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92_HB3120 LRB9206231JSpc 1 AN ACT concerning telecommunications. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Public Utilities Act is amended by 5 changing Section 13-508 and adding Section 13-202.5 as 6 follows: 7 (220 ILCS 5/13-202.5 new) 8 Sec. 13-202.5. Incumbent local exchange carrier. 9 "Incumbent local exchange carrier" means with respect to an 10 area, the telecommunications carrier that provided 11 noncompetitive local exchange telecommunications service in 12 the area on February 8, 1996, and on that date was deemed a 13 member of the exchange carrier association pursuant to 47 14 C.F.R. 69, 601(b), and shall include its successors, assigns, 15 and affiliates. 16 (220 ILCS 5/13-508) (from Ch. 111 2/3, par. 13-508) 17 (Section scheduled to be repealed on July 1, 2001) 18 Sec. 13-508. Classification of retail services as 19 competitive and structural separations. 20 (a) Notwithstanding any of the ratemaking provisions of 21 this Article or Article IX that are deemed to require rate of 22 return regulation, and notwithstanding any plan of 23 alternative regulation implemented pursuant to 13-506.1, the 24 Commission may classify all retail service offerings of an 25 incumbent local exchange carrier as competitive if the 26 Commission makes all of the following findings: 27 (1) That the incumbent local exchange carrier has 28 structurally separated its retail operations from its 29 wholesale operations consistent with the requirements of 30 subsection (c). -2- LRB9206231JSpc 1 (2) That there is sufficient competition to prevent 2 the incumbent local exchange carrier from increasing the 3 rate for any retail service that is to be classified as 4 competitive. 5 (3) That the incumbent local exchange carrier has 6 fully complied with all relevant provisions of the 7 Federal Telecommunications Act of 1996 and orders and 8 regulations of the Federal Communications Commission and 9 that the incumbent local exchange carrier has petitioned 10 and received approval from the Federal Communications 11 Commission to provide inter LATA interexchange service 12 pursuant to Section 271 of the Federal Telecommunications 13 Act of 1996. 14 (4) That the incumbent local exchange carrier has 15 fully complied with all relevant provisions of this Act 16 and orders and regulations of the Commission 17 (b) Any structural separation of the incumbent local 18 exchange carrier must comply with or be designed to comply 19 with all of the following requirements. 20 (1) The incumbent local exchange carrier must 21 establish at least 2 separate affiliated corporations, a 22 network affiliate and a retail affiliate. 23 (2) The network affiliate must own and operate the 24 essential network elements and related facilities of the 25 incumbent local exchange carrier as determined by the 26 Commission. 27 (3) The retail affiliate must own and operate all 28 retail operations and all non-essential network 29 facilities of the incumbent local exchange carrier as 30 determined by the Commission. 31 (4) The 2 affiliated companies must have separate 32 boards of directors and be independently managed and 33 directed. Specifically, there may be no common member of 34 the boards of the companies. Further, no manager, -3- LRB9206231JSpc 1 director, or other corporate officer of one company may 2 be a manager, director, or corporate officer of the 3 affiliate. 4 (5) No employee of one affiliate may also be an 5 employee of the other affiliate. 6 (6) The 2 affiliated companies must maintain 2 7 separate books of account. 8 (7) The compensation of the managers and directors 9 of the affiliate companies must be based, at least in 10 part, on the financial performance of the affiliates 11 pursuant to a plan to be filed with the Commission. 12 (8) The network affiliate must be partially 13 publicly owned in an amount not less than 20%. 14 (9) The network affiliate may not design its 15 network, interfaces, support systems, databases, or other 16 systems or implement technology into its network in a 17 manner that unfairly favors its retail affiliate. The 18 network affiliate may not share or disclose information 19 about network deployment to its retail affiliate unless 20 the information is simultaneously filed with the 21 Commission and made available to requesting 22 telecommunications carriers. The network affiliate may 23 not discriminate against competitive local exchange 24 providers in any manner in favor of its retail affiliate. 25 (10) All transactions or agreements between 26 affiliate shall be in writing, filed with the Commission, 27 and available for review by interested parties. 28 (11) The network affiliate may not offer retail 29 services and any non-essential facilities owned and 30 operated by the retail affiliate. 31 (12) To the extent the retail affiliate leases 32 network facilities from the network affiliate, the retail 33 affiliate must utilize the same operations support 34 systems for those facilities as used by requesting -4- LRB9206231JSpc 1 telecommunications carriers and must lease those elements 2 on the same terms and conditions (including price and 3 non-price terms) as provided to other requesting 4 telecommunication carriers. 5 (13) To the extent the requirements of the federal 6 Telecommunications Act of 1996 apply to the incumbent 7 local exchange carrier as of the effective date of this 8 amendatory Act of the 92nd General Assembly, those 9 requirements shall apply to the relevant affiliate. 10 (14) The network affiliate shall be regulated by 11 the Commission to ensure that the rates, terms, and 12 conditions of the services and elements offered are just, 13 reasonable, and in accordance with all applicable State 14 and federal law. Further, the Commission shall have all 15 necessary authority to ensure that the network affiliate 16 provides reasonable service to requesting 17 telecommunications carriers. 18 (15) The non-retail services, elements, and 19 operations of the retail affiliate shall continue to be 20 regulated by the Commission to ensure that the rates, 21 terms, and conditions of the services and elements 22 offered are just, reasonable, and in accordance with all 23 applicable State and federal law. Further, the 24 Commission shall have all necessary authority to ensure 25 that the retail affiliate provides its non-retail 26 services, elements, and operations in a reasonable 27 manner. 28 (c) Prior to the implementation of any structural 29 separation pursuant to this Section, the incumbent local 30 exchange carrier must file with the Commission a detailed 31 plan of implementation. After notice and hearing, the 32 Commission shall review, reject, or modify the plan as 33 necessary to comply with the requirements of this Section. 34 (d) Notwithstanding any other provision, the Commission -5- LRB9206231JSpc 1 on its own motion or upon petition of any party may order an 2 incumbent local exchange carrier to implement a structural 3 separation consistent with subsection (b). The Commission 4 shall order such a structural separation after notice and 5 hearing after finding that the incumbent local exchange 6 carrier has failed to comply with the obligations contained 7 in: 8 (1) Sections 251 and 252 of the Communications Act 9 of 1934; 10 (2) orders and regulations of the Federal 11 Communications Commission; 12 (3) the obligations contained in this Act; or 13 (4) the obligations contained in orders and rules 14 of the Commission.The Commission is authorized, after15notice and hearing, to order a telecommunications carrier16which offers or provides both competitive and17noncompetitive telecommunications service to establish a18fully separated subsidiary to provide all or part of such19competitive service where:20(a) no less costly means is available and effective in21fully and properly identifying and allocating costs between22such carrier's competitive and noncompetitive23telecommunications services; and24(b) the incremental cost of establishing and maintaining25such subsidiary would not require increases in rates or26charges to levels which would effectively preclude the offer27or provision of the affected competitive telecommunications28service.29 (Source: P.A. 84-1063.)