, why don’t you come up and tell us why rural incumbent local exchange carriers need representation?
Russell Rowe, Legislative Advocate, Churchill County Communications:
[Introduced himself.] Mr. Hay explained it [the amendment] for us. We would like to see at least one of the rural providers have a seat on this advisory committee.
[There were no questions for Mr. Hay or Mr. Rowe. Chairman Goldwater invited others to testify on A.C.R. 19.]
John Frankovich:
Throughout the debate this session on S.B. 400 we’ve encouraged a study. You’ve heard [numerous] statements, contentions, assertions, and opinions, many of which were not backed up by facts. I can almost guarantee that you will be revisiting many of these same issues next session. We believe it’s appropriate in making decisions in next session that we be fully armed with the facts so that we can make an informed decision. We support the amendments proposed by Mr. Hay to A.C.R. 19. It is critical that these issues be studied not only for the benefit of competition, but also for the consumers of the state of Nevada and to answer Chairman Goldwater’s question, “What is the best policy?” and, “Is this good policy for the state of Nevada?” Those are the answers an interim study group can obtain for the benefit of us all.
Steve Tackes:
I would just say, “Me, too,” to the comments Mr. Frankovich made. S.B. 400 was a big step towards deregulation. It remains to be seen how that will affect the rest of the state of Nevada. A.C.R. 19 is very important to look at, in terms of what effect it has.
Chairman Goldwater:
Mr. Hay or Mr. Parks, one of my contentions over the years is recognition that there’s not as much balance between the Legislative Branch and the Executive Branch as I would like to see. I try to apply that principle. In here we have potentially one legislator to a very important panel, and the remaining eight members coming from the Executive Branch. Is that an appropriate balance or does it matter?
Timothy Hay:
In my opinion, the composition of the study committee itself could be evaluated. I did not feel it was necessarily appropriate for us to do that, judging by the experience that this body had from the last session when we had a renewable energy task force set up. We had a somewhat similar representation of various interest groups appointed by the Executive Branch. I think, in light of that experience, you could make a good policy argument that perhaps there should be more legislative appointees. From my perspective, rather than having one consumer viewpoint represented by my office or my appointee and one by the Governor’s Office, it may be more appropriate to slightly enhance that and maybe have a small business consumer representative appointed either by the Legislative Branch or through another mechanism and give a little bigger tent for this advisory committee to actually operate under. It’s actually skewed towards people who represent various industry viewpoints and almost all of the appointments are made by the Executive Branch. I was not aware what policy implication that certain ones, such as the appointment from the Department of Administration, would have. Obviously, the state is a consumer of telecommunications services but not in a fundamentally different sense than any other large institution.
Assemblyman Knecht:
I have a similar concern. I would like to add my voice to your concern about the numbers from the two branches on the Committee, but, furthermore, looking at Mr. Hay’s proposed amendment to A.C.R. 19, he has a five-line paragraph there that would essentially make the Bureau of Consumer Protection the staff for this. I would be much more comfortable keeping it primarily with the LCB staff and letting them tap other resources as they find appropriate. I would ask Mr. Hay one question in connection with this: Has the Attorney General seen this language and expressly approved this part of your proposed amendment?
Timothy Hay:
Let me explain my rationale. Obviously during any interim, there are going to be a number of things that the Legislature is concerned with. We’re offering to do the groundwork of helping collect and compile data that can be used by both the advisory committee and the legislative interim committee. We thought, given the resources of our office, that might avoid having to develop that resource within LCB. Obviously the policy and the legal decisions that would need to be presented to the committee would be affected by the LCB staff. What we’re considering is more just the empirical data that is the prerequisite to a comprehensive study. As you know, our office is an independent division of the Attorney General’s office, and it has been our policy not to affirmatively have the Attorney General sign off of any of our legislative presentations.
Chairman Goldwater:
The legislative staff would staff it? [Received confirmation.] This would just say that they would help. [There were no further questions.]
Ann Pongracz:
Sprint supports A.C.R. 19 in large part because it responds to the concerns that have been articulated by Assemblywoman Buckley about the impact of industry changes on basic local rates. However, as members of the Committee may be aware, we have not had the opportunity to review the proposed amendment to A.C.R. 19 until it was presented ten minutes ago to the Committee. We are concerned that it could require the investment by the state of additional funds if the studies that are discussed therein were to be completed in a comprehensive fashion. Therefore, at this point, we don’t believe there’s enough information available to support the amendment proposed by the consumer advocate.
Chairman Goldwater:
I would ask then, Mr. Parks and/or the Speaker, whether or not you are satisfied, since, Mr. Speaker, you have chaired the Legislative Commission, with the membership makeup here or do you want to make any changes?
Speaker Perkins:
The membership certainly is, in various interim committees, different based upon the end results or the kinds of products [desired]. I think that it would be more concerning for the sponsor of the bill since he’s the one who has brought this forward and obviously has a goal in mind.
Chairman Goldwater:
Mr. Parks, do you think this maintains a balance between the Legislative and Executive Branches?
Assemblyman Parks:
When I requested this A.C.R. to be drafted, I did leave it fairly open. I wanted to get as broad a base of members on the advisory committee as possible. I certainly have no pride of authorship with regards to the actual composition as long as it’s an effective number of individuals who can provide that advisory function. I would be happy with whatever the Committee would come up with.
Chairman Goldwater:
How about two members from the Legislature, one from the Majority Leader of the Senate and one from the Speaker of the Assembly? Is that okay?
Assemblywoman Giunchigliani:
I know you are discussing the potential amendments. This bill still needs to come to Elections [Committee]. I don’t know if, at that time, you want us to consider the amendments, because otherwise it slows it down. I will be happy to include that in our work session document with Mr. Parks if that’s the way you want to proceed. That would actually be better for staff.
Chairman Goldwater:
Okay. [There were no further questions or testimony.] I will close the hearing on A.C.R. 19 and we will accept a motion. The motion would be to adopt and rerefer.
Assemblywoman Giunchigliani:
It will slow it down if you amend it now, because we won’t get it until Wednesday. My suggestion would be to do pass and rerefer and then I will take these amendments for adoption to the [Elections] Committee. I think it’s faster for staff that way.
ASSEMBLYWOMAN BUCKLEY MOVED TO ADOPT AND REREFER A.C.R. 19 TO THE ASSEMBLY COMMITTEE ON ELECTIONS, PROCEDURES, & ETHICS.
ASSEMBLYMAN PARKS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Goldwater:
That concludes our agenda and concludes almost anything that could possibly be agendized in this committee, save significant policy issues on Senate amendments. Are there any other questions or comments for the Committee? [There were none.] The meeting is adjourned [at 3:17 p.m.].
RESPECTFULLY SUBMITTED:
Sharee Gebhardt
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: