IL Telecom Rewrite
7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Background
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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.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Leader in telecommunications
regulatory reform (IL)
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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.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
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.
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7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Seven Conditions
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(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 goals;
(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.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Section 13-103 of Article XIII
presents the current policy
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a) Telecommunications services should be available to all
Illinois citizens
b) Where possible, competition should replace regulation
c) Modifications to state regulation should ensure orderly
transition
d) Regulated prices should be reasonable and nondiscriminatory
e) Regulation should be periodically reviewed and
evaluated
f) Competition should foster investment and innovation
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Rewrite Proposals
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HB 0492 – Bill written by Ameritech –
Illinois
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7/12/2016
Strips the ICC of much of its regulatory
oversight
HB 2900 – Bill that actually became law.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Rewrite - BENEFITS TO
CONSUMERS
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Provides $30 million in funds to eliminate the Digital Divide.
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Enhances Life-Line and Link-Up enrollment for low-income phone
subscribers.
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Requires Ameritech to offer 3 flat rate packages.
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Sets in statute Service Quality standards and customer credits for carrier
failure to meet standards.
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Strengthens protections against Slamming, Cramming and Jamming.
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Provides $90 million in customer refunds for settlement of Ameritech's
business reclassification case
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Requires deployment of advanced services, such as high speed internet, by
incumbent carriers to 80% of their customers by 2005, except in rural areas.
7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
ENHANCEMENTS FOR
INDUSTRY COMPETITION
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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).
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Provides ICC authority to impose interim tariffs to allow
expedited implementation of Orders.
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Strengthens and codifies certain market-opening
provisions and increases enforcement of inter-carrier
disputes regarding market opening provisions.
7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Classifying Services as Competitive
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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
conditions;
(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 appropriate.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
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
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7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Business Rates
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Rates for business lines 4 or less capped at
5/1/01 rates until 7/1/05.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
High Speed
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7/12/2016
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.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
3 local calling plans
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(1) A budget package, which shall consist of
residential access service and unlimited local calls.
(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.
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
ICC deregulates Chicago-area local
service
ICC passes order 06-0027 on 8/30/06
 CUB agrees to support AT&T
 Classifies most AT&T services as
competitive
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7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
Filing started 11/2005
Competitive pressure from (75) CLECs,
wireless and VoIP
 Residential Market Share dropped 32%
since 2001 (claimed AT&T)
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7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979
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
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7/12/2016
ECO 436 Industry Studies Seminar David G. Loomis 309-438-7979